When you engage in any type of financial planning throughout your life, you invariably react to ever changing circumstances. Your own financial capabilities may evolve over the years, and of course, market conditions are always going to be in flux.
Unfortunately, many people do not apply this logic to the subject of estate planning. They put an estate plan in place, they put the documents in a lock box, and they forget about the matter.
In reality, estate planning should be seen as an ongoing process, not a one-time event. As your life changes over the years, the estate plan that you put in place a long time ago may be obsolete.
In addition to your own life circumstances, there are changes to relevant laws that take place from time to time, and this is another factor to take into consideration.
For example, taxation can take a heavy toll on your legacy. The federal estate tax carries a very hefty 40 percent maximum rate, so the imposition of this tax can significantly impact your family’s financial future.
The estate tax exclusion is the amount that you can transfer tax-free. Over the years, this exclusion has fluctuated a great deal, but there has been some stability over the last several years. At the moment, the estate tax exclusion is $5.43 million, and there are annual adjustments to account for inflation.
However, legislative changes are always possible, and there have been budgets proposed that would reduce the amount of the estate tax exclusion to $3.5 million.
When you regularly review your estate plan with your attorney, you can be sure that you are up to date with regard to the current state of the tax laws.
When major life events take place, like changes in marital status, you are probably going to automatically recognize the need for an estate plan update. However, more subtle circumstances can enter the picture as well, so you should review your estate plan with the benefit of legal guidance on an incremental basis.
If you were to have your estate plan reviewed every year, you would be certain that you were always up-to-date. However, at minimum you should have your estate plan reviewed every two or three years.
Schedule a Free Consultation
Our firm would be glad to assist you if it is time for an estate plan review. We offer free consultations, and we give each and every one of our clients personalized attention. At the consultation we will get to know you, and we will become apprised of your objectives. Ultimately, we can recommend alterations to your existing estate plan if they are necessary.
To set up an appointment, send us a brief message through this page: Indianapolis IN Estate Planning Attorneys.
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.