Estate planning is not a one-time task. Laws governing taxation, retirement accounts, and asset transfers change, sometimes in ways that significantly alter how your plan functions.
If you assume your existing estate plan will always align with your goals, you may face unintended consequences. Let’s take a look at some relevant scenarios.
How Estate Tax Changes Affect Your Plan
One of the most significant areas of estate planning subject to change is taxation. Federal estate tax laws have shifted multiple times, and another adjustment is on the horizon.
The Tax Cuts and Jobs Act (TCJA) of 2017 temporarily increased the federal estate tax exemption, allowing you to transfer up to $13.99 million in 2025 without incurring estate taxes.
Unless Congress acts, this provision will expire at the end of the year, reducing the exemption by roughly half in 2026.
If your current plan was structured around the existing exemption, you may need to reassess your approach. Strategic planning, such as making tax-free gifts or funding irrevocable trusts, could help you minimize future estate tax exposure.
Retirement Accounts and the SECURE Act’s Impact
Legislative changes can also disrupt strategies for inherited retirement plans. As a case in point, the SECURE Act, passed in 2019, eliminated the “stretch IRA” for most non-spouse beneficiaries.
This forces them to withdraw the full balance within ten years instead of over a lifetime. The SECURE 2.0 Act, signed into law in 2022, introduced further changes, including adjustments to required minimum distributions (RMDs).
Changes like these may not make the radar screen of people that are not professionals in the field, so this is something to keep in mind.
How State Laws Can Affect Your Estate
Federal laws are not the only ones that impact your estate plan. State-level changes to estate or inheritance taxes, powers of attorney, trusts, and long-term care planning can create complications.
If you have moved to Arizona from another state, your existing plan may no longer comply with local laws. Some states have different requirements for recognizing out-of-state estate planning documents.
Why Regular Estate Plan Reviews Matter
Estate planning laws change frequently, and failing to update your plan can create unnecessary problems for your beneficiaries. Even if no major legal changes occur, life events such as marriage, divorce, or the birth of a child may require revisions.
An outdated estate plan can result in assets passing to the wrong people or tax strategies that no longer provide the intended benefits.
If you created a trust for tax efficiency based on old laws, those strategies may need to be adjusted. Reviewing your documents with an estate planning attorney allows you to make necessary updates before issues arise.
Summing It Up
Laws affecting estate planning do not always come with advance warning. Once new rules take effect, your options for mitigating their impact may be limited. Regular reviews of your estate plan help you stay ahead of legislative changes, protecting your assets and your loved ones from costly mistakes.
We Are Here to Help!
Our firm can help you review your existing plan or help you create your initial plan if you are completely unprepared. To get started, call our Phoenix, AZ estate planning office at 222-888-1328.
In addition to our Phoenix location, we have offices in Scottsdale, Mesa, Tucson and the surrounding areas, and other Arizona cities. You can use our contact form to send a message that will reach the office that is most convenient for you.
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