Legal Question in Wills and Trusts in New York

Re: Joint Trust with right of survivorship

My guess is that the joint trust with right of survivorship provides that Grandma gets the income, etc. for life and then whatever is left to the desiganted beneficiaries.

There is no estate tax advantage to this arrangement. The total value of the assets in the trust fund and all other property owned by Grandma will be included in her taxable estate.

What can be done to reduce the estate tax??

The are are six beneficiaries that you mention. Grandma can give them each $10,000 a year and this will reduce the taxable estate by $60,000 a year.

Grandma can give the real estate to one or more objects of her bounty. All appreciation in value which occurs after the gift will escape estate tax on her death.

Grandma can give to charity during her lifetime or under her Will or Trust, and that will pass free of estate tax.

Keep in mind that every time Grandma gives property away to reduce her taxable estate, she also reduces the property available for her to live on, and generally people are reluctant to give up the security that wealth provides, even if it may eventually go for nursing care.

To escape all estate tax, Grandma would have to reduce her estate to about $700,000.

Re: Joint Trust with right of survivorship

Absent any other information, the assets will not transfer tax (estate) free upon the death of Grandma. However, since the taxable estate consists primarily of stocks and bonds, there are also some income tax issues regarding the tax bases of the particular stocks and bonds, and to what extent you should liquidate these in order to make gifts during Grandma's lifetime to minimize the taxable estate. I recommend that Grandma consult with an attorney in her area as soon as possible and, preferably, prior to year end to take advantage of year 2000 activities.