Changes in Laws 

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Many people did estate planning when the federal transfer tax law (gift and estate tax laws) were remarkedly different. When the estate tax exemption equivalent was a relatively small amount, it was normal to plan for and include a compulsory exemption equivalent trust (often called a Family Trust) for a surviving spouse, with all amounts above the exemption equivalent amount put into a Marital Trust for the surviving spouse.

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As the exemption for estate taxes increased it became far more advantageous to not use the compulsory Family Trust, and instead to allocate more or all assets to a Marital Trust. By doing that, the need for the hassle and expense of trust administration to set up and fund a Family Trust by re-titling assets could be avoided.

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As a further benefit, assets in a qualified Marital Trust would receive the advantages of a full step-up in basis for income tax purposes upon the death of the surviving spouse. Assets in the Family Trust do not receive a step-up in basis upon death of the surviving spouse. The income tax benefit of a full step-up in basis upon the death of the last spouse to die can often be very helpful to those who inherit after both spouses die.

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For people who choose to leave assets in asset protection trusts for beneficiaries in the next generation, the increased amount of the GSST exemption dictated changes in the estate dispositive documents. Older dispositive documents often included a second Marital Trust for a surviving spouse, which was designed as a QTIP trust for which the successor Trustee could make what was called a reverse QTIP election in order to not waste any of the GSST exemption of the spouse that was first to die. The need for such second QTIP Marital Trust was obviated by the unification of the estate tax and the GSST exemptions.

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Just these simple changes in the tax laws illustrate why original dispositive documents should be totally revised.

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Changes in Trustees and Agents

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As years pass many people observe changes in the behavior of and actions in which their designated successor Trustees or their designated agents for Powers of Attorney occur.

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Such changes often prompt people to reconsider and change who they will designate as their successors and as agents to carry out their wishes as expressed in their estate plan.

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Changes in Behavior or Circumstances of Beneficiaries

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As time passes, we are able to observe the development of abilities, habits, and needs of persons we want to inherit from us. An estate plan that provided for distribution to a descendant who had attained age twenty-one but who is now twenty-eight may cause the parent to want to either limit the amount for a descendant, or the manner in which the amount may be used to benefit and protect the descendant.

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Such changes are a normal part of life because when a plan is first made we are unable to clearly see and know the future. A good son or daughter who at age fifteen seemed to be on a good track may have developed habits and behavior that require a parent to want a change in how things will pass for such child. Also, that child may marry or live with someone that poses a potential problem for the descendant you want to benefit, and your descendant may now need certain asset protection features for which you can provide in your dispositive documents as a gift of love for the descendant.

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Many examples of reasons for new estate plans could be given from years of experience and observation, and if you have any concerns about the advisability or need for changes to your own estate plan you may easily schedule a Free Periodic Review Meeting to discuss your issues and seek recommendations.

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Call us today for a consultation.