What If There Is No Estate Tax? Do I Still Need My Trust?

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There has been talk that President-Elect Donald Trump plans to repeal the federal estate tax.  This leaves many asking whether they should continue on with their estate tax planning, wait to see what happens, or do nothing at all.

Should you spend time and energy on a Trust if there will be no estate tax?  If you already have a Trust, do you still need it?

Trusts are and will continue to be necessary tools in your estate planning with or without an Estate Tax.  Below are 10 things to keep in mind regarding Trusts in this era of uncertainty:

1)      Our Crystal Ball is Broken.  Keep in mind the Republicans have only a slight majority in the Senate, and 60 votes is needed for major changes under the “pay as you go” rules.  As a result, the realm of Estate Tax possibilities includes:

a.       Huge changes – such as Estate Tax repeal, or replacing it with a capital gains tax at death (note that the latter is replacing one problem with another).

b.      Moderate changes – such as a gradual phase-out over 10 years (similar to the Bush tax cuts in 2001); or

c.       No change – any number of domestic or global events could bump the Estate Tax from the priority list.

2)      Asset Protection.  Trusts provide asset protection from potential creditors, divorce, or unwise management and spending.

3)      Personal Protection.  With today’s blended families, arguments over who controls the finances are increasingly common when a parent becomes incapacitated. A trust can help protect you and your wealth from costly squabbles and guardianship proceedings.

4)      Control.  Trusts ensure assets pass to intended beneficiaries, and can, with the use of corporate fiduciaries, ensure your chosen professional wealth management team is in place, and protect your family from out-of-control spending.

5)      Set Parameters and or limits.  Trusts can provide that your assets are only distributed for certain purposes or distributed within certain standards you choose.

6)      Ease and Speed.  A Trust avoids probate administration.  Probate administration can take on average six to nine months and is a process usually requiring court supervision.  Trust administration of an estate can be far quicker.

7)      Privacy.  A trust is generally a private document whereas Wills may become public (it seems as if some celebrity’s will is raked over the coals weekly in the media).

8)      Choice of Law.  Typically the law of a decedent’s domicile at death would govern the probate administration, however, a trust may choose the applicable law and the site of administration.

9)      Flexibility.  Trusts allow for a wide range of flexibility.  Provisions can be included into a trust to allow the Trustee discretion in distributions and investments to name a few.

10)   Special Circumstances.  Special trusts can be established to provide additional care for individuals needing public assistance. An example is a Supplemental Needs Trust for a beneficiary with a contingent disability or needing long-term care.

Trusts are here to stay, so you will want to include them in your comprehensive estate plan.

If you:

·         would like to have your current Trust reviewed;

·         are interested in finding out how a Trust might add value to your estate; or

·         are just unsure how to proceed in these uncertain times…

Contact us at Oakstone Law!

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Oakstone Law
1415 Panther Lane, Suite 439
Naples, Florida 34109
Tel: 239.206.3454