Tuesday, August 17, 2010

Houston Estate Tax Lawyer Reveals Another Issue With Having "No Estate Tax"

By Kim Hegwood, Houston Estate Tax Lawyer

The current environment with no estate tax seems to be causing a bunch of unintended consequences (as if that is a surprise!). Here is another...

A standard estate plan for a married couple, put together by many advisors, uses "A-B" trusts. Upon the death of the first spouse, the single trust is split into the decedent's trust and the survivor's trust. The amount in the decedent's trust is usually equal to the federal estate tax exemption. The remaining assets go to the survivor's trust for the surviving spouse's benefit.

The problem with this setup in 2010 is that a deceased spouse may unintentionally give the surviving spouse nothing. With no federal estate tax, all assets pass to the decedent's trust, leaving nothing for the survivor's trust. The decedent's trust most likely benefits the surviving spouse, but probably has many more restrictions than the survivor's trust.

For example, the surviving spouse may only be an income beneficiary with the remainder going to the children. This setup can also cause a couple to pay more state estate taxes than necessary.

That is why it is important that we schedule a review of your current plan, because even though the estate tax is sure to change, there are so many other aspects of your plan which are affected by our environment. Don't be caught by surprise!  Call me, your neighborhood Houston estate tax lawyer and schedule a free Lifetime Legacy Planning Session so we can give things a look. These sessions are normally $750, but I will waive the fee for the first 10 people that call before August 31st.

I am personally dedicated to the success of your family-- and your state of mind! Can other estate planning lawyers say that?