A Trap for the Unwary

A tax trap, that is. If you (1) are married, (2) have a small or moderate-sized estate (under $10 million), and (3) created a trust-based estate plan at any time in the past several decades, chances are that plan could end up costing your children or other beneficiaries a LOT in unnecessary taxes after you die.  Now, this probably does not apply to you if you live in one of a handful of states that imposes a state estate tax with a low exemption amount (CT, DC, ME, MD, MA, MN, NJ, NY, OR, RI, and TN all have exemption amounts for 2013 that are $2 million or less), in which case your planning has probably been designed to minimize those taxes, as well as the Federal estate taxes, and that may save you more in the long run.  But if you live in one of the many states that has no state estate tax (a list of states with an estate tax can be found here), or has an exemption greater than the value of your estate, keep reading to find out why your plan may be in need of a critical update.