Pennsylvania residents who have created an estate plan with a strategy for reducing estate tax might want to review that plan with an eye to how they might change it if the estate tax is repealed. While it is not yet known what might happen to the estate tax, making a plan now would mean that it is easier to make quick changes if necessary.
One way that some people may have designed their estate plan to lower its value and avoid higher tax is by creating a multi-generation trust. This passes funds down to children, grandchildren and even great-grandchildren and can be funded up to the amount allowed by a generation-skipping tax exemption. Other assets might be placed in a marital trust. However, the generation-skipping tax might be repealed as well along with the gift tax.
There might also be higher exemption rates. Whatever changes are made, people may want to review their plan to see if additional tax savings may be possible.
Regardless of the size of a person’s estate, most adults should consider making an estate plan. A will can name beneficiaries for assets, including sentimental items, and appoint a guardian for minor children. Without a will, the state decides how assets are distributed. An estate plan has other important elements as well. For example, it can include paperwork that appoints someone to make health care decisions if the person becomes incapacitated, and it can contain instructions for end-of-life care. It can also name someone to make financial decisions if needed. Furthermore, even if estate tax is not an issue, an estate plan should be reviewed regularly in the event alterations need to be made due to a change in family or financial circumstances.