Preventing Unintended Consequences, Especially if You Are Remarried

My Dad’s wife recently passed away in June.   Unfortunately they had not followed advice I had given them—namely, getting their 1990 estate plan updated.   It’s a complicated situation, but the end result is that my Dad has lost access to a piece of property that was dear to him, her kids are now in control of what his wife owned and shared with my Dad, and a host of other issues that could’ve been prevented had they met with an estate planning attorney.

Estate planning continually evolves with tax laws, Congressional acts, state laws, relationships and family changes. Estate plans are static. If you have something in writing, it will remain as such until action is taken to amend the document.

One tip I have for you is: you may need or want to amend your A-B Trust. When I began financial planning, the exemption was only $250,000 per spouse. Estate taxes could be as high as 55% on amounts over $250,000.  A-B trusts were designed to minimize estate taxes by combining both spouses’ exemptions to $500,000.   The exemption is currently $5,340,000 per spouse with portability of unused exemptions. A-B trusts can now cost you or your family more in capital gains taxes, in addition to administration costs of additional tax returns.

Estate taxes are not the issue they used to be.

If you have a blended family, other issues arise, as in the case of my Dad.   You may need an A-C (QTIP) Trust.

I encourage you to discuss your current estate plan with your estate planning attorney and listen to their recommendations on what you should do with your existing trust.

If you do not have an estate plan currently, don’t worry– the state where you reside has a plan for you and it may not be what you would’ve intended!  I encourage you to meet with an estate planning attorney and execute a proper estate plan for your situation.

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