Possible estate tax reforms on the horizon

Rumors of estate tax reform could create new questions for people in Ohio who have already set up an estate plan. Their plans would have been based on current tax laws, and many people create trust structures to control tax exposure to heirs. The potential repeal of estate taxes and generation-skipping taxes presents an opportunity to consider how to update an estate plan should the laws change. Such a proactive analysis could enable someone to quickly rework a plan in the event of tax reforms and limit the amount of time that an obsolete plan is in effect.

Currently, many estate plans are designed around funding exemption trusts so that people avoid some or all estate taxes. A marital trust might hold some assets while others send gifts to multi-generational trusts that benefit spouses, children, grandchildren and great-grandchildren.

If taxes cease to be a factor or exemption limits are raised, then the amount of funds directed into certain trusts might need to change. A redesign could allow for greater tax savings.

Typically, a person consults an attorney and a financial planner when making decisions about an estate plan. Even without changes to tax code, a will or trust might need to be updated if a beneficiary dies, someones gets a divorce or there is a birth in the family. An estate planning attorney could evaluate a client’s assets and suggest how to meet certain goals. To update a will, an attorney would write the document and go over the provisions until the client is satisfied with the terms.