submitted by Richard P. Wilson, Esquire, firstname.lastname@example.org
If you did estate tax planning in the past, you may discover that the trusts that were created for husband and wife are no longer needed. Simply because the exempt amount for federal estate tax purposes rose from $600,000 in 1986 to $11.2 million dollars per person in 2018. Thus, today, a husband and wife can potentially pass to their children more than $22 million without paying any federal estate tax.
While there still remains a Pennsylvania inheritance tax to consider, there is no state inheritance tax assessed on transfers between husband and wife and there is only a 4 1/2% tax on assets that pass to children. In the past, separate trusts were created for husband and wife so that the maximum amount would past tax-free to their children.
The tax saving trusts are no longer needed and can be revoked, depending upon circumstances.
*If there was a trust created under a will it can be revoked by a new will; and
*If it is a living trust, you can revoke it by terminating the trust and transferring out the assets. However, if the trust has now become irrevocable and the grantor (maker) has died, the trust now becomes irrevocable. An irrevocable trust can be terminated by consent of the maker and the beneficiaries, and if the maker is deceased, termination may require court approval.
Another type of trust is now important today because of the reality of the costs of nursing home care.
Nursing home care can cost $12,000 or more a month. However, there is a way to protect assets with an irrevocable trust provided that the trust is created more than five years before nursing home care is needed.
There is a five-year look back on transfers to such a trust. An irrevocable trust can protect assets and is much less expensive than long term care insurance.
The time is now for you to review your estate plan to see if it is useful, considering today’s realities.
Don’t hesitate, act today!