It still isn’t clear whether Trump plans to follow through on one of his [empty] campaign promises of eliminating the estate tax. The estate tax was actually repealed for one year in 2010 and then
reinstated in 2011. In 2009, the Federal estate tax exemption was $3.5 million and then in 2009, that amount was $1 million. Needless to say, those couple of years presented a very unique and uncertain time for clients and estate planning attorneys. And now today the exemption amount is at a high of $5.49 million. If the estate tax is repealed, do those of you with assets over $5.49 million still even need a Trust?
Trusts serve many purposes other than sheltering assets from the estate tax. One of the primary reasons for Trusts is keeping assets out of probate. Trusts also allow you to direct how assets are to be managed and distributed thus, giving you the ability to control from the grave. Also, a properly drafted Trust can help protect beneficiaries from their creditors such as a lawsuit or divorce. Another reason why Trusts are helpful is that it provides protection if you become incapacitated. (Yes, Trusts are not just for when you die. In your Revocable Living Trust, the Trustee is directed to manage your Trust assets during your incapacity for your benefit without the need to go to court and get a conservatorship.) These are just a few non-tax reasons why Trusts are useful.
So even if you may be among the few wealthiest Americans who anticipate Federal estate tax liability after your deaths, Trusts still serve many other purposes. That being said, not everyone absolutely needs a Trust – everyone’s situation is unique, but what everyone does need is a comprehensive estate plan that includes a Will, Durable Power of Attorney, and Living Will and Patient Advocate Designation – whether a Trust should be part of your estate plan depends on many factors and I can help you assess your need for a Trust in Michigan.
Contact me if you have any questions and need help navigating these questions.