Ohio residents who are looking to set up wills or start with the estate planning process may be aware of a South Dakota's congresswoman's tale of how the federal estate tax had a major impact on her farming and ranching family. The congresswoman has been telling her story as an example for reforming what was being called an overburdening tax system.
However, a tax attorney found that, while the congresswoman's father did create a will in 1976, it was never updated. If it had been updated before he died in 1994, the family would have been able to avoid having to pay any estate or inheritance tax. When the father drafted the original will in 1976, he gave half of the estate to his wife and the other have to a trust to be managed by his brothers. A 1981 spousal exemption would have allowed the family to not have to pay any federal estate tax at all.
At the time of his death, the congresswoman's father had created an estate that was worth over $2 million. When the father died in a field accident, the family faced an estate tax liability for over $169,000. Even without an amended will, the family had many options after the death to deal with the tax liability, including a low-interest loan.
Tax and other laws affecting trusts and wills are always changing. Those who drafted wills early in their lives may wish to update their estate planning documents to take these changes into account. In addition, estate planning documents should be periodically reviewed in order to reflect family changes, such as a divorce or the birth of a child, and an attorney can often be of assistance in this regard.