Listen: Susan Powers., SKI, Todd discussed on Real Stories of The Legal Exchange
"To the legal exchange and it's time for us. the segment where time will answer your questions about anything and everything that's included in the estate planning process once again here's time let's ski and Susan powers. come back Todd our first question comes from Tony in Boston mass and Tony rights both of my parents are resident aliens can an irrevocable trust still be utilized to increase my parents Massachusetts the state exemption to two million dollars so long as they're appointed trustee is a U. S. citizen in prior shows your example has always been only one member of the couple as a non US citizen but you could have a more of a complexity yeah I have the one member of the family the nine to do your best residents so I'm very familiar with the one side of the equation on both of them being non citizens the answer the quick answer is yes. you can still double your exemption to two million and shelter the assets what what you need to do is they'll and again it's all about drafting perfect question the trust that you put together are going to have to be what they call are going to have to have language in it called Q. dot language and me tell you what that means is qualified domestic trust language in in order to qualify you would need a citizen trustee. or a bank or you know some kind of a financial institution sure so. each other so I I don't know what kind of a trust they would be talking about so it says here vocal so so if it's irrevocable they're not likely to be trustees anyway right so you don't even have to worry about the fact that neither of them are gonna be trustees so let's assume that their son Tony in this case who's writing in is a citizen US yeah and I'm gonna go on a limb here and I think you're right Susan that likely let's say both of them you know immigrated here and that's why they're residents are not citizens but then settled here and had children here yep probably a likely scenario then all of their children our citizens. so. leave any of the children could serve as trustee. what be in it be almost no different than if they weren't right aliens and they are they weren't citizens. so if you are citizens and you're doing you're a vocal trust planning yes. you're gonna have children serving as trustee if you are not citizens and you're doing irrevocable trust planning you're still going to have a child serving as trustee your needs the difference would be that that child needs to be a citizen right okay and and if they're not then you're going to need to find one that is in other words you still could have a child serve as trustee if they're not a citizen but they're gonna have to serve with. a citizen got it trustee and why do we care about this and and I guess you'll see it more with three vocal trust so let's just change the facts a little and say what if this was a revoke herbal trust that they were doing well then you would want husband and wife non citizens to be trustees right well they're living perfectly okay. but upon the death of a non citizen don't know more. then the spouse could serve but with a citizen okay trustee okay you'll need both and the reason they need that among other things in this Q. dot language. is that let's say remember the the unlimited mayor of the docks and right so if you have a trust with let's say two million dollars in it. and it breaks down and you can shelter one million in the remainder share which is the mass tax which is what we're talking about here the one million dollar exemption that can be sheltered that's okay because you're allowed to do that but then this the other million that passes to the marital share that's held in trust for the benefit of the spouse and can come out yep what they worry about is that that's spouse would take out all that money from the marital share end goal and leave the country and die overseas in the in the homeland. well then Massachusetts would never get the tax rate on that that they want to get when the spouse dies so what they do is they put a citizen trustee on to say when it comes out it has to be taxed the end of even before they die if they go could be subject to tax and so you don't want to you know that that's really the goal that language that Q. dot language avoids that avoids that so."