It is wise to put an estate plan in place as soon as you are a self-supporting adult, and it becomes a must when you have other people relying on you. Though the reasons for this are rather obvious, studies that are conducted reveal a startling lack of preparedness.
Less than 30 percent of people that are between 35 and 54 years old have put estate plans in place according to Caring.com. When folks take chances like this when they have life partners and/or children, they are really being irresponsible.
A survey that has been conducted by the same source has found that most unprepared people know that they should take action, but they procrastinate for one reason or another.
When someone that has been putting it on the back burner does eventually make the right move, they tuck the documents away somewhere safe and they breathe a sigh relief. They finally did what they had to do, and they can put the matter behind them once and for all.
This is a big mistake. Estate planning should be viewed as an ongoing process, because things in your life are going to change as the years pass. Let’s look at some of the events that can trigger the need for an estate plan revision.
Improved Financial Status
If you are diligent and you put a plan in place when you are a relatively young adult, you will have a lot of working years ahead of you. It is very likely that you will be in a very different financial position at some point.
When you planned your estate when you were at point A, and you are now at point C or D, your plan is not going to reflect the current reality. There can be a number of different reasons why an update can be necessary, and estate tax exposure is one of them.
There is a federal estate tax that carries a 40 percent top rate, but there is a high exclusion at this moment. The credit or exclusion is $11.58 million, and this is the amount that you can transfer before the remainder would be subject to the tax.
This figure came about when a tax cut for the wealthy was enacted at the end of 2017. At that time, the exclusion was essentially doubled.
Since there is an election coming up this year, it is very possible that the estate tax exclusion could be reduced by new leadership. These are the types of things that can render your existing estate plan obsolete.
Here in Vermont where we practice law, there is a state-level estate tax. For the rest of 2020, the state level exclusion is $4.25 million. If you are now exposed, and your estate plan was not in taxable territory when you established it, action is required.
Changes in Marital Status
Unfortunately, a significant percentage of marriages end in divorce, and this is another situation that would call for some estate planning changes. This would also apply to remarriage scenarios, especially when there are children from previous marriages involved.
Subtractions and Additions to the Family
Your family dynamic may change over the years. For example, a person that you name to be your executor or trustee after you pass away may predecease you.
People that are on your inheritance list may pass as well, and on the sunnier side of the equation, additions to the family may come along. You have to address these evolving circumstances to keep your estate plan up to date at all times.
Schedule a Consultation Today!
If you are sitting on an estate plan that has not been reviewed in many years, or if you know that it needs to be changed, now is the time for action.
You can schedule a consultation appointment if you give us a call at 802-879-7133. There is also is a contact form on this website you can use to send us a message.