Because so many people procrastinate before they put an estate plan in place, when they finally take action, they tuck the documents away in a lock box somewhere. They forget about the whole matter, because they feel as though it is behind them forever.
In reality, this is a big mistake. Various different events can come down the pike that will trigger the need for estate plan updates, and we will look at some of them here.
Changes in Marital Status
Unfortunately, a significant percentage of first marriages end in divorce. If this happens to you, an estate plan adjustment will be in order. Unless you have a very unusual relationship with your ex, you will want to change beneficiary designations, and other tweaks will be required.
At some point in time, the majority of divorced people get remarried, and many of them have children from the previous marriages. These situations definitely require estate plan revisions, and there are specific tools that can be utilized to take care of all the people that you love in the optimal fashion.
When it comes to protecting your children’s inheritances, you could use a qualified terminable interest property trust. Your spouse would be well provided for throughout their life if you die first, and your children would be the final beneficiaries of the trust.
Estate Tax Exposure
Most people do not pay the federal estate tax, because there is an exclusion that is relatively high. At the time of this writing, it is $11.7 million. This is the amount that can be transferred before the remainder would be subject to taxation.
You may plan your estate initially when you are not exposed to the estate tax, so there would be no mitigation strategies. Along the way, you may do very well, and at some point, you may have to alter your plan to minimize your estate tax exposure.
In addition to your own success, there is something else to take into consideration along these lines. The exclusion that we have today was put into place when a tax act was passed at the end of 2017. It was previously right around half of what it is now.
This legislative measure will sunset at the end of 2025, and the exclusion will revert back to $5.49 million in 2026. Plus, there can be a new law passed between now and then that could accelerate the reduction.
Here in New York, we also have a state-level estate tax, and the exclusion is just $5.93 million. Once again, it is subject to change via legislative mandate, so you never what the future holds.
Additions and Subtractions to the Family
Families evolve over the years, and your extended family may grow little by little. With each new grandchild that comes along, an estate plan adjustment may be necessary depending on your intentions. Sadly, people may pass away, and this is another relevant event.
The marital status of your children can change as well, and this is yet another situation that can necessitate a trip to your estate planning attorney’s office.
Attend a Free Seminar
We conduct seminars on a periodic basis that cover all the most important estate planning and elder care topics. There is no charge, and you will come away with a great deal more information if you join us, so should take advantage of one of these opportunities.
You can see the dates obtain more information if you visit our seminar page, and when you identify the session that works for you, follow the instructions to register.
Need Help Now?
If you are already informed enough to know that it is time for you to work with a Smithtown, New York estate planning lawyer to put a plan in place, we are here to help.
You can schedule a consultation appointment if you call us at 631-265-0599, and there is a contact form on this site you can use if you would rather send us a message.