Estate Planning Updates - How Often Should You Review Your Plan?

If I have an estate plan, how often do I need to review it to ensure it’s up to date? How will I know if it is reflecting current laws and regulations and that the plan remains in my best interest?

We generally recommend that you review your estate plan with a qualified estate planning attorney every three to five years to make sure that your plan reflects current laws and regulations. We also recommend that you review your estate plan at any time that you have significant changes in your life that impact your assets, your health or your family.

While we take care to provide comprehensive estate planning strategies for our clients that provide flexibility for change, work to maximize estate tax savings opportunities and provide contingencies for many foreseeable life events, it is simply not possible to plan to cover every eventuality. For this reason, periodically reviewing your estate plan is often just as important as creating your initial estate plan.

Laws and regulations are always subject to change. Under current law, the present interest exclusion amount for gifts made in 2018 will be $15,000, which is up from the $14,000 exclusion amount allowed in 2017. The estate and gift tax exemption for 2018 is $5.6M, up from the $5.49M amount allowed this year, however, this will most likely be changed before the end of the year. As you have likely heard, Congress passed legislation yesterday to make the most sweeping changes to the tax code in decades. President Trump is expected to execute the bill before the end of this year to enact the new laws. If passed as expected, the bill would result in the $5.6M estate and gift tax exemption in 2018 being increased to approximately $11.2M with inflation adjustments. Keep in mind that the increased exemption amount would expire at the end of the year in 2025.

With any new legislation, there are new planning opportunities. Outside of the pending tax bill, other changes have taken effect this year including the elimination of certain temporary proposed treasury regulations under IRC 2704 that would have negatively affected business succession planning. The current estate and gift tax exemption amounts are the highest they have ever been and the tax bill could result in raising both even higher. Now is an ideal time for wealthy individuals and business owners to implement or review their estate planning, business succession planning and asset protection planning strategies.

If you have assets under $11M or combined assets of under $22M for married couples, the tax bill may still impact your plan. When planning for a lower exemption amount, you may have been required to make certain compromises in your plan to comply with complicated and burdensome tax rules and regulations, such as rules as to which individuals could be given control or how and when your assets may be distributed in the future. If estate taxes are no longer a driving force in your plan, you may want to sit down with your estate planning attorney to discuss simplifying your plan and taking back control on how you choose to pass on your assets.

There are countless other reasons to review your plan from time to time that you can often do on your own. Life events such as the death of a family member, the birth of a child, a marriage or divorce, changes to your health, retirement, selling your business, or receiving an inheritance or bonus could impact your plan. Pull out a copy of your plan from time to time and simply look at the individuals you have named in your documents. Make sure the individuals you named are still individuals that you want to leave your assets to or be in control of your estate and trust. You may find that your wishes have changed from when you initially created your plan.

Once a new bill is passed, it takes time for estate planning attorneys and other tax experts to research and review the content to find additional tax savings opportunities that can be passed on to you and to determine where changes may impact your planning and require updating. If the bill is enacted this year as expected, we recommend that you contact your estate planning attorney to meet to review your plan in the first quarter of next year. In the meantime, now would be a good time to pull out your documents to determine if there are other changes you may want to make.

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