The Trust and Estate group at Nisen & Elliott, LLC is currently in the process of revising the estate planning documents for several of our clients in order to minimize exposure to potential capital gains taxes following the death of the second to die. Under most existing documents at the first death a Family Trust is funded first, up to the current estate tax exemption of $5,430,000. The original purpose was to exclude this trust from the estate of the second to die. The combined exemption of $10,860,000 exceeds the typical total value of assets for most couples. By excluding the Family Trust from the second estate, the assets in the Family Trust do not receive a step up in basis at the second death. If the original survivor lives five years after the first death and the assets grow by twenty percent, the potential capital gains tax for the end takers could well be in excess of $100,000. The greater the growth, the greater the tax exposure. The new forms developed by the Trust and Estate Group, including Paul F. Gerbosi, John F. Lesch, Mark F. Zaenger, Helen M. Jensen, and Maureen E. Ryan minimize or eliminate this tax exposure.
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