8/14/2019 2010 Tax Laws May Jeopardize Your Spouse

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I offe r m y c l ie ntscounsel, congratula-tions and caution. Thecounsel part is obvious.Congratulations are inorder because manypeople have to dealwith difficult issues tocreate their estate plan.

Lastly, I caution thatthey will need to revis-it their estate plan ift h e i r l i v e s o r l a w schange.

Well, the law just changed. Dueto congressional inaction, the feder-al estate tax has lapsed. It is sched-uled to reappear in 2011, but may bereinstated retroactively for 2010. Thislegislative limbo should be a wake-up call for married couples witholder estate plans and substantial

assets. If this describes you, youshould review your estate plan tomake sure each spouse is economi-cally protected. Heres why:

Years ago, couples with potentiallytaxable estates often set up a bypass,or credit shelter trust. The husbandand wife each had their own trusts.

Standard language in each trust saidthat the maximum amount that canbe passed tax free would go into acredit shelter trust when the trustordied, with the remainder going out-right to the surviving spouse. In somecases, the survivor would get income,but not principal, from the credit shel-ter. Then, when the survivor died, the

entire credit shelterwould pass to the chil-dren.

Those may have beenappropriate provisionsin the past, but nottoday when there is noestate tax and no cap onwhat can be passed tax

free. If the first spousewere to die now, ALLthe funds in his/her trustwould f low into thecredit shelter trust, leav-

ing the principal beyond the reachof the survivor. The surviving spousewould get nothing, except perhapssome income from the credit shelter.The survivor would end up effec-tively disinherited.

If you have an older estate planthat includes a bypass trust, have

it reviewed by a certifiedelder law/estate planningattorney, who can examineit to ensure the survivings p o u s e i s e c o n o m i c a l l yprotected.

Joseph S. Karp is a nationally certi-fied and Florida Bar-certified elder lawattorney (C.E.L.A.) specializing in thepractice of Trusts, Estates and Elder Law.

His offices are located at 2500Quantum Lakes Drive, Boynton Beach;

2875 PGA Blvd., Palm Beach Gardens;and 1100 SW St. Lucie W. Blvd., PortSt. Lucie.

Call him at561-752-4550 (Boynton);561-625-1100 (Palm Beach Gardens);or 7 7 2 - 3 4 3 - 8 4 1 1 ( P o r t St . L u c i e ) .Toll-free from anywhere: 800-893-9911.E-mail: KLF@Karplaw.com or websitewww.karplaw.com.

Read The Florida Elder Law andEstate Planning Blog atwww.karplaw.blogspot.com.

Joseph S. Karp,C.E.L.A.

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Listen to Joe Karp withAnita Finley on Saturday,

April 10 from 7:00-7:30 AMon WSBR 740AM and on the

Internet at www.wsbrradio.com.

Revisit Your Estate Planto Protect Your Spouse