One of the biggest problems with DIY estate planning (where you get a kit, or a program, or a form, and “do it yourself”) is that the stuff you don’t understand can ruin everything.

But then, this happens even with estate planning you get from a lawyer. Sometimes.

Case in point: up until 2011, there was some very complicated language, which was inserted into a lot of living trusts, splitting the trust when the first spouse died. It was a necessity in certain situations, but that language is still hanging around in a lot of older trusts, waiting to jump up and bite someone on the buttocks.

Let me back up. The federal estate tax is still a big deal today, but it used to be even bigger. The tax rate has ranged from a low of 35 percent, up to a high of 55 percent. And it used to apply to even fairly modest estates; 30 years ago you would get hit with the estate tax if you had more than $600,000.

So let’s say that husband and wife are sitting around one evening, and they find out that they are subject to a really high tax rate, but only if they leave assets more than $600,000. They quickly add up all of their assets, including their IRAs, house, life insurance, and investments, and it turns out they are worth $1.1 million.

“I guess we don’t have to worry, then, honey” says the husband, “because I have an exemption of $600,000, and you have an exception of $600,000. That adds up to $1.2 million exempt, which is more than the amount we have. So we’re under the exemption, and therefore we shouldn’t have to pay any estate tax”.

And in a sense, he is right. Unfortunately the next day he has a fatal heart attack, and like most people, he leaves everything to his wife. She now has $1.1 million. As a surviving spouse she will not have to pay any estate tax, but when she dies their children will have to pay a whopping estate tax. She only has a single $600,000 exemption, and she is leaving the children $1.1 million. The estate tax, divided among the children, would be somewhere north of $200,000.

Today that would not be a problem. After the husband died, his wife would have nine months to file a form with the IRS, and she would then be able to carry his estate tax exemption forward throughout her life, and add it to her own exemption when she dies. That way there would be no estate tax, because their exemptions would add up to more than the amount of assets they have. This is called “spousal portability”.

But up until the law was changed in 2011, there was no spousal portability. So how could a couple preserve the exemption of the first spouse to die, so as to double up the estate tax exemption? Well, the usual strategy was something called an A/B Trust.

An A/B Trust was a complicated animal, but boiled down to its basics it was this: when the first spouse died, the trust automatically split into two separate parts, Part A and Part B. and then both parts went to the children (or whoever the intended heirs would be) when the second spouse died.

Part A was sometimes called the Survivor’s Trust. The assets in Part A were totally available to the surviving spouse. She could take money out of that part of the trust, she could spend it anyway she wanted, she had a completely free hand. She could even change the heirs if she wanted to.

But Part B, often called the Decedent’s Trust, was restricted. There were a variety of different ways to restrict it. Sometimes the surviving spouse would have the right to all of the income, and could withdraw up to 5 percent of the principal each year. In other cases there might be a co-trustee who had the discretion to pay out anything he thought appropriate for the surviving spouse’s benefit. It could be handled a number of different ways, but the surviving spouse could not just do whatever she wanted with that money. She could not take out large lump sums, and she could not change the beneficiaries for that part of the trust. She had limits.

Typically, those restrictions were not really what people wanted. While there were, and still are today, some couples who want to restrict what the surviving spouse can do (particularly in blended families), most couples would prefer to allow the surviving spouse to have a free hand with all of the assets. But putting some restrictions on Part B was necessary, back in the days before spousal portability.

“Alright, Kirk,” you might say, “I’m ahead of you on this one. I’ve been doing my homework, and I happen to know that last December, they increased the estate tax exemption, so that I don’t have to pay estate tax at all unless my estate is worth more than $11 million. And since I am nowhere near that princely sum, none of this applies to me. And besides, like you said earlier, they did pass that spousal portability law, so if we ever do accumulate more than $11 million, we can double up the exemption without using one of those A/B Trusts”.

And all of that is true, for the vast majority of people.

But.

A lot of people have living trusts that were created before 2011. And a lot of those folks were over the estate tax exempt amount at the time the trust was created. And they may have language in the trust which automatically splits the estate when the first spouse dies. And it doesn’t matter whether they actually need those Part B restrictions, because they now have those restrictions (the moment the first spouse dies) whether they still want it or not.

The problem is, people often do not recognize what the language of the trust does. A/B Trusts were not written for ordinary people to be able to read and understand. They were written to satisfy specific provisions of the Internal Revenue Code.

So, if you have a trust which was drafted before 2011, you need to have it checked out by somebody who knows how to interpret these trusts, so you don’t end up with a restriction you don’t want.

But that wasn’t quite my original point. People get these DIY estate planning programs, and they fill in the basic information such as who should be the trustee, and who should get the money when they are gone. But the program then spits out a document which includes a whole lot of complicated legalese. They look at the boilerplate, can’t understand what it means, shrug, and say “I don’t know what that part says, but the parts I do understand seem to do what I want”.

But it’s the parts you don’t understand that can hurt you.

Kenneth Kirk is an Anchorage estate planning lawyer. Nothing in this article should be taken as legal advice for a specific situation; for specific advice you should consult a professional who can take all the facts into account. We go to school for this stuff.