Something very important and exciting in the estate planning world happened in 2013, and that was the advent of portability. Portability simply means that between a married couple, when the first spouse dies, any unused exemption amount from that first spouse can be ported over to the surviving spouse. For trusts that were drafted prior to 2013, when portability did not exist, they were typically drafted in a way so that exemption amount was fully used up for the first to die. The way those trusts were drafted prior to 2013 was fine, but in today’s environment where we have portability, you may be left with some adverse income tax consequences that you’re not expecting. The other downside to many trusts that were drafted prior to 2013 is that they didn’t allow for a lot of flexibility for the other surviving spouse. I highly recommend that if you have one of these trust, drafted prior to 2013, that you talk to a lawyer about it, have it reviewed, and just see if it makes any sense to have some updating done.
