How often should you review your trust and estate plan? Is there a regular cycle to these reviews, or should they be driven by significant events in your life or the lives of your beneficiaries and executor or trustee? How will the next few years in Congress impact trust and estate planning decisions?
Estate plans should focus on protecting assets, minimizing tax exposures, portfolio growth, and smooth transitions when a major event occurs in a grantor’s life. They should also reflect the beneficiaries’ needs and ensure that they receive everything as you intend. Planning is often focused on the well-being of those we care about and the continuation of our business objectives or issues we believe in or care about.
It is common for clients to think “a trust is a trust” or “once an estate plan is set up, you never have to think about it again.” Estate planning is not a stagnant issue for any of us. Relationships change. Possessions and homes change. Income and finances change. Laws change. Lifestyles change.
There are many times when one should consider revisiting their existing trust and estate planning. For most individuals and couples, the timeframe should be at least every two to three years. However, there are also many major life events that warrant a more immediate review of your trust and estate plan and its components.
A normal cycle of review should be every 2 to 3 years. Many events and life developments should also signal the need for a review. For example, a marriage or divorce, the birth of a child or a grandchild, or a move within the state or out-of-state/country can require an immediate review and updates to existing plans.
Substantial change in a beneficiary’s life may require an adjustment to existing plans. If a beneficiary predeceases the grantor, the estate plan often requires modification. This is also true when a beneficiary faces challenges such as incapacitation, illness, addiction, and substance abuse or simply experiences challenges making prudent decisions regarding money, assets, and debts.
A marriage resulting in a newly blended family presents several important reasons to review your trust and estate plan. Many grantors who are remarrying may wish to ensure that their own children are protected and provided for in the event of their passing. There have been too many cases where a spouse in a blended situation has passed believing that half of the existing assets would go to their children. In reality, the surviving spouse may feel the need to utilize those funds for other purposes, thereby reducing the inheritance of the children of the spouse who passed first.
Business owners and those in professional or private practice should consider business succession, the disposition of their holdings if the grantor becomes incapacitated or passes, and the protection of all they have worked so hard to build.
You may simply have a change of heart regarding a specific possession or a beneficiary’s needs. Developments in the life of a designated executor or trustee might require an immediate review.
There are also international, federal, and state tax issues to consider. Many important provisions in the Tax Cuts and Jobs Act (TCJA) are presently scheduled to sunset at the end of 2025. These changes would affect many important considerations, including the structure of the tax tables, Alternative Minimum Tax (AMT) rates for business owners, mortgage interest deductions, and a significant reduction in estate tax exemptions.
The regular cycle to review your trust and estate plan should be every two to three years. Has anything substantial changed in your own life, the life of a spouse, or those of a beneficiary, executor, or trustee? What is happening at a state and local level? Have you moved, or are you planning a relocation? Are you monitoring developments in Congress regarding the TCJA and the sweeping impact associated with any overhaul or change of the U.S. Tax code?
We invite you to learn more about the latest developments in the areas of estate planning and trusts, as well as the integrated tax, legal, accounting and business consulting services of Allen Barron. Contact us or call today to schedule a free consultation at 866-631-3470.
