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Have applied to Arlington County VA under its senior homeowner…

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Have applied to Arlington County...
Have applied to Arlington County VA under its senior homeowner tax abatement program.Submitted all required documentation re asset/income verification. County attorney demands I submit Living Trust for review claiming it's a "controlling" document. Given that a Living Trust does NOT "control" the amount or value of any income or assets so titled and that all revenue earned by assets within the Living Trust is reported to IRS under Trustees' social security number/included in my 1040 I maintain County has no right to demand Living Trust to validate that my income and assets are within abatement program limits. It is an invasion of privacy..
Submitted: 8 years ago.Category: Legal
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6/25/2010
Lawyer: Law Educator, Esq., Attorney replied 8 years ago
Law Educator, Esq.
Category: Legal
Satisfied Customers: 126,862
Experience: JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law
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If it is a living trust and not an irrevocable trust, then because a living trust can be terminated at any time, they can consider that and ask for a copy as proof for income verification purposes. This is why people use irrevocable trusts and you should consider going to a local attorney to have your living trust converted to the irrevocable trust if you want it excluded and protected.

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Law Educator, Esq.
Category: Legal
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Experience: JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law
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Customer reply replied 8 years ago

FOR PAULMJD : Any bank/brokerage acct (and any income source) can be terminated at any time regardless of held in own name or Living Trust.. So why do you say that fact that a revocable Living Trust can be terminated any time makes its review necessary to evaluate income or asset holdings? By law, any income received by Living Trust must be reported by payor to IRS under trustee's social security number. Realize law is not always logical, but this seems contrary to reality.

Lawyer: Law Educator, Esq., Attorney replied 8 years ago
An irrevocable trust cannot be changed or terminated, this is why they are treated different under the law and why the assets in irrevocable trusts are protected from seizures from creditors and from collection from Medicaid reimbursements and other things. The fact is that on the living trust, the trustee has more control over the assets because they can cancel the trust and can actually manipulate income where as under the irrevocable trust they cannot do so.
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Customer reply replied 8 years ago

 

It is simply not true that a Living Trust provides greater control to trustee than assets/income held in own name. Nor does Living Trust increase risk of manipulation. Those factors are the same for either form of title. I submit this as a simple statement and am not seeking a reply. While accept your comment above I do not feel it calls for additional payment since it provides no new or meaningful information.

Lawyer: Law Educator, Esq., Attorney replied 8 years ago
As you have not clicked on accept for any answer you have not made any payment, you have merely made a deposit which you can get refunded. I am not looking to debate this with you either, just provide you with information. I am merely stating that the irrevocable trust gives you more protection of your assets from this type of intrusion and from creditors than the living trust can provide. On a living trust the grantor still owns the assets. What’s wrong with a revocable living trust is that the owner of the assets (the Grantor) retains too much power over the disposition of the trust assets. This direct control nullifies any defenses against potential frivolous lawsuits. His deemed control is equivalent to ownership, and if you still own the asset you are liable to lose them in a lawsuit and they are open to be considered for these types of issues as your assets.

Unlike a Revocable Trust, (revocable living trust), assets transferred to an “irrevocable” trust cannot be changed or dissolved by the Grantor once it has been created. The Grantor no longer owns the assets. With an rrevocable rust, all of the property in the trust, plus all future appreciation on the property, is out of your taxable estate. That means your ultimate estate tax liability may be less, resulting in a more tax efficient way to transfer your accumulated wealth to your beneficiaries. Property transferred to your beneficiaries through an Irrevocable Trust will also avoid probate. As a bonus, property in an irrevocable trust may be protected from your creditors. Of late this irrevocable trust device is being utilized by many planners for avoiding the Medicare nursing home spend-down provisions whereby if the elderly has to enter a nursing home he must first spend all his money until he does not have any money left.


The above differences is why they are seeking the information on your living revocable trust and why they would not be able to do so if the trust was an irrevocable trust.
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Customer reply replied 8 years ago

 

PAULMJD: I have already accepted one answer as confirmed by the popup when I click on Accept Answer button. It states " You have already accepted one answer...etc.

 

I do understand the technicall pro/con of revocable and irrevocables. My question...point...is that Arlington County does not need to review my trust in order to verify my income and/or assets. My 1040 serves that purpose. What additional info would trust provide in so far as the dollar amount of such funds is concerned? Please accept this as rhetorical comment not requiring any response.

 

THANKS

Lawyer: Law Educator, Esq., Attorney replied 8 years ago
I apologize for that I did not see the accept when I gave you my last answer, please accept my apology sometimes the system does not update like it should.


They can review the trust, because until those assets/income from the trust are actually declared on your 1040 they are not visible to them. What I mean by that is if there are assets or earnings in the trust during the year but before you file your 1040, this is something they would consider in their determination and it would not be accurately reflected on your previous year 1040.
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Customer reply replied 8 years ago

 

 

No...no...no. Eligibility under the program is based on applicant's financial status as of prior yearend ,i.e. 2009..Applicants must submit their yearend bank, brokerage statements, 1040, etc to prove they fall within program monetary limits. Applicants must reapply annually. Thus, income earned during year 2010 is only a factor when one is filing in 2011. This is standard practice with all such programs and assumed recognized as such by you. How could you have a program wherein eligibility depended on income received on ongoing basis during the year????

 

Now with this clarification I assume you agree that Living Trust review is not required in order to validate prior year financial review. As you say every thing is visible to county in the 1040.

Please do not answer this if you feel doing so justifies additional charge. Thanks!!!

Lawyer: Law Educator, Esq., Attorney replied 8 years ago
Just like requiring your W-2 forms if you are working in addition to your taxes, this is the same thing. They can request the information to verify your tax returns. The botXXXXX XXXXXne is you do not have to provide it and they in return do not have to give you the abatement.
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