If you or if your parents have a trust that was drafted in the 80's or 90's or before, it may pay to take a look at that trust. The trust was likely written with the goal of maximizing the estate tax exemption, thus lowering any potential tax burden on the kids. The rules and the exemption amounts were different then. Each person, not each married couple, as current law, had an estate tax exemption that pretty much operated as a "use it or lose it" benefit. Legal practitioners wrote trusts that attempted to maximize both exemptions for married couples. While it might have maximized the amount passing, it also put those assets out of the reach and control of the surviving spouse: that is how the game worked. You have no right to control the trust left from your deceased spouse only the income it produced and distributed to you by the trustee.
Because the law is now changed: Married couples enjoy "portability" of their exemptions or the ability to share the total (close to $22,000,000.00 exempt from estate tax under the new tax law), old trusts may unnecessarily shackle a surviving spouse with the conditions inherent in old trust tax tools. If, after a quick look at a trust, you see the words "bypass", "marital trust", "family trust", "credit shelter" or even reference to "the maximum allowable amount excludable from taxation as a result of the death of the Settlor (aka Grantor, Maker, Trustor)", those are the "red flag" words, that should lead you to have the trust reviewed by an estate planning attorney.
The old mechanisms we used in the 90's were designed around the then current laws and tax landscape. Those tax regulations have changed and appropriate trust design needs to meet the needs of the Grantors, those writing the trust. No two trusts should ever look exactly the same, because no two family or individual situations are ever identical. Make sure your trust "fits" you and your desires and your wishes.
Because the law is now changed: Married couples enjoy "portability" of their exemptions or the ability to share the total (close to $22,000,000.00 exempt from estate tax under the new tax law), old trusts may unnecessarily shackle a surviving spouse with the conditions inherent in old trust tax tools. If, after a quick look at a trust, you see the words "bypass", "marital trust", "family trust", "credit shelter" or even reference to "the maximum allowable amount excludable from taxation as a result of the death of the Settlor (aka Grantor, Maker, Trustor)", those are the "red flag" words, that should lead you to have the trust reviewed by an estate planning attorney.
The old mechanisms we used in the 90's were designed around the then current laws and tax landscape. Those tax regulations have changed and appropriate trust design needs to meet the needs of the Grantors, those writing the trust. No two trusts should ever look exactly the same, because no two family or individual situations are ever identical. Make sure your trust "fits" you and your desires and your wishes.
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