We are married and have no kids.
We already have a Trust.
Does it need revision due to the new 2001 Tax Law?
If you have a Trust using a formula which refers to the maximum tax free amount, it
may need to be reviewed.
If you are married, in a first marriage with no kids, you are probably OK. The typical
Trust for a married couple is an A-B-C Trust (more properly called a Survivor's Trust;
Bypass Trust; and QTIP Trust) where the Survivor gets life use of all of the funds and
then what remains at her death is divided among specified people, by percentages or
in equal shares. Although there is a formula clause to make an allocation between the
B and C Trusts, for most couples the Trust does not need to be changed.
- Occasionally clients will want to leave the taxable portion to charity, so the IRS
gets NOTHING, ha ha ha!
- If the couple is worth $2,000,000, under the new law, charity will
get nothing because the taxable portion is nothing (because
$2,000,000 is tax free in January, 2002). IF that is what the clients
want, great, the Trust does not need change.
- Alternatively, if the clients are truly charitable, the Trust needs to be
changed.