2014 Virginia Legal Elite – Taxes/Estates/Trusts/Elder Law
Deborah D. Cochran
Cochran Allan, Tysons Corner
Other legal specialties: CPA
Education: Bachelor’s degree (with honors) Franklin & Marshall College; law degree (Order of the Coif, with highest honors) George Washington University
Spouse: Brian Cochran
Children: Jeffrey, Alex, Allison and Mitchell
Hobbies or pastimes: Running, hiking, spending time with family and friends
First job as a lawyer: Shaw Pittman
Favorite sports team: Emory University soccer
Favorite vacation spot: Grand Tetons
Recently read books: “The Goldfinch,” “Parenting Teens with Love and Logic,” “Half the Sky”
Career mentor: My dad
How has estate planning changed during your career?
When I graduated law school in 1988, the estate tax exemption was $600,000, and it is currently $5,340,000 per person. Since fewer people now have an estate tax problem, we have the opportunity to help many clients focus more on how they really want their assets distributed, and clients are not burdened with estate tax complexities as they think through difficult personal issues. We help our clients strategize on how to avoid probate, how best to protect assets if the surviving spouse remarries and how to ensure assets passing to their children are protected in the event of divorce. We are also now advising clients on trusts set up in the past that may no longer be needed with all of the tax law changes. Other law changes necessitate confirming that every client has updated beneficiary designations for retirement accounts, an updated medical directive and a financial power of attorney to name someone to manage their assets upon incapacity.
Should the federal estate tax be abolished?
Now that the estate tax exemption is $5,340,000 and portability allows a married couple to pass $10,680,000 tax-free, I doubt the government will move to abolish the federal estate tax in the foreseeable future. There is currently a step-up in basis upon death, meaning that when someone dies, the capital gains tax is wiped out and there is no capital gains tax on inherited assets. In the one year in which the estate tax was repealed (2010), the step-up in basis was reduced. If that happened again, more people would pay capital gains tax on their inherited assets. There clearly is an interplay between the estate tax and the capital gains tax, so if Congress increases the capital gains tax rates even further, the estate tax could become unnecessary, but, again, I doubt any further changes to the estate tax are coming in the near future.