The Dow Jones Industrial Average has risen approximately 60% since the day President Trump was elected in November 2016 and more than 380% since the Great Recession low on March 9, 2009. While it’s great news for many people, it does raise questions: With people’s wealth rising, what does the increase do to their estate plans, especially the plans of married couples?

Take, for example, a married couple who came to you anytime between 2010 and the 2016 election. The federal estate tax in 2010 was reinstated after a gradual phaseout, but the exemption rose to $5 million (with inflation adjustments after 2011). Most clients and their estate planning attorneys at the time likely gave little thought to the idea that the Dow would rise by so much so quickly.

Before 2010, advisors tackled estate plans with “two share” or two trust plans that absorbed the smaller exempted amounts into one trust upon the death of the first spouse and saved the rest of the assets for another trust to be used upon the death of the second spouse (attorneys applied these strategies for married couples when there was serious concern the federal estate tax exemption could drop back to $1 million—since nothing is really permanent).

The $5 million federal estate tax exclusion changed that, and estate planning attorneys shifted to “joint” plans for many married couple clients. These plans roll all assets into joint trusts or shares, and do not separate the couple’s assets into separate trusts or separate shares before the death of the first spouse. These are much simpler plans for couples to administer and normally produce better income tax basis results for their heirs. If used properly, these joint estate plans can also produce asset protection benefits for couples residing in so-called “tenancy by entirety” states (where the couples both mutually own undivided property).

Let’s say a married couple in their 60s is at or nearing retirement and has a total net worth (including life insurance and retirement plan and IRA benefits) of up to $4 million. This couple might have been ripe for a joint estate plan after 2010, given the $5 million exemption (and inflation).

But now let’s assume the couple executed a joint estate plan the first week of November 2016. A conservative estimate is that this couple’s net worth has risen by 50%, to $6 million. How is this increase in their net worth relevant to the estate plan now?

Some may argue that, since the federal estate tax exemption has risen to $11.58 million, a joint estate plan is still appropriate. But things change. The $11.58 million exemption is scheduled to drop to approximately $6 million in 2026, and that could drop even farther (and earlier) if Donald Trump is not in the White House next year.

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