Trusts Estates

Trusts and estate law regulates the planning and administration of a person's assets and personal affairs in preparation for and at the time of his or her death or disability. State trusts and estate law governs the creation and administration of trusts and wills, as well as the intestacy process. Most states' trusts and estate law also impose a death tax upon estates of a certain size. Because of a $3,500,000 unified estate tax credit set forth in I.R.C. § 2010 for 2009, most estates are currently not subject to federal estate tax. The future of the federal estate tax is in flux. The Economic Growth and Tax Relief Reconciliation Act of 2001 contained a sunset provision stating that the estate tax was to be repealed in 2010 and then returned to its 2001 levels in 2011. It is doubtful that those provisions affecting trusts and estate law will remain unchanged.

Trusts form the heart of most estate plans and trusts and estate law. Living trusts allow grantors to place their assets into a trust while they are living. The grantor usually becomes the trustee and is name the beneficiary of the living trust. At the time of the grantor's death, the assets do not pass through the probate process, but transfer according to the rules of the trust. Most living trusts are revocable. Some living trusts, such as AB trusts, structure marital assets so that less estate tax will be due upon the death of each spouse. Irrevocable trusts, such as life insurance trusts, exclude certain assets from the grantor's taxable estate. Testamentary trusts are created by a will and are most often used to administer assets for the benefit of a minor or disabled person.