Formulas Used to Divide Estate Assets Won’t Work in Absence of Estate Tax

At this writing, for this year only, there is no federal estate tax.  In some circumstances the temporary absence of the tax can cause changes in the division of a person’s property at death.

For more than 50 years, it has been common to use a written mathematical formula to divide the assets of a married couple when the first spouse dies, to maximize estate tax savings.  Formulas have also been used to provide funding for charitable causes and to benefit family and friends.

Now, in 2010, in the absence of the estate tax, these formulas will not work as expected.  If your spouse is not your sole beneficiary (for example, if you have children from a prior marriage), the existing formula could result in the elimination or substantial reduction of resources provided for the surviving spouse.

For single clients as well as married couples, it would be good to make sure that your property will be divided according to your desires, and not as dictated by Congress.

We encourage any client who has anything more than the most simple estate plan to meet with us as soon as possible to review your plan and to make any changes that are necessary in the light of this new law.  We want to make sure that your property passes as you desire after your death.

Ralph Beard can be reached at rbeard@hhmlaw.com or at (330) 744-1111.