By Jeffrey R. Wolfe, Senior Vice President, Manager of Wealth Planning Strategies

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Many folks find the year’s end is a time of reflection.  While maybe not top of mind, consider using this tendency as motivation to review your estate plan.  While it’s estimated that more than 50% of adult Americans don’t have an estate plan, [1] even those that have a plan can’t rest on their laurels.

An estate plan is something that’s truly never done until you’re “done.”  Much like maintaining your car or your home, estate plans need to be maintained as well.  Lives change, laws change, and over time your goals may change.  Consider some of the following as motivators to review and potentially update your estate plan:

LIFE EVENTS

Life happens.  We experience births, deaths, marriages and divorces.  Any one of these events may trigger the need to update your plan.  Regardless of the event, whenever you have a change in your life you should review your estate plan and your beneficiary designations to ensure that change is accounted for in the way you wish.  Failing to do so could leave your assets to an unintended beneficiary.

CHANGES IN THE LAW

The threshold of wealth to reach a taxable estate for federal estate tax purposes has been changing significantly over the last few years.  As late as 2000, the amount of wealth needed for a taxable estate was only $675,000.  Today it’s over $11 million.  As the law is written today, if Congress doesn’t act, the exclusion will revert in 2026 to something around $5-6 million.

That’s not all.  As the federal rules have changed, many states have implemented or eliminated their own state estate taxes.  As of this writing, twelve states and the District of Columbia impose an estate tax while six states have an inheritance tax.

In short, this area of the law is constantly shifting.  When it does, it may affect your plan.  Many plans reference the federal estate tax thresholds and stipulate how and who may inherit based on those thresholds.  Do you know if your plan has these references, and if so, do you know what that means with your legacy?  If you can’t definitively answer “yes,” then it’s time to review your plan.

CHANGES IN WEALTH

How old is your will or trust?  Did you create it the week you brought your daughter home, and now you’re walking that daughter down the aisle?  If your plan is dated, it’s likely your net worth has significantly changed as well.  Maybe leaving your now sizable estate to a younger beneficiary isn’t such a great idea.  Perhaps you now have an estate tax problem.  Again, a significant change like this should prompt an estate review.

EVERY THREE TO FIVE YEARS

Even if you feel that you’ve got all of your ducks in a row, it’s a good idea to review your estate plan every three to five years just to make sure you know what you’ve got.  Again, there may be nothing wrong with your car, but you change the oil at regular intervals to make sure it’s maintained properly.  Do the same with your estate plan and dust it off every three to five years.

Estate planning can be intimidating, and it’s never all that exciting to plan for your own demise.  Work with your Benjamin F. Edwards financial advisor, along with your tax and legal advisors, to implement, review and maintain your estate plan.  You’ve spent time and money creating your plan, be sure to follow up regularly to make sure it will work the way you wish.

 

IMPORTANT DISCLOSURES

The information provided is based on internal and external sources that are considered reliable; however, the accuracy of this information is not guaranteed. This piece is intended to provide accurate information regarding the subject matter discussed. It is made available with the understanding that Benjamin F. Edwards & Co. is not engaged in rendering legal, accounting or tax preparation services. Specific questions on taxes or legal matters as they relate to your individual situation should be directed to your tax or legal professional.

[1] http://www.naepc.org/events/awareness_campaigns;