A debate over where to place one's trust
Q My husband set up a revocable living trust for me that was funded when he passed away in 1989. The trust is with a bank in Michigan. After I moved to Arizona in 1998, an Arizona attorney suggested that I might want to move the trust there. Is there an advantage to such a move?
Also, I have had an outside accountant do the trust's income tax return as well as my personal return. A bank officer suggested that since the Michigan bank also does the trust's return, it was not necessary to have the added expense of hiring an outside person. Does that make sense?
S.P., Scottsdale, Ariz.
A "The question is, who is in charge here?" says Paula Hogan, a fee-only financial planner in Milwaukee. "If you are the trustee, or a co-trustee with the bank, you have the power to shift the trust to wherever you want it to be located."
If you move it to Arizona, you will need to determine how the trust is administered, either setting up a self-directed trust with you alone making the investment decisions, or hiring a bank, an attorney, or a financial planner to handle it.
But if the Michigan bank is the trustee, and you are simply the beneficiary, "the bank will make all decisions regarding the trust," says Ms. Hogan.
The only advantage Hogan sees to a move is it allows you to discuss trust issues face to face rather than over the phone or via computer. As for the trust's tax return, she recommends you leave it to the bank's accountant since the services performed would likely be identical.
Q As a 20-something, I've heard plenty about how Social Security could dry up in two or three decades. But I, like others my age, still pay into the system. Must all working people pay Social Security taxes? When do people get a Social Security number? Can anyone opt out of Social Security payments because they have too much money already?
S.D., via e-mail
A According to a representative for Social Security, all persons working for wages or who are self-employed in the US must pay the required Social Security tax.
You now get a Social Security number at birth, since parents are required to list the number on their tax forms.
Alas, you can't opt out of the system for personal reasons, but you can delay receiving benefits up to age 70, the spokesperson says.
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