The Bypass Trust Still Has a Role

January 6, 2014. I intended the recent string of musings regarding basis management to highlight the need of estate planners, in the aftermath of portability, to be income tax planners. Accented as well was the role the traditional bypass trust can still play in the planning process; portability is not a cure-all even though there is a casual inclination to believe that the benefits of a bypass trust do not present themselves unless a couple starts closing in on $10 million in assets. Which is not true. Here are a couple of things to consider. The bypass trust still offers creditor protection for the surviving spouse; simply electing portability does not. Portability, on its own, also does not take into account a spouse remarrying and the effect that might have on the remaining children’s inheritance and support. More devastating still is that while the estate/gift tax exclusion is portable, the generation skipping transfer tax exclusion is not. Relying on portability puts a family at a severe disadvantage if multi-generational planning is expected. Lastly, the future brings uncertainty, and postponing significant pieces of planning exposes us to more risk since it is hard to guarantee future planning or administrative steps will be taken. Furthermore, we can’t guarantee the exemption will always be as generous as it is now. In the near future? Sure. In the intermediate to distant? Only maybe. Visit Goosmann Trust Law Counsel's website, email info@goosmannlaw.com or call 712.226.4000 to learn more.