Revocable Trusts Remain A Great Option Under New Tax Law

    As many Americans work to prepare and file their 2018 income taxes, the changes made to the tax code by the Tax Cuts and Jobs Act passed at the end of 2017 are finally becoming crystallized and individualized.  In addition to significant changes to income tax law, the Tax Cuts and Jobs Act also changed the taxation of estates and trusts for individuals who died in 2018 or later.  Contrary to popular opinion, however, revocable trusts (also called living trusts and family trusts) are just as useful to individuals and families under the new tax law, and should be seriously considered by anyone wishing to put together a wise and complete estate plan.

   With regard to the taxation of estates and trusts, the most significant change brought on by the Tax Cuts and Jobs Act was the increase in the minimum taxable size of an individual’s estate from $5 million to $11 million. For the few who are affected by this big-to-enormous change, this is a major opportunity to save tax money, especially for married taxpayers who can effectively double this minimum to $22 million before any estate/inheritance tax is due.  What the change is not, however, is a reason to rely on a standard will to transfer assets at death, as doing so continues to be problematic for two primary reasons other than taxes.

   The first reason why a revocable trust is far superior to a will in planning one’s estate is that a pro ...