Estate Planning, Probate & Elder Law Attorneys

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» Property Schedules in Trusts

Here's a question I get a fair amount: "Should we list all of our property on a schedule attached to our living trusts?" I see trusts (usually older ones) with schedules attached, but my answer is typically "no." Property changes -- we buy a new house, switch our investment accounts from one custodian to another, and change our life insurance policies. To my mind, the schedule can raise confusion -- why does it list Schwab account #12345678 when no records for this account can be found?

A better solution is to make a list of your property, including how it's titled (or who the beneficiaries are), and put that list with your original estate planning documents. And make sure to update it every year or so.

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» 5 Things You Need to Know About the Estate Tax in 2010: #5 (2011 and on)

So where do we go from here? It's hard to know. If we're going to think in terms of what might happen, then we have to consider the following three possibilities:

#1: No action by Congress (no federal estate tax in 2010, but federal estate tax automatically comes back with a $1 million exemption in 2011 and thereafter);

#2: Prospective action by Congress (federal estate tax re-enacted for 2011 and thereafter -- and maybe for the rest of 2010 as well); and

#3: Retroactive action by Congress (so federal estate tax applies in all cases, even for 2010 -- obviously there's the retroactivity problem here).

If I had to guess, I'd say that #2 seems like the best possibility (maybe I should, but I'm not even including total repeal as a possibility). But even if that's the case, we have no idea what the re-enacted federal estate tax will look like. Will the exemption amount be $3.5 million? Or higher? Or lower?

The big question is, should any of this cause you to take action with respect to your documents right now? And my answer -- which I hate to give -- is, "I don't know." In a perfect world, you wait a month or so, we get some clarity on the estate tax, and then you have your documents updated. But what if that clarity doesn't come in a month or so (or ever)? Or what if you die during this period of uncertainty? Ultimately, I think everyone has to make the call on their own, depending on their situation and risk tolerance. The shameful part is that the very rich can afford to change their documents now, and then change them again and again. Can anyone else afford to do that?

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Let the battle begin.