Having a will in place is a good start for estate planning. However, it is good practice to revisit one’s will from time to time to make sure that it accounts for changes in tax and privacy laws. In the past fifteen years there have been several changes to both federal and state laws that could have an impact on the distribution and management of estates. One significant change involves phasing out the federal credit for state estate and inheritance taxes. Luckily, residents of Ohio do not need to worry about this change because the state does not impose such taxes.
Other changes do apply to Ohio residents, however. One key issue involves the institution of privacy regulations under HIPAA , which prohibits protected health information from being disclosed without a patient’s explicit permission. As of 2003, anyone authorized to act on a person’s behalf with doctors, employers or insurers must have a written document signed by the person and conforming to specific language mandated by HIPAA. A will, revocable trust or durable power of attorney created before this date needs to be updated.
Two other changes offer potential benefits for estates. In 2010, the federal estate tax exclusion was increased to $5 million, up from just $1 million in 2001. With indexing for inflation, that exclusion is up to $5.43 million in 2015. Wills created before 2010 may include federal tax planning provisions that are no longer needed. Likewise, since 2013, married couples with combined taxable estates over $5.43 million can take advantage of ‘portability,” allowing a surviving spouse to transfer a deceased spouse’s exclusion to his or her estate.
An attorney may be able to help guide a client through the process of updating a will to conform to new federal and state requirements as well as to take advantage of favorable tax laws. Such guidance may help ensure that the estate retains its value for the benefit of the client’s heirs.