Alimony Substitution Trust
Categories: Tax, Trusts and Estates
This situation might come up if you're rich and you get divorced (we're looking at you, Ben Affleck). Instead of writing a check to your ex every month like a dirty peasant, you set up a trust with enough income-producing stuff (bonds, property, high-dividend stocks, Justice League residuals, etc.) to pay the agreed upon alimony payments. The money comes out of the trust rather than out of your bank account.
There are tax advantages to this system: since the payments come out of income generated by the assets, then (theoretically anyway) you are capturing tax-free the gains of the investment, and the dividends it pays, rather than having the costs come directly out of a cash-only bank account, which doesn't go up all that much over time. Hopefully, you can stay sort of as rich as you were before, despite the divorce, and don't have to start begging Kevin Smith for guest roles.
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finance a la shmoop. what is a partnership? a marriage. joint ownership
of a bar. when two dudes put up half the dough each to share 50/50 in a time [two different people offer money for keys]
machine. well a partnership is just the merging
of two individuals in doing a given business deal or setting up a business
structure. if both are owners then both are liable for you know bad things
should they happen. partnerships carry a lot of financial danger if one partner
goes off the rails and decides to commit fraud in the name of the company or that
evil partner enters into a stupid company bankrupting contract, well then [bad contract sold to unsuspecting victim]
both parties pay for it. the innocent partner pays just as much in the form of
whatever financial damages befall the partnership as the evil one, and
partnership liabilities include personal assets if the partnership is structured
like a general partnership with limited partners having no personal liability so [ liability structures defined]
for all the good that a partnership can have it can get bad and ugly so you got
to enter partnerships carefully. spend lots of dough on lawyers before you set
it up so you don't have to after. [money exchanged for partnership contract ]