Are you sitting on a Two-Trust Time Bomb?

Married couples who had estate plans done in the 1990s and 2000s were usually given two trusts. These trust plans, called “credit shelter,” “bypass,” or simply “A-B” trusts, were designed to maximize the individual exemption from the Federal (and in Massachusetts, the State) estate tax.

Now that Congress has raised the estate tax floor for couples to $10.5 million, these trusts are very likely unnecessary for you, and may create serioius problems for a surviving spouse. Bypass trusts are usually funded at the death of the first spouse by a formula that forces the trustee to send the maximum estate tax exemption amount directly to the children, bypassing the spouse except in cases of particular need. That means that on your death, up to $5.25 million may have to be put in trust for your children – even if that leaves your spouse with nothing to live on! Undoing this state of affairs after your death can be difficult – or impossible if all of the beneficiaries do not agree.

Fortunately, solving the problem is easier (and cheaper) if you do it while you are still alive – as with most problems. We can analyze your trust funding language and the existing allocation of assets and give you written recommendations for preventing unnecessary heartache and expense resulting from an out-of-date estate plan.

Call the office now to make an appointment: (603) 554-8464.