On October 2, 2013

In 2012, changes in rules regarding federal estate taxes sent Littleton families who were well-to-do rushing to save their heirs from outrageous estate taxes. It turned out that by the middle of 2013, however, their estate planning worries were unfounded. This meant that many might want to wind down the trust they had just set up the year before, and that could be just as expensive and complicated as setting a trust up in the first place.

The exemption threshold for federal estate taxes had been expected to drop from over $5 million to $1 million at the beginning of 2013, but the fiscal-cliff compromise set that threshold at $5.25 million or $10.5 million for a couple. That amount would also be adjusted every year for inflation. This led to families with assets between $1 million and $5 million wanting to change or fully dissolve the tax trusts they had created when it looked like the threshold was going to affect their money.

Experts said that getting rid of an AB trust, which was one of the more popular options for people looking to shield their wealth from estate taxes, was relatively straightforward and uncomplicated. Other trusts, however, such as those designed to contain other assets like houses or shares in a family business, were seen as requiring greater attention to legal details.

The services of an attorney may be of help to families in Littleton, Colorado, who want to work with an estate planning document. An attorney may be able to help guide clients through the process of creating a trust, making a living will and pursuing other legal strategies to ensure asset distribution is executed according to clients’ wishes.

Source: Market Watch, “How to escape an estate-planning trust“, Matthew Heimer, September 23, 2013

Categories: Estate Planning

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