A Lurking Estate Trap?

I have always preached about the value of keeping your estate current. An article in today's WSJ titled "Is There a Trap Lurking in the Language of Your Will?" just reinforces this.

Apparently many people have language spelled out in their wills that they created a number of years ago which directs the "full amount" of the estate tax exemption (currently $3.5 million today) to go into a bypass or credit shelter trust when the first spouse dies.

May of these wills were created or updated back in 2002 when the exemption was at $1 million. As the exemption has increased, the entitlement left over for the surviving spouse has drastically decreased for those families whose net worth is around $4 million.

By not updating their wills, this generic language that states the "full amount" has left many surviving spouses with little to nothing left over for them. The article goes on to state that the problem is usually far worse for blended families. Children from a different spouse typically don't get along with the surviving spouse. This can lead to some real animosity.

The moral of the story - keep your wills updated and make changes as necessary!