Business & Finance Personal Finance

How Much Money Should I Put Into an Irrevocable Trust in a Year?

    Identification

    • State trust laws do not limit the number of assets you may pass along to beneficiaries. However, in all states, a trust must take ownership of at least one asset to be legally recognized by the state. Think of a living trust as a privately owned box that you can fill with as many assets as you like. When you die or become incapacitated, the state may tax that box based on the value of what is inside it.

    Types of Funding

    • You may fund an irrevocable living trust with any number of assets, including financial accounts, stocks, bonds, mutual funds, money market accounts, brokerage accounts, royalty contracts, patents and copyrights, jewelry and antiques, precious metals, works of art, valuable collections, and trust accounts, a type of financial account used in estate planning to hold money for a beneficiary or heir.

    Taxes

    • The annual federal estate tax is up from the $3.5 million tax threshold approved in 2009. As of June 2011, the federal government approved a schedule that allows you to pass along up to $5 million to heirs without incurring the estate tax.

      The federal gift tax for individuals remains at $13,000. This tax allows you to pass along annual gifts of up to $13,000 to beneficiaries without incurring the gift tax.

    Considerations

    • Planning your trust around the tax-free threshold can minimize trust costs. The estate tax for a trust worth $5 million or more is 35 percent. Speak with an estate planner or trust attorney about ways to modify your trust.

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