Waiting for Estate Tax Repeal: What Do You Tell Your Clients in the Meantime?

The 1988 film “The Boost” is about a guy who loses everything when his business is affected by a change in tax laws. The repeal of the estate tax in 2001 could also affect lawyers who help people with their estate planning, but it’s not clear what will happen yet. Planning techniques that made sense before might still be a good idea, but some things will need to be rethought. It’s all very uncertain right now. The new tax law may make it seem like there’s no reason to give gifts, but it’s still a good idea for some people. If you can afford to give away some of your assets and don’t need them right now, it’s a good idea to consider making a gift. This can help save on taxes and protect your assets. If you’re not sure, it’s best to talk to a financial advisor or lawyer to see if it’s the right decision for you. It’s too early to make a will that deals with two different tax scenarios. The law on estate taxes is still changing, so it’s better to wait and update the will later. For married couples, the way their assets are divided between different trusts could cause problems if the estate tax laws change. To avoid this, the will could be written to create a single trust for the surviving spouse, and then decide later if a separate trust is needed. This gives more flexibility and avoids potential problems with tax laws. If the estate tax laws change, the surviving spouse may have a right to a share of the trust assets, so the will should be careful to follow the law. Trusts are an important part of estate planning, and they offer benefits beyond just saving taxes. For example, trusts can protect assets for your spouse, children, and grandchildren, and can also protect your assets from being mismanaged, exploited, or lost in the event of disability or incapacity. With the potential repeal of the estate tax, it’s important to consider the flexibility of trusts to adapt to changing laws and circumstances. While the future of estate taxes is uncertain, trusts remain a valuable tool for passing on wealth to future generations. Estate planners will need to be prepared to navigate these changes and ensure that their clients’ assets are protected and distributed according to their wishes. The new law increased the estate and generation-skipping tax exemption amounts and decreased the highest marginal rates. The law also suspended the taxes in 2010 and brought them back the next year, retained the federal gift tax, and modified the carryover basis rules. More information can be found in the Law, Explanation and Analysis: Economic Growth and Tax Relief Reconciliation Act of 2001.

Someone who has created a trust can define a triggering event which means that their death may not be a big concern, assuming their assets will be in the trust at that time.

The law has certain rules and regulations for trusts in case of bankruptcy, and for spouse’s rights to an inheritance.

There are specific rules for trusts in Florida, including the valuation of the trust for a spouse’s elective share and the application of trust reformation statutes. Richard R. Gans is a lawyer in Sarasota who specializes in wills, trusts, and estates. He works for a law firm called Fergeson, Skipper, Shaw, Keyser, Baron & Tirabassi, P.A. He is certified by the board in his area of expertise. This column is written for the Real Property, Probate and Trust Law Section. The chair is J. Michael Swaine, and the editors are S. Dresden Brunner and William P. Sklar. The column is about the principles of duty and service to the public, improving the justice system, and advancing the study of law.

Source: https://www.floridabar.org/the-florida-bar-journal/waiting-for-estate-tax-repeal-what-do-you-tell-your-clients-in-the-meantime/