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How Often Should You Update Your Estate Plan?

August 12, 2019

Did you recently get married or have children? Have you updated your estate plan to reflect that? These are just two instances where an estate plan review is needed! Learn more here.

Only wealthy families need estate planning, right? WRONG. As we mention in our recent blog, 6 Common Estate Planning Myths, estate planning applies to everyone, regardless of the size of your estate. While the Tax Cuts and Jobs Act (TCJA) certainly provides generous estate tax relief (tax does not kick in until your taxable estate exceeds $11,400,000), the need for estate planning is still relevant for all families. So, when should you be updating your plan? We explore below.

TCJA Changes

Recent TCJA provisions may help you shelter all or a large portion of your estate from estate and gift tax. The estate and gift tax applies only to the portion of an estate’s value that exceeds the estate tax exemption, indexed annually for inflation. Starting in 2018, the TCJA doubles the estate exemption per individual from $5 million to $10 million. With inflation factored in, the exemption for 2019 is $11.4 million for an individual, and $22.8 million for a married couple. These provisions are scheduled to expire after 2025. Unless Congress takes further action, the law will revert to pre-2018 levels for 2026 and thereafter.

Why estate planning matters for everyone

There are at least 4 reasons those with estates below the unified exemption threshold should develop and maintain a plan.

  1. Family changes- Is your list of beneficiaries up to date? Circumstances change over time, you may need to revisit your estate plan to reflect marriage, births, deaths and divorces in your family. You should also consider revisiting your estate executor choice—perhaps your child(ren) are old enough now to be listed as estate executor(s).
  2. Asset/liability changes- Any time there’s a significant change in the value of your estate (including the value of any business interests, real estate or securities you own) it’s a good idea to review your estate plan. The increase or decrease of one asset’s value can cause you to rethink how your holdings should be allocated among beneficiaries.
  3. Residence changes- Moving to another state? State law typically controls estate matters. You’ll want to review your current plan and determine whether changes are needed. Bear in mind that an old home state may assert that you didn’t change your legal residence and continue to pursue state death tax obligations. Don’t get caught in this trap!
  4. Estate tax changes- Have you updated your estate plan according to changes made under the TCJA? Make sure your plan reflects current tax law (effective through 2025).

Time to Update

Don’t let your estate plan gather dust! It’s important to periodically review and update whenever your personal circumstances change. Having trouble knowing what/if you should be updating? Contact us. We can help!

The TCJA…So Many Changes, So Many Questions…we can help you navigate this huge tax overhaul! Visit our Tax Reform Center for everything you and your business need to know, now.

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