When a new year is approaching, people often make resolutions of various kinds. It can be self-improvement, a career goal, or a commitment to take care of a responsibility that has been placed on the back burner.
If you put your estate plan in place years ago, a revision may be necessary. In fact, some people are surprised when they are reminded about the decisions that they made decades ago.
Life Changes
Things that happen in your life can make your existing estate plan obsolete, and you may be aware of this when you have a change in marital status. Additions and subtractions to the family are other life events that can impact your legacy goals.
However, time passes by rather quickly, and procrastination can set in because nobody expects to pass away without a good bit of warning.
This makes sense on the surface, but unexpected things happen each and every day. If your estate plan does not reflect your current wishes, you are taking a big risk that is completely unnecessary.
Financial Capabilities
If you put an estate plan in place when you were a relatively young adult, your plan is going to reflect your financial profile at that time. Over the years, you may enjoy more and more success, and your capabilities can change considerably.
When you review your estate plan with one of our attorneys, we can gain understanding of your situation as compared to the estate planning decisions that were made. We will suggest any changes that may be necessary to maximize the impact your legacy.
Spending Safeguards
You may decide to leave equal inheritances to your children in lump sums at one point in time because there is no reason to think that any of them are poor money managers. As time goes by, one of your children may come to you seeking help because of financial problems.
This can happen more than once, and a mistake is one thing, but a pattern is another. At that point, you may have concerns about this child receiving their entire inheritance at once with no safeguards.
If you are in this situation, you can provide for them in a safe manner through the utilization of a revocable living trust with a spendthrift clause. After you are gone, the trust would become irrevocable, and the assets would be protected from the beneficiary’s creditors.
The inheritance can be distributed in limited increments over an extended period of time. You could give the trustee the latitude to provide discretionary distributions when certain circumstances exist.
Changes to Relevant Laws
In addition to the events that are specific to you and your family, laws that are connected to estate planning issues are subject to change via legislative mandate. This definitely applies to the federal estate tax exclusion.
The exclusion is an amount that can be transferred tax-free before the estate tax would be levied on the remainder. It was $5 million adjusted for inflation from 2011 until 2017, but it was increased to $11.18 million for 2018 when the Tax Cuts and Jobs Act was enacted.
A provision in the measure that established the exclusion is going to sunset at the beginning of 2026, and it is going down to $5.49 million with an inflation adjustment at that time.
There are steps that can be taken to mitigate estate tax exposure. If your plan was created when you were not exposed to the estate tax, and the exclusion is lowered and you accumulate more wealth, an update will be necessary.
In Vermont, there is a state-level estate tax with a $5 million exclusion this year, and this is subject to change as well.
Make an Appointment Today!
Today is the day for action if your estate plan should be updated. Even if you do not know that your plan should definitely be adjusted, we can review it with you to make sure that it is up to date.
You can schedule a consultation at our Essex Junction, VT estate planning office if you call us at 802-879-7133, and you can use our contact form to send us a message.
Wendy now works with clients on estate plans, including Trusts, Wills, Powers of Attorney, and Advanced Directives.Wendy also assists clients with Medicaid Planning and helps clients to qualify for Medicaid assistance.Wendy is a member of the Vermont Bar Association and both the national and Vermont chapter of the National Academy of Elder Law Attorneys.
- Do I Need to Name a Successor Trustee When I Create a Trust? - September 5, 2023
- Can I Modify My Trust Agreement? - August 24, 2023
- What Is Involved in Trust Administration in Vermont? - August 23, 2023
