Berman & Asbel, LLP

Tax laws may be reason to review estate plans

People in Pennsylvania may want to review their estate plans for two reasons. One is that there have been changes in tax law that may affect certain documents. The other is that estate plans should be reviewed regularly to ensure that they reflect changes in families and assets. This means not just looking over the will but beneficiary designations, powers of attorney and all other components of the estate plan.

As of 2013, spouses have been granted the right to the other spouse's unused federal estate tax exemption, and this means that as of 2016, a married couple may have a total estate tax exemption of $10.9 million. People with a bypass trust or an AB or ABC trust might want to consider simplifying their estate plan. While simplifying these trusts may be a good solution in some situations, there may also be reasons to preserve these trusts. These reasons include protecting the assets from creditors or ensuring that in the case of mental incapacity, the surviving spouse cannot transfer assets.

Another consideration is beneficiary designations. IRAs and qualified plans that have a revocable trust named as a beneficiary may result in a tax burden. Parents may also want to prepare a trust that prevents a child's spouse from receiving their inheritance.

Creating an estate plan can be complex, and by working with an attorney, people may learn that there are many more options and ways of protecting their assets than they had realized. For example, people who may not have considered trusts because they think of them as mainly tools for the wealthy may be surprised at how versatile they can be. An attorney may also be up to date on current tax law and able to suggest strategies to best preserve assets and keep taxes low for beneficiaries.

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