Introduction – I Already Have an Estate Plan…Now What?
Estate planning is something many people put off for years or even decades. After all, nobody wants to think about death. Once you have an estate plan in place, then, it would be understandable to set it aside and focus on more pleasant things. Unfortunately, however, estate planning is not a one-time event. In order to ensure that your wishes are fulfilled, you should update your estate plan over time. How often? Here are two key indicators:
Change in Personal/Financial Circumstances
A change in your circumstances calls for a review and update of your estate plan. If you have additional children, for instance, you’ll want to make sure that your will or living trust provides for them. On the financial side, an increase in your net worth due to investments, saving or inheritance may require amending your estate plan to minimize estate taxes.
Recently, Congress passed and President Trump signed the Tax Cuts and Jobs Act. Among other things, the Tax Cuts and Jobs Act modified the business tax structure as well as doubled the federal estate tax exemption. With regard to the former, if you own a business, you may consider reorganizing the business as a different type of entity (e.g. converting from a C corporation to an S corporation or LLC). Concerning the latter, in the event your estate is valued at less than the new exemption amount ($10 million, indexed to inflation), an existing living trust could be simplified to remove some of the more restrictive provisions.
Conclusion – Good Estate Plans Must Be Fluid
This post has summarized a couple reasons for updating an estate plan. There are no doubt many other factors at play. The bottom line is that estate planning is fluid. As you formulate your goals for 2018, updating your estate plan should be on the list. Happy New Year!