Federal laws prompt estate plan changes

On Behalf of | May 10, 2016 | Estate Planning

Due to some changes in federal estate tax laws, Nevada residents and others across the nation have been left wondering whether they should change their estate plan. Determining whether or not to make a change to a trust, for example, depends on when the current trust was created and the individual circumstances of the grantor.

In 2016, the federal estate tax exemption stands at $5.45 million per individual. The law allows a spouse to use his or her deceased’s spouse unused exemption. Therefore, the surviving spouse would not owe any estate taxes as long as the estate is valued at less than $10.9 million in 2016. Prior to this point, many individuals used a bypass trust and possibly a survivor’s trust. However, with the changes, many people may be able to rely on the portability feature to simplify their estate plan.

By having just one trust, the grantor may enjoy a number of benefits. These include not being required to file an additional income tax return that would otherwise be necessary with a bypass trust. However, different trust structures provide different benefits and protections. For example, some trusts help protect trust assets from the beneficiary’s creditors. Therefore, it is important to fully evaluate the potential ramifications of changing a trust before completing this process.

Estate taxes have often been an important consideration in estate planning, but the fact is that with the exemption as high as it is, most people now longer have to worry about it. An attorney can review a client’s existing plans to see what changes should be made in that regard.