State Specific Question About: MASSACHUSETTS (MA)

We will purchase a rental property and put it under a Realty Trust. I will be the trustee, and both me and my husband be beneficiaries. We own the property free and clear. I wonder whether we can add our two young kids as beneficiaries.

If yes,

1. Can I assign 20% to each of them? will the shares be consider as gifts to kids?

2. Since there is rental income, do they need to fill income tax?

I understand realty trust is not living trust. But most of our assets are in this rental property.

BTW, The kids will be beneficairies when the trust is set up at closing. We will buy the house in cash, If each of them gets 20%, that will be more than $30K. That's why I wonder about the gift tax.

you REALLY need an attorney.

In Pennsylvania, the courts would appoint a guardian for the kids if you want to encumber, sell, or anything else significant with this property. they also would want to see that 20% going to your kids and not into a general pool.

Minors owning real estate is generally a very bad idea for "regular" people.

You need to consult with an attorney because children have legal limits on becoming beneficiaries until they become of age. You may need to re-think your way of holding title and giving ownership to your children before you:

1) set up your retirement

2) set up your children's education

3) then after those two are fully funded, think about giving away to your kids ownership in properties.

Remember your family trust can retain ownership even after you and your spouse dies, and the proceeds each month go to your children. This way your children's spouse won't get ownership of your property, or their new spouses if they get remarried after your children die -- it could provide an income for

Our goal is to make sure our kids own the property if both of us die. I saw many posts here talking about passing assets to kids through trust. How does that happen? Can kids be beneficiaries of a living trust?

You do a transfer on death and the title will go into the children's names bypassing probate.

www.nolo.com/legal-encyclopedia/avoid-probate-transfer-on-death-accounts-29544.html

Still confused.

Robert J [CA]: What do you mean "Right now you and your husband are the executors or the trust". It seems that realty trust only has trustee and beneficiaries. What's executor?

Cathy, are you sure that you really want to act on the advice of a bunch of strangers or as my DW refers to them potential axe murders found on the internet? IMO deciding the best way for you & your DH to purchase / own / manage any asset requires much more specific information than any prudent individual should share on an open forum such as this.

That being said the Mr LL family is a good place to get some general information regarding what other LLs have done to obtain, manage and pass along their wealth. In addition to getting generic input from the LLS on this site you should be using them especially MA LLs to help you find a lawyer as well as an accountant who can work together to protect your assets & determine the best way for you & your DH to acquire more assets, manage the existing assets, protect the assets from excessive / unnecessary taxes, etc.

One thing that my DW & I did was set up Roth IRAs for our kids while they were preteens. In our particular case these allowed us to pass along a good deal of money to our kids without any real tax implications for us or more importantly for our kids. Now that they are in their late 20's / 30's they have a substantial amount of tax free money which could be used for further education, certain housing options or what we hope will be a nice liquid asset for their eventual retirement.

I will ask the attorney who will set up the trust for us about the kids. But I do want to get some ideas from other investors who have such experience. I found many of you adding kids names to the deed. So it seems that my kids can be beneficiaries.