Kathryn T. Joseph & Associates, Inc.
216-245-0504

Testators may need to live with unclear tax rules

Ohio residents seeking to manage their wealth and their families' futures through the creation of estate plans can't necessarily depend on the assumption that tax codes will eventually work in their favor. According to some financial analysts, waiting for President Donald Trump to finalize previously touted tax regulation changes might be ill-advised if such new rules end up making it harder for people to leverage assets held in structures like trusts.

Financial planners might find it wise to adopt unique strategic approaches to managing their clients' trusts. For instance, South Dakota, Nevada, Alaska and Delaware are known for maintaining legal climates that actually favor trusts, but these conditions might not last if laws change at the national level. Experts also advise the use of trust protectors with fiduciary powers who can make estates more flexible or loan provisions that let other third parties dole out trust monies to clients as necessary.

Depending on which taxes the president repeals, it may become increasingly difficult to shift assets away from existing tax systems pending the implementation of new estate tax rules. Those who want to retain the full use of their trust holdings may benefit from using structures like domestic asset protection trusts that enable their creators to be beneficiaries, but only 17 states permit these kinds of holdings.

Although trusts will likely remain important estate planning tools, their creators need to use them properly. Different structures may incur unique tax penalties or make it harder for the settlors to apply funds towards specific goals. In some cases, poor planning could shift these financial burdens onto the intended beneficiaries. In order to avoid these kinds of negative outcomes, people may find it helpful to ask legal advisers about the ramifications of using specific estate vehicles in their unique situations.

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Kathryn T. Joseph & Associates, Inc.
Executive Commons West
29425 Chagrin Blvd.
Suite 305
Cleveland, OH 44122

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Phone: 216-245-0504
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