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How does the current Estate Tax law effect individuals and couples who do not have a Living Trust?

Unmarried Individuals.  The need for an unmarried client to prepare a Living Trust is unchanged.  The primary motivation for such a client to prepare a Living Trust—Probate Avoidance and Planning for Incapacity—remain unchanged by the new Estate Tax Law.

Married Couples.  The same applies for married clients.  Simply put, Probate Avoidance and Incapacity Planning have been and will remain the primary focus of a Living Trust.  The only change is that a some married clients may be advised to prepare a Living Trust described as “An ‘A’ Trust with an Optional ‘B’ Trust”.  Unlike a traditional ‘AB’ trust which requires the community assets to be divided upon the death of the first spouse, this type of trust (technically a Disclaimer Trust) allows the decision whether to divide the estate to be made by the surviving spouse, within nine months of the death of the first to die, based on the situation and tax law in effect at that time.  Of course, there are many occasions where a traditional “AB” Trust will still be used, such as blended families, second marriages, separate property estates, etc.

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Kenneth S. Jacobs                          
Attorney at Law
Certified Specialist
Estate Planning, Trust & Probate Law
State Bar of California Board of Legal Specialization
117 N. Main Street.  Sebastopol, CA 95472
(707) 829-7303