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Feb 1, 2012 12:00 PM
Expect the Unexpected
Expanding the boundaries of traditional estate-planning documents
When attorneys draft trust documents, it's important to include maximum flexibility mechanisms to better respond to future tax, societal and beneficiary changes. Despite our clients' and our belief in crystal ball prognosis, these situations really are unforeseeable.
The current instability of the transfer tax system (gift, estate and generation-skipping transfer (GST) taxes) has wreaked havoc on traditional estate-planning practices. In the past, estate-planning documents could be constructed based on an established tax regime, in which we could anticipate future changes (through formulas) and proceed in an orderly manner. That's no longer the case. Gift and estate taxes weren't unified for five years before they were reunified starting in 2011. Also, exemptions were increased in 2011 and will potentially be decreased in 2013, and state estate and inheritance tax laws are across the board in application and not necessarily tied to federal estate tax rates. A new approach to estate planning is necessary to combat the instability of the transfer tax regime. That approach should also take into account the difficulty of predicting future cultural and beneficiary objectives. The same flexibility that's required for tax planning needs to be built into beneficiary (trust) planning.
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Topics of Interest
| Estate Tax | Donor Advised Funds |
| GSTs | Family Offices |
| Private Foundations | Life Insurance |
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Topics of Interest
| Estate Tax | Donor Advised Funds |
| GSTs | Family Offices |
| Private Foundations | Life Insurance |
| 2010 Tax Act News | Industry Trends Surveys |
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