CALIFORNIA PROBATE CENTER

The Authority for Probate Litigation and Estate Planning in California

Now Is the Right Time to Update That Will or Trust

Posted on | January 31, 2011 | No Comments

​It is essential that everyone be diligent in updating their will or trust when changes occur in their lives. These changes are things such as marriage, divorce, birth or adoption of children, death of a family member or beneficiary, substantial changes in the value of your estate, and probably most importantly when changes in estate taxation have occurred. The list of when it is necessary to see an attorney to update your will or trust goes on and on. Basically, any major change in your life calls for a diligent update of your current will or trust. The most applicable reason currently on this list is the new estate tax laws that the Obama administration just passed in January, 2011.

​During the reign of George W. Bush estate laws were enacted that kept estate transfers worth $3.5 million or less exempt from estate taxation completely. These exemption limits were set to expire in 2011. If this expiration had been allowed to occur, wealthy beneficiaries all over the United States would have been hit by a huge tax burden. The pre George W. Bush estate tax levels were 55% for estates worth $1 million to $10 million and 60% on transfers of estates worth over $10 million. Had congress been unable to agree on a new estate tax law these high estate tax levels would have been reinstated. While it may seem that this only impacts the most wealthy of us, it is actually very easy for an estate to amount to $1 million when all assets are taken into account. Many people would easily reach this amount when real property value, 401K, life insurance policies and the like were accounted for. However, congress and Obama were able to work out a deal just in time. The current law states that estate transfers of $5 million or less for individuals and $10 million for couples will be exempt from all estate taxes. As of 2011, any estate transfers over the allotted $5 million for an individual and $10 million for couples would be taxed at most at 35%. This current agreement is applicable to both estate transfers and gifts, but will expire at the end of 2012. Only time will tell what new tax laws will be agreed upon for 2013.

​What does all of this information mean to you? It means it is time to see your attorney to update your will or trust. Furthermore, if you do not have a will or trust already in place now would be the perfect time to set one up under the current laws. After all the last thing that anyone wants to leave their loved ones is a higher tax burden.

- Authored by Marissa Sirota

Category: Uncategorized

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