People in Ohio who created their estate plans with the intention of avoiding estate tax might want to take another look at that plan. At the end of 2017, Congress passed a tax bill that raised the estate tax to more than $22 million for married couples and more than $11 million for individuals. This means that for some people, the best plan might simply be to leave assets to the surviving spouse. However, there still might be reasons that people whose estates fall under the exemption amount might want to use a bypass trust or other tools.
If a person wishes to have other beneficiaries or has a blended family, a bypass trust can help ensure these other beneficiaries or the person’s children still receive assets. A trust might also be used to protect assets from creditors. There is no portability associated with the generation-skipping transfer tax exemption, so each person in a couple might want to create a dynasty trust using the individual GST exemption.
There are other considerations as well, and it is unclear what may happen after 2026 when the higher exemption rate expires. Using lifetime transfers up until this time is one way to make use of the exemption.
Whether a person has an estate that is large enough to raise concern about estate tax or one that is far smaller, an estate plan is a good idea for all adults. It lets loved ones know how a person would prefer assets to be distributed. A will can be used to appoint a guardian for minor children. An estate plan can also deal with what happens if a person becomes incapacitated. With documents such as powers of attorney and health care directives, people can appoint loved ones to manage their finances and health care as necessary.