I recently reviewed a trust that was written in the 1990s and was the controlling document of an estate for a client whose spouse had just passed away this year.
The problem was being written in the 90s, the trust used a technique where all the amount included in the estate tax exemption went to the family trust and any amount in excess of the exemption went to the spouse.
The problem is that the estate was worth about a million dollars and as a result the entire estate went into the family trust leaving the spouse with nothing. The result: A very unhappy surviving spouse.
Mind you, this was a perfectly good planning technique in the 1990s when the estate tax exemption was in the $600,000 range and the couple had an estate that exceeded that amount. Today however, with the estate tax exemption at $5.45 million and climbing with inflation, the technique can cause a lot of headache and heartache.
Your trust and estate planning documents need to be reviewed at least every five years, and more frequently in the case of a substantial life change such as a divorce, death, birth of a child, or remarriage, to make sure they still meet your needs and life situation. They also need to be reviewed at least every five years as well for addressing changes in the law since they were last completed.