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Marty Roos Talks Trusts & Estates with SABJ

As seen in the San Antonio Business Journal.

Marty Roos, partner at Strasburger & Price LLP and leader of the firm’s San Antonio office – discussed the importance of trusts and estates during the 2018 South Texas Law Review Roundtable. Below are selected insights from Marty’s interview.

Q:  Are there any recent legal developments that make it advisable for clients to review their estate plan?

A:  Yes, in January of this year, Congress passed a new tax law that brought many changes to the income and estate tax area. The new law remains in effect until 2025, at which time there is a sunset provision. The most significant change in the estate planning area is the increase in the exemption from the federal estate tax from $5.5 million to $11.2 million per person.

So, for most of the country, the estate tax has in effect been eliminated. The estate tax is often discussed in the media by politicians, but it affects less than 1% of our country, but at 40%, it’s the highest individual tax that we have. With this change in the law, people should review their estate planning documents to determine if the format under their current documents still works under the new law. If planned properly, a married couple can shield up to $22.4 million from the federal estate tax. To do so, the wills (or revocable trust) need to include a bypass or credit shelter trusts.

Additionally, many clients with the financial means are considering making gifts, whether outright or on generationskipping trusts, for the next generation. Gifting today with the increased exemption can be an effective tool for getting potentially appreciable assets out of one’s estate. Gifts may include cash or other liquid assets, real estate, business interest, etc.

Q:  Is there any advantage to using revocable trust format versus a will from an estate planning and probate perspective.

A:  I always talk to clients about this point because the revocable trust is merely a tool for avoiding probate. If a person moves assets into a revocable trust during his or her life, then at the person’s death, the assets in the trust do not go through probate. Sometimes, understanding probate and the probate process will better guide a person’s decision.

We are fortunate in Texas because unlike other states like California and New York where probate is costly, Texas is one of the easiest state, if not the easiest state, and least expensive state, to probate in. Word of caution though is that many clients create the revocable trust and then do not completely find the trust so that at the person’s death, the estate still must go through probate.

So, is there an advantage of using a trust over a will format? Other than potentially saving on probate cost, there is no advantage from either the perspective of asset protection or any greater estate savings.  One misconception is that a revocable trust will protect your assets from potential creditor claims. That would be too easy.

I probably use the trust over a will in three situations:

  • One, if somebody is concerned about privacy. A will, unlike a revocable trust, is a public document.
  • Second reason I like to use a trust over a will is when somebody has out of state real property. In that situation, we will create the revocable trust and fund the trust with the out of state real property to avoid probate in multiple states.
  • Third and probably the most important reason is for future incapacitation. If a person has been diagnosed for instance with early stage of dementia, we would recommend creating a revocable trust now so that it will be much easier to handle the person’s affairs when the time comes.

Q:  How often would you recommend that a client have their estate plan, will or trust revisited?

A:  A person should review his or her estate planning documents every couple of years. The review is helpful to determine if you still have the right people named in your documents, not only as to the beneficiaries, but also as to their decisionmakers, both during periods of incapacitation as well as at death. For couples with young children, this should also include who would be guardians for their minor children – probably the most important decision for a married couple.

To read the full article, click here.