Honorverse

cthia wrote:Even if it is a tax shelter on Beowulf, you can never know if it will continue to be so. But trust funds ARE a thing. However, the bottom line would be the same for Alison because even trust funds are not paid out until the time of death. That's why they are called "Trusts."

I've known parents to give percentages of the trust at various times before death, but that amount is penalized for early dispersal. Besides, trust funds are simply tax-sheltered inheritances anyway.

The highlighted statement is incorrect in the general case. There are all sorts of things that can be done with trusts, but irrevocable trusts cease being the property of the grantor at the time they are created.

tlb wrote:

cthia wrote:Even if it is a tax shelter on Beowulf, you can never know if it will continue to be so. But trust funds ARE a thing. However, the bottom line would be the same for Alison because even trust funds are not paid out until the time of death. That's why they are called "Trusts."

I've known parents to give percentages of the trust at various times before death, but that amount is penalized for early dispersal. Besides, trust funds are simply tax-sheltered inheritances anyway.

The highlighted statement is incorrect in the general case. There are all sorts of things that can be done with trusts, but irrevocable trusts cease being the property of the grantor at the time they are created.

True. Irrevocable trusts are no longer the property of the parent/grantor. That only means two significant things.

1. The parent cannot change his/her mind because they don't like your lifestyle or the person you marry. Nor can they renegotiate the trust because they are now broke.

2. The main reason they are even considered is to protect the assets from the government, or from any lawsuits or from any other unforeseen stormy weather.

It does not mean the assets become directly the property of the recipients. It becomes the assets of the Trust. IOW, the trust receives the money, and not the child. Or why go to the trouble of setting up the Trust. Simply write the child a check. (Barring the possibility of the mentally incompetent or the underaged.) They are only paid out in time of death. If not, a child can burn through their inheritance before the parents are dead. That is not the spirit of a "Trust that you'll have money when we're gone."

There are lots of things that can be done with Trusts, true. But the intention is to cheat the government, not cheat the spirit of the Trust or the parent or child.

Now, you can set up a trust to be paid out at any age that you think the child will be responsible. Just be sure of it, or you may have to set up another. It's messy.

In the HV, I can't see them being paid out too early when lifespans are so long.

cthia wrote:True. Irrevocable trusts are no longer the property of the parent/grantor. That only means two significant things.

1. The parent cannot change his/her mind because they don't like your lifestyle or the person you marry. Nor can they renegotiate the trust because they are now broke.

2. The main reason they are even considered is to protect the assets from the government, or from any lawsuits or from any other unforeseen stormy weather.

It does not mean the assets become directly the property of the recipients. It becomes the assets of the Trust. IOW, the trust receives the money, and not the child. Or why go to the trouble of setting up the Trust. Simply write the child a check. (Barring the possibility of the mentally incompetent or the underaged.) They are only paid out in time of death. If not, a child can burn through their inheritance before the parents are dead. That is not the spirit of a "Trust that you'll have money when we're gone."

There are lots of things that can be done with Trusts, true. But the intention is to cheat the government, not cheat the spirit of the Trust or the parent or child.

Now, you can set up a trust to be paid out at any age that you think the child will be responsible. Just be sure of it, or you may have to set up another. It's messy.

In the HV, I can't see them being paid out too early when lifespans are so long.

Still not true in general, the trust can be set up to pay out an income beginning at any time; rather than a lump sum.

The trust administrator is in a fiduciary relationship with the beneficiary and I believe that is where the word "trust" enters; not from the stories you have made up about it.

If the only reason for a trust was to "cheat the government", then why would any government allow them to be created? Tax avoidance is NOT tax evasion.

cthia wrote:Also, who says that Alison wasn't given a nice sum of money as a wedding gift? Or better yet, that she didn't have some form of a dowry, that was quickly spent on moving expenses. Or in this case, and much more costly, relocation expenses across the galaxy, which would include such things as, well, a starter home? Even if that starter home didn't include counter-grav or a two-car garage. Meaning, if Alison and Alfred chose to remain where her family's wealth was located, instead of traipsing about the galaxy, they may have been offered one of the family's properties.

It's possible Alfred didn't yet have full access to the Harrington ancestral home. His parents (Honor's paternal grandparents) were probably still very much alive then and might have been until recently, even pre-prolong. If Alfred's parents were still living in that home, it's possible he and his new wife didn't want to live in the same home because they wanted to do husband-and-wife things. Like, you know, arguing about who cleans the gutters, because at 35% higher gravity, rains must be hard on gutters.

We know Honor grew up in that home and we know that she was born in Craggy Hollow, but there's no requirement that her parents were living there at the time of her birth. It could simply be a matter of tradition that Allison gave birth there instead of the nearby hospital. And because of tradition, they decided to move there when Honor was half a Sphinx year old or so to raise her.

tlb wrote:

cthia wrote:True. Irrevocable trusts are no longer the property of the parent/grantor. That only means two significant things.

1. The parent cannot change his/her mind because they don't like your lifestyle or the person you marry. Nor can they renegotiate the trust because they are now broke.

2. The main reason they are even considered is to protect the assets from the government, or from any lawsuits or from any other unforeseen stormy weather.

It does not mean the assets become directly the property of the recipients. It becomes the assets of the Trust. IOW, the trust receives the money, and not the child. Or why go to the trouble of setting up the Trust. Simply write the child a check. (Barring the possibility of the mentally incompetent or the underaged.) They are only paid out in time of death. If not, a child can burn through their inheritance before the parents are dead. That is not the spirit of a "Trust that you'll have money when we're gone."

There are lots of things that can be done with Trusts, true. But the intention is to cheat the government, not cheat the spirit of the Trust or the parent or child.

Now, you can set up a trust to be paid out at any age that you think the child will be responsible. Just be sure of it, or you may have to set up another. It's messy.

In the HV, I can't see them being paid out too early when lifespans are so long.

Still not true in general, the trust can be set up to pay out an income beginning at any time; rather than a lump sum.

The trust administrator is in a fiduciary relationship with the beneficiary and I believe that is where the word "trust" enters; not from the stories you have made up about it.

If the only reason for a trust was to "cheat the government", then why would any government allow them to be created? Tax avoidance is NOT tax evasion.

Don't be so naive about the government.

Of course it can be set up to pay out at any time. It is often unavoidable in cases of mental retardation or incapacity of both parent or recipient. In fact, that in itself has caused many to be tied up in probate court for years. It's the one loophole.

The fiduciary relationship IS where Trust originates. To ensure you will have money when the parents are gone. But the trust cuts both ways. If the parent knows you to be irresponsible, they must be able to TRUST the agent not to be bribed to disperse the funds early. The spirit of a trust or inheritance is to ensure the offspring or recipient has cash after death. Think Stacy Hauptman already has everything coming to her? It isn't even good business sense as far as what even goes into the trust at the time it is set up.

And yes, as I said above, they can be made to pay out at any age. I suppose I should have added dispersed at any rate or frequency. The Hiltons are an example.

I know siblings who received their Trusts early with the stipulation they would continue to care for the extended family of pets. How that is enforced is beyond me.

But, naivety will get you a lazy bum unwilling to apply himself because he'll be rich soon. And broke sooner. It is at your discretion. Most people I know are "discreet."

cthia wrote:Of course it can be set up to pay out at any time. It is often unavoidable in cases of mental retardation or incapacity of both parent or recipient. In fact, that in itself has caused many to be tied up in probate court for years. It's the one loophole.

Still not there, an irrevocable trust is NOT subject to probate, it ceases to be the property of the grantor at the time it is created. However the other kind of trust does go through probate, the difference is because a revocable trust remains under the control of the grantor (which is why it can be revoked).

PS. It is not cheating if you follow the rules that have been set up, even if that only means that you are not breaking a prohibition

PPS You were still saying that "They are only paid out in time of death", which is definitely NOT true for an irrevocable trust.

cthia wrote:There is also a possibility of a certain amount being doled out yearly in gifts to reduce the inheritance tax. But that is capped at a paltry amount that doesn't depend on the value of the inheritance. In the UK I think that amount is capped at 3000. So, Alison could have been getting a yearly check that may have been enough to pay part of her own tax obligation and maybe enough left over for a hamburger or two. Inheritance taxes can get messy.

In the US the annual exemption for the gift tax is currently five times that.

But who knows what the Beowulf and Manticoran tax laws are like; could be anything from no exemptions on gifts to no taxes on gifts.

Dauntless wrote:I believe that Alison parents helped develop prolong and were among the earliest recipients. also while 1st gen prolong could be administered later then the more recent versions the cut off is still around 30. so Alison's grand parents are very unlikely to have ever received prolong.

In UH, as Hamish is traveling to meet Alison's mother, he muses to himself that she was the first person to receive prolong, because she used herself as the experimental subject.

Telling that those on here are using current US tax law as a guide for what applies thousands of years hence on another planet.
I'm not well informed on our (Australia's) relevant laws as my accountancy training was to do with running large organisations, not personal tax matters but - We don't have inheritance tax, death duties or gift tax, but we still have trusts. From my understanding they are designed to spread family business profits across many to minimise income tax liability, using each's tax free threshold. Annache may well know better, so apologies if I got it wrong.
Regardless the point remains that Honorverse Trusts are probably quite different to yours.

Jonathan_S wrote:

cthia wrote:There is also a possibility of a certain amount being doled out yearly in gifts to reduce the inheritance tax. But that is capped at a paltry amount that doesn't depend on the value of the inheritance. In the UK I think that amount is capped at 3000. So, Alison could have been getting a yearly check that may have been enough to pay part of her own tax obligation and maybe enough left over for a hamburger or two. Inheritance taxes can get messy.

In the US the annual exemption for the gift tax is currently five times that.

But who knows what the Beowulf and Manticoran tax laws are like; could be anything from no exemptions on gifts to no taxes on gifts.

I specifically used the UK because the HV is patterned after it. I'm not certain the UKs is still 3000 pounds. That was some time ago when I was a teenager visiting. I'm not even sure that was the actual cap then in the UK, just that the family I visited had recently began receiving checks for 3000 pounds each, which was a lot of money for teenagers in those days. There could have been more that went into a separate account. Dunno.