7 Reasons to Revisit Your Estate Plan

by | Jul 25, 2014

Many believe that setting up an estate plan is all there is to estate planning. This is incorrect, and potentially disastrous.  Estate plans need to be updated if certain life changes occur, and if there are no life changes, every three to four years. By leaving an estate plan stagnant, trustors put themselves and their beneficiaries at a major disadvantage.

Here are 7 main reasons to review and update your Estate Plan regularly

1. Moving to a New State Or Purchasing Property in a New State
State laws are different and updating an estate plan to reflect the purchase of property in that state could offer tax advantages.

2. Purchase or Sale of a Business
When a business is purchased, a trustor needs to make accommodations for succession, death or disability. When a business is sold, the plan needs to be updated to reflect that.

3. Change in Beneficiary Circumstances
Sometimes, a beneficiary or fiduciary may need to be removed due to mitigating circumstances such as death, change in health or mental capacity, finances or other personal reasons.

4. Birth or Adoption
Most estate plans automatically update to accommodate new additions to the family and provide for all children equally. Any variations to equal shares must be made through a revision.

5. Death
If any of the designated beneficiaries or fiduciaries has died, it is in the best interest of the trustor to change the estate plan accordingly.  Not updating the estate plan on the death of a beneficiary could result in a prolonged and costly execution of the trustor’s wishes.

6. Marital Status
A new marriage creates a whole new set of tax planning opportunities which would be lost if the estate is left as is. Conversely, it is very important to update estate plans after a divorce to remove a former spouse as a beneficiary and to change designees to life insurance and retirement plans.

7. Taxes
The most important reason to regularly review estate plans is to take advantage of the changes in tax laws. For example, the US estate tax is currently 40%. However, there is an estate tax exemption of $5.34million (double for married couples). Ten years ago, the exemption was $675,000 (double for married couples). If an estate plan was set up ten years ago and ignored, the trustor could be at risk of missing out on the changes to the tax laws.

At Klueger & Stein, LLP we remind our clients of the importance of diilgently reviewing their estate plans. We work with them to take advantage of changes in tax laws and make sure their estate plans stay current.

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