January 2013

 

Ask a trust officer:

Old estate plans

 

DEAR TRUST OFFICER:  

 

My husband and I executed our estate plans when our assets were about $3 million, and now they might be double that. Do we need to keep the trusts we set up in our wills?   I think there is no chance our combined estate will ever be worth more than the $10.5 million that is exempt from the federal estate tax this year.

—LOOKING TO SIMPLIFY

 

DEAR LOOKING:

 

The fact that your family has dodged the estate tax bullet is great news.  The estate tax changes in January upped the ante for the wealthiest families, with an increase in the tax rate to 40%, while it exempted the majority of families, even very successful ones, from all federal estate tax worries.

 

Of course, estate planning is about much more than taxes, even though, admittedly, taxes were the “hot button” that motivated many to action.  Estate planning is equally about asset protection, investment management and financial protection for heirs, typically in several generations.

 

For that reason, the early thinking of estate planners has been to preserve existing trust plans for their benefits beyond estate tax savings.

 

What’s more, if you live in or have property in one of the minority of states that “decoupled” from the federal approach to estate taxation, you could have state death taxes to contend with. See your estate planning advisors to learn more, but our bias would be: Don’t be too hasty to abandon your earlier plans.

 

Do you have a question concerning wealth management or trusts? Send your inquiry to tormey@pgbank.com.

 

(February 2013)

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