Estate plans should be reviewed periodically to ensure that their objectives are still being met. And now, with major changes in the tax code that affect estates, it's important you revisit your estate plan as soon as you can.
In general, here are guidelines as to why and when you should take another probing look into how you can best pass your assets to your beneficiaries and charities of your choice.
Tax laws change -- The last three years have been among the most volatile in terms of the federal tax code's effects on estates. New federal laws reestablished estate taxation after a year of zero taxation, introduced new features that affect married couples, and changed the gift-tax exemption limits. Without reviewing and redesigning your estate plan in view of these changes, it's almost certain that should you or your spouse die this year, there will be some unplanned consequences and missed opportunities. And none of this even takes into account any new or proposed changes in any state inheritance tax you may be subject to.
Asset values change -- Even more dramatic than the state of the U.S. tax code, asset values have undergone their most dizzying changes since World War II. Real estate prices are off as much as 50% to 60% from their peaks in 2006 (Source: Realty Times, 2011). Meanwhile, the Dow Jones Industrial Average and the Standard & Poor's 500 indexes have fluctuated significantly over the past few years, and individual stocks and bonds have been even more volatile. As a result, the total value of assets in estates and funded trusts may have shrunk or expanded significantly and may now be way out of tune with the new unified exemptions.
Life changes -- Are you and your spouse earning the same amount of money and in the same health as you were the last time your estate plan was finalized? Are you still married to the same person? Do you still have the same number of children and heirs? Such changes happen as often as several times a year. If you have a backlog of changes not yet reflected in your plan, there's no good reason to wait any longer.
Causes change -- If charitable giving is part of your plan, there are several reasons it may need to be updated. The causes you want to support may have changed, new charities may have arisen that interest you, or the financial state of the charities you support may have become more dire or more flush.
Despite the fact that an estate plan deals with your passing, to be consistent with your wishes and concerns, the best guideline is to consider it a living document that needs periodic reassessment. Please call if you would like to discuss this in more detail.