Many of you have seen your estate values cut in half or more while the Federal Estate tax minimum has gone from $2 million to $3.5 million. The feeling is that you do not need to do any estate planning. The problem is that you do not know what the law will be at the time when you pass away. Moreover, the law is even more likely to change by the time the second spouse dies. As an example, we frequently see widows that have outlived their husbands by ten, twenty, or even thirty years. When their husbands passed away the value of his estate was often less than the federal limit at that time of $675,000. The surviving wife ended up with home, investments, and a pension. The pension and social security covered all her living expenses. The home and investments continued to double every seven to nine years depending on the market conditions. The widow continues to hold the investments concerned that she may need the money in the event of a serious illness. More than likely, the state of Maryland will receive 16% of the amount the estate exceeds $1 million dollars or the estate will be devoured by medical expenses.

This scenario could easily repeat itself if assets return to their historic values. Establishing a By-pass trust upon the death of the husband would have protected the couple's moderately valued estate for their children by effectively doubly the estate tax exemption. Long care health insurance provides protection for the expense of nursing care.