Study show that the vast majority of adults are unprepared when it comes to estate planning, though many of them acknowledge that they should take action.
When a person that has been procrastinating finally puts a plan in place, they often breathe a sigh relief. They tuck the documents away in a safe place, and they forget about them.
Years pass, and as they say, change is the only constant. Things will happen in your own life that affect your existing estate plan, and there are outside circumstances that can enter the picture as well.
Estate planning should be viewed as an ongoing process. The original plan that you put in place will reflect your life at that time, but you should go into it with the knowledge that changes will be necessary.
Marital Status
Unfortunately, a significant percentage of marriages end in divorce, and course, some people are widowed. Most people that get divorced ultimately remarry, and this will trigger the need for an estate plan update. If you put the matter on the back burner, you are tempting fate.
Additions and subtractions to the family would also enter the picture here when it comes to the need for estate plan revisions. A light bulb should go off in your head whenever changes in your family dynamic come down the pike.
SECURE Act
Sometimes legislation is passed in Congress that can impact the field of estate planning. In December of 2019, the SECURE Act was enacted, and it had some elder law and inheritance planning implications.
It changed the guidelines that apply to individual retirement accounts. Among other things, it requires IRA beneficiaries to clear out their accounts within 10 years. Previously, there was no end date, so people could stretch the IRAs to maximize the tax benefits.
This is a single example, but there are other legislative changes that can render portions of your existing estate plan obsolete.
Estate Tax Exposure
There is a federal estate tax in the United States, and it can take a toll on your legacy because it carries a 40 percent top rate. Most people don’t have to pay the tax, because there is a credit or exclusion that you can use to transfer a certain amount tax-free.
At the time of this writing, the exclusion is over $11 million. However, it was doubled for the 2018 calendar year due to a new tax law that was passed. This would be relevant to someone that planned their estate when the exclusion was around $5 million.
This figure is always subject to change, and there are also state level estate taxes in some states. Michigan does not have an estate tax, but if you own valuable property in a state that has one, you could be exposed to it.
Clearly, changes in tax laws can impact your estate plan. And of course, if you have a great deal of financial success over the years, you could develop an estate that enters taxable territory.
Schedule an Estate Plan Review!
We have touched upon a few of the different circumstances can call for an estate plan update, but there are many more. If you have not looked at your estate plan in years, or if you know changes are necessary, now is the time to take action.
You never know what the future holds, and anything can happen to anyone at any time. When you keep your estate plan current at all times, you can always go forward with peace of mind.
To schedule a consultation appointment, give us a call at 248-251-1001. If you would prefer to reach out through the Internet, simply fill out the contact form on this website.
