One of the things about estate planning that you would do well to recognize early on is the fact that it is an ongoing process. Things within your own life do not stand still, and significant life changes are going to make certain aspects of your existing estate plan obsolete. For example, if you were to get divorced you would probably want to change things around considerably. Then if you were to remarry, your family dynamic would change again and you would inevitably want to alter your estate plan to reflect your current situation.
Changes in marital status are one example but there are many different events of a personal nature that can take place that would compel you to update your estate plan. But in addition, there are forces outside of your control that wield power with regard to your estate planning efforts. One of these would be the ongoing legislative changes that take place that are relevant to the field of estate planning.
The estate tax exclusion is a case in point. Simply put, the amount of the estate tax exclusion is the line that separates those who must pay the estate tax from those who are exempt. This line moves around all the time, and if it catches you unprepared the result can be a significant loss of resources as you pass your assets onto your loved ones after your death.
To provide a brief look backward, in 2008 the estate tax exclusion was $2 million; in 2009 it was $3.5 million; the estate tax was repealed throughout 2010 due to provisions contained in the Bush era tax cuts; and this year and next the estate tax exclusion is $5 million. But, unless there is some new legislation passed in the meantime to change the current laws the estate tax exclusion will be reduced to just $1 million when 2013 rolls around.
Exactly what Congress chooses to do from a legislative perspective over the next 18 months can have a significant impact on your legacy. Estate planning attorneys will be keeping a close eye on this matter going forward, and this is one of the many reasons why it is a good idea to develop an ongoing working relationship with an experienced estate planning lawyer.
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.