Many people procrastinate before they put an initial estate plan in place. Once they do take action, they put the documents in a lock box somewhere and forget about them. Inertia sets in, and that pattern of procrastination resumes.
Estate planning should actually be viewed as an ongoing, dynamic process.
Estate planning is a form of financial planning. It is an extension of the financial planning that you have done throughout your life. When you are managing your finances you naturally react to ever-changing circumstances. This need for ongoing adjustments applies to your estate plan as well.
Family Dynamic
One of the things that will necessitate an estate plan adjustment is a change in your family dynamic. If your marital status changes you should certainly ask yourself how this is going to impact your existing estate plan.
Changes in the marital status of your children and/or grandchildren could trigger the need for an estate plan update as well.
When new children are born into the family your estate plan may need an adjustment. If someone who is named in your estate planning documents has passed away, once again an adjustment will be necessary.
Financial Status
You should always be aware of the current estate tax parameters. In 2014 the amount of the federal estate tax exclusion is $5.34 million. The maximum rate of the tax is 40 percent.
It is possible that you originally planned your estate at a time when you were not exposed to the estate tax. If you are now in possession of assets that exceed $5.34 million in total value, your estate plan would be in dire need of a revision.
Exposure to the estate tax is certainly a concern. However, if your finances are considerably different than they were when you originally planned your estate, an update may be called for even if you are not exposed to the estate tax.
Shifting Priorities
In addition to changes in your family dynamic and financial status, your priorities may shift over the years. For various different reasons you may want to adjust your existing estate plan to reflect your current point of view.
Estate Plan Revision in 2014
When a new year rolls around people are often reminded to take care of things that they had been placing on the back burner. With this in mind, you may want to consider scheduling a consultation with a licensed estate planning attorney in 2014.
If you have not looked at your estate plan in years you may not even remember all the details. You should certainly conduct a review to see exactly what you have and make any adjustments that may be necessary.
Our firm offers free consultations to people here in the greater Indianapolis area. If you would like to review your plan in 2014, contact our office to request an appointment.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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