The new estate tax laws have had many in New Jersey and across the country taking a closer look at their estate plans. Anyone who included a trust as part of their estate planning documents may want to review it now, particularly if it is designed to minimize or avoid estate taxes. In some cases, the new laws render some trusts unnecessary. However, it is still helpful in certain circumstances to keep a trust.
One popular trust, known as the credit shelter trust, is designed to protect spouses from estate taxes. Couples who have such a trust and possess under $10.5 million in assets may no longer need it because they are now exempt from paying a federal estate tax. Instead, having a will in addition to naming beneficiaries on financial accounts may be sufficient enough. Another type of trust that may require further scrutiny is a transfer trust designed to pass assets to children or grandchildren. The wording on this type of trust may need to be amended.
Keeping a trust when it is not really needed may result in added paperwork and expenses. However, just because some trusts require a second look, that does not mean that all of them need to be amended or undone. Trusts are still useful in many situations, such as when children have disabilities or special needs, or when passing down assets to children from a previous marriage.
New Jersey residents who included a trust in their estate planning may find it beneficial to go over their documents now in order to determine if any changes need to be made. In some cases, it may be a relatively quick fix. Updating an estate plan to work with the new estate tax laws may save a lot of time, hassle and money down the road.
Source: Palm Beach Daily News, "New tax laws may make trusts unnecessary," Gail Liberman, Feb. 3, 2013