There are many different types of trusts which San Diego couples may create as the cornerstone of their estate plan. Prior to 2000 when the exemption for estate taxes was $650,000 many couples had A/B trusts prepared. These were also called Bypass Trusts, Marital Trusts, or Exemption Trusts. These types of trusts call for the initial trust to split into two or more trusts after the death of the first spouse in order to reduce or eliminate the federal estate tax. Today many couples still have this type of trust. Couples with children from prior relationships also may have this type of trust which requires a split or division in trust assets after the first death.
Couples may also have a disclaimer trust which requires the surviving spouse to disclaim assets within nine months of death in order to take advantage of the federal estate tax exemption for couples. There are also so-called option trusts which place a duty on the surviving spouse to value the estate after the first death and only split the trust into sub trusts if necessary to take advantage of the federal estate tax exemption. All of these types of trusts require that after the first death, some steps be taken to comply with California law, preserve the federal estate tax exemption, and change title to assets. This is called trust administration.
If the trust is one which requires a division into two or more sub trusts, the assets in the estate need to be valued as of the date of the first death, then the assets allocated between two or more trusts, and new deeds prepared for real property. If the original trust is not divided at all after the first death or the assets allocated improperly, tax benefits can be lost. Also there may be financial losses to the children of the couple or other beneficiaries. Sometimes in the aftermath of a spouse passing away, these details may understandably be overlooked.
If you need help figuring out what to do after your spouse dies, we can help. The experienced estate planning lawyers at Law Office of Scott C. Soady, A Professional Corporation can review your trust and do whatever trust administration your trust requires. Our initial consultation is complimentary.