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Changes in estate tax could require review of estate plans

Since the passage of the American Taxpayer Relief Act of 2012 (ATRA), many Texas residents may need to review their estate plans. The increase in the estate tax exemption may necessitate changes in an estate plan in order to ensure that a person's assets are handled in the manner in which they intend. This could be especially important for people that want to make sure their spouses have access to assets outside of a family trust.

Spouses are able to inherit unlimited assets under ATRA. Non-spouses, such as a trust or other parties, may now inherit up to $5,250,000 from an individual or $10,500,000 from a married couple. For the majority of people in Texas, this would more than cover their entire estate.

Before ATRA was passed, many estate plans called for assets up to "the maximum amount excluded from estate taxes" to be placed into the family trust. For many families, this language would now cause 100 percent of a person's assets to be put into the family trust. This could leave the surviving spouse without anything outside of the trust.

Now that the majority of people in Texas no longer have to worry about their loved ones being subjected to the payment of estate tax, a review of estate planning documents may be beneficial. An estate plan that was previously designed in order to avoid estate tax could now be restructured. It may no longer be necessary to have certain trusts that were previously in place. Family members and friends may directly inherit assets if the person making the estate plan so desires, so long as the total amount of those assets do not exceed the exemption.

Source: al.com, Tax law changes drive need to review estate planning (Stewart Welch), Stewart Welch, Oct. 10, 2013

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