Federal Rules for Testamentary Trusts

Do your estate plans include trusts in your existing will(s) or gifts to registered charities? New rules that came into effect on January 2, 2016 may force you to re-think your plan.

Under the new rules, there is now a Graduated Rate Estate (GRE), which is actually a testamentary trust that must be established no more than 36 months after death. If your will has other testamentary trusts within it, these trusts will be treated as a flat rate trust for tax purposes – meaning that the graduated tax rates that were previously used to tax any income in the trust are no longer available.

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This should not be construed to be legal or tax advice, as each client’s situation is different. Please consult your own legal and tax advisor.