Wow. But thanks for the Heads-Up.
Thanks Chris, your experience is exactly why I'm working on this now. Thanks also to everyone else who has contributed. When I raised the initial question, I didn't realize that I would "touch so many nerves". I hope to have a solution (for our situation) soon but am taking it slowly. I will post what we decide on.
C W,
Sounds like you need a good lawyer to get you out of the Trust, I'm sure he can find a loop hole since others are getting out of the Trust. Get a Trust attorney and not a general attorney.
Also, the Trustee has to account for every penney they manage. Sounds like they need to be audited by the government for mis-management. Even though it sounds like they are taking plenty to manage the trust, the 6% is norm on a sizeable trust. If your family would have left this in an estate, most of it would be gone by now because of estate taxes. I know 20 years ago, we paid over 50% in estate tax and since lots of the property was in OK, we paid OK estate tax also. Lots have changed in the last 20 years, but it's still costly to pass away and own anything.
Thank you Virginia, for sharing that about Estate Taxes, I do not know anything about Estate Law, now you have hit a new nerve.
Thank you,
Chris
Currently 2012 the first $5,120,000 of an estate is not taxed by the feds.
However this is not permanent. They started raising it in 2002 or so. It was renewed a couple of years ago but expires. With all of the desire to tax the “Rich”, it is possible we might see it drop.
20 years ago, I think the exemption was $600K and you paid over half of anything above that.
Never mind that it is taxing the Dead on assets they have already paid taxes on.
Don’t even get me started on taxes. On oil income, we are paying 56% of the gross in taxes (before any deductions anyhow).
Back on track, some careful planning can reduce some of the tax liability in an estate.
Rick,
Thanks for sharing the information regarding 2012 Estate Tax.
For those who don't understand what is at stake, They can go to IRS estate tax for 2012. gov
In Oklahoma, Jan. 2010 the state tax was phased out and now goes along with the federal state death tax credit under OK ST title 68-804. So, if you owe Fed tax, you will also be paying to Oklahoma.
You may want to think twice about these 700 BBD wells and at least don't pass away if you have one. The Fed's love you otherwise. You need a lots of good planning if you have one of these wells or you won't have anything left.
Finally got together with an attorney. She confirmed that the best route for us is to simply create an LLC owned by the our A-B revocable trust and which I would manage. Upon the death of the surviving spouse the trust dissolves and the assets go to our kids who would then automatically become the owners of the LLC. (Sometimes we can try to complicate simple issues!)
Thanks again to all for your inputs and comments.
John,
Does all the income from the oil/gas wells go into the revocable trust? If so, you will be paying tax on a trust which is much higher rate. Did you check this out? Sounds like your attorney set up 2 trust, one for you and one for your wife, which is good. But, it may need a little fine tuning.
What about executing a Mineral Deed conveying the minerals to your children BUT reserving a "life estate" for yourself and your wife? Once you both pass away, they become vested with the fee-simple interest AUTOMATICALLY, no probate needed or other paperwork needed. Ask an attorney about a "life estate."