If you have a will, you are already ahead of most of the population. Almost three-quarters of adults ages 45 to 59 in the United States do not have a will or estate plan of any kind. Now that you have one, you are good right? No need to worry about it anymore!
Unfortunately, this is not always the best idea. Although you have already taken that first step to put together an estate plan (which is arguably the hardest part) it is important to revisit it on a regular basis. Without updates, the estate plan may not meet your needs. Three examples of triggers that are likely to impact your plan are: major life events, a big move, and changes in the law.
#1. Life and family.
Various events can trigger a need to review your estate plan. Common examples include:
- Birth. Whether a child or grandchild, you may need to make changes to your plan if you want this bundle of joy included as a beneficiary.
- Death. The death of a loved one can also impact the plan. Their portion of the inheritance may no longer go where you intended. Take a moment to review it and make changes as needed to better ensure the distribution is in line with your wishes.
- Marriage. The addition of a family member through marriage can have an interesting impact on your estate plan. Whether you want to protect the assets to go only to blood relatives or expand it to include new family members is something to consider. Once you decide, review your plan to make sure it meets your goals.
- Divorce. It is possible that the estate could go to an ex. Review and update as needed.
Other triggers can include retirement or a change in health.
#2. A new home.
Be sure to review your estate plan if you moved to a new state. The original plan likely took state laws into account. Your new home’s state laws could have a different impact and may not take advantage of tax savings as originally intended.
#3. Changes to tax law.
The law is not a static structure. It is constantly evolving. Any changes to the law, especially estate and tax laws, could impact the distribution of your estate. Federal tax limits also change. An estate plan put together in 2001 generally only allowed for the transfer of $675,000 without an extra tax bill. That rate in 2022 is $12 million.
It is important to keep up to date on the legal landscape, so you can make sure your plan takes full advantage of tax savings opportunities. An attorney can review your options and discuss various strategies that help you meet this and other goals with your estate.