Statistics show that most Americans do not have estate plans in place, but the majority of people who are polled also say that they think estate planning is important. They simply put it on the back burner for various reasons.
When they finally do take action, they put the documents away for safekeeping and they close the book on the subject. In reality, this is a misguided perception.
Estate planning is not a one-time event unless you put your estate plan in place during the final stage of your life. As they say, the only constant is change, so estate planning is actually an ongoing process.
The original estate plan that you devise will be based on your life situation at that time, but circumstances can call for estate plan revisions, and we will look at some of these situations here.
Changes to Relevant Laws
There are various laws in place that can have a direct impact on the way that you plan your estate, and estate tax statutes are certainly in this category. Most families do not have to pay the estate tax, because there is a high credit or exclusion that can be used to transfer a certain amount tax-free.
The exclusion is set via legislative mandate, so it is always subject to change, and the rate of the tax can change as well. In 2024, the exclusion is $13.61 million, but it is going down to the 2017 level of $5.49 million adjusted for inflation in 2026 if there are no changes in the meantime.
If your estate plan was constructed when you were not exposed to the estate tax, there would be no tax efficiency strategy, but it could be necessary if changes are implemented.
There is another tax-related situation that is in flux. As it stands right now, inherited appreciated assets get a step-up in basis. The inheritor does not have to pay capital gains taxes on appreciation that took place during the life of the decedent.
Some lawmakers have proposed the elimination of the step-up in basis for inherited assets because it is used by wealthy families as a tax efficiency strategy. You never know what may happen with this situation in the future.
These are a couple of examples, and other relevant legislative mandates can enter the picture. If you resolve to work with an attorney to review your existing plan on an ongoing basis, you can make any adjustments that may be necessary.
Personal Circumstances
In addition to the events that are out of your direct personal control, your life and your family dynamic may take twists and turns over the years. There can be additions and subtractions, and many people go through changes in marital status.
Your financial capabilities can improve over time, and beneficiary choices and percentages may no longer reflect your current wishes as your relationships evolve.
Once again, if you recognize the fact that estate planning is a process, you can take the right steps along the way to revise the plan to reflect current circumstances.
Access Our Special Reports
It is important to educate yourself as you start to consider your legacy, and there is a lot of ground to cover. We go the extra mile to provide educational resources on this website, and we update this blog on an ongoing basis so you should come back to visit us.
This is just one resource, and there is another avenue that you can explore to build on your knowledge. We have a library of special reports that cover all of the most important topics in depth. They convey a lot of key info, but they are easy to read and easily understandable.
We urge you to take advantage of this opportunity, and you can see the titles and obtain access if you head over to our special reports page.
Need Help Now?
Learning is great, but at some point, action is required. If that time is now, you can call us at 888-222-1328 to schedule a consultation at our Phoenix, AZ estate planning office, and you can use our contact form to send us a message.
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