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Ways to Ensure That Your Estate Plan Is Flexible Enough to Handle Coming Change


There is no question that a crossroads is approaching estate planning, and you should start preparing for it now. In addition to the high probability of change coming to federal estate and gift taxes, whereby the exemption could be significantly reduced in the future, there are a number of other changes coming such that you want to have a flexible estate plan in place that is capable of adapting before you can get around to revising the plan again.

Eliminate Formula Clauses

If a formula clause has been used in your will to split property between the estate and a trust (also known as a bypass or credit shelter trust) in order to take advantage of a lower, outdated lifetime estate and gift tax credit, under today’s formula, the entire estate would go to the trust and your surviving spouse would experience difficulty directly inheriting. As a result, any formula clauses need to either be eliminated or revised.

How & When To Transfer Assets

Florida does not collect inheritance tax or place a tax on the estate, however, Florida residents may have to pay inheritance tax when they inherit property. In addition, some still may be interested in using lifetime gifts to transfer wealth as an alternative to inheritance. Make sure that you discuss which assets should be transferred now and how to do so with your estate planning attorney; i.e. which ones should be done directly or through trusts, and/or whether you should use an instrument that allows you to retain some income or returns in this capacity, such as GRATs.

Power of Appointment

Power of appointment allows the creator to add a beneficiary at a later time even if they weren’t originally listed as a beneficiary. It can also save on taxes in the future if the exemption amount is reduced.

Trustees & Trust Protectors

Providing a trustee or a group of trustees with some discretion to determine how to structure distributions in order to minimize taxes in the future is another way to build in flexibility in order to address whatever changes may come. Another option is to name a trust protector who can then monitor and change key provisions of the trust – as well as replace the trustee – if necessary.

Decanting A Trust

Decanting a trust is another good idea. This essentially involves trust assets being shifted to a new trust – for example, from an irrevocable trust – if circumstances change. There have been a number of recent changes to Florida’s decanting statute such that the revised law grants decanting powers to an “authorized trustee” (other than a beneficiary or settlor) with the power to invade trust principal. Therefore, the trustee can modify the trust or appoint another trustee who can decant as long as they are not beneficiaries, and the scope of the changes they can make depends upon their power to invade principal.

If You Have Any Questions or Concerns About Your Estate Plan, Contact Our Florida Estate Planning Attorneys

For advice regarding how to ensure that your estate plan is flexible enough to account for coming changes, contact Gierach and Gierach, P.A. for a no-cost consultation and allow our Orlando estate planning lawyers to help provide you with the security you need.






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