When was the last time you reviewed your estate plan? Most people have not reviewed their estate plan since they put it together with the help of their attorney. Although it is relatively common, taking a set-it-and-forget-it approach to estate planning is risky business. As time passes, life circumstances change, as does the law regarding estates. For these reasons, it is essential to review an estate plan every three to five years. Below are a handful of common mistakes that can easily be caught and corrected by reviewing all estate planning documents.
Updating Your Fiduciaries
Knowing who is named as the executor of a will or as the trustee of a trust is crucial to making sure that an estate plan is properly carried out. Each fiduciary plays a critical role in the administration of an estate. Over time, relationships often change. People drift apart and may even fall completely out of touch. People also grow old and pass away. Thus, it is crucial to check in with an estate plan every so often to make sure the named individuals are still up to the task. Even if the fiduciary is still willing and able, you may find on further inspection that there is a better person for the job.
Children and Grandchildren
Most people put their estate plan together when their children are young. At the time, their primary estate planning goal is to protect and provide for the children in the event of one or both parents’ untimely death. However, these estate planning goals are likely to evolve as children grow older, become self-sufficient, and create families of their own. Therefore, as children grow older, it is essential to review an estate plan to ensure that your legacy is protected, and placed in the right hands. Otherwise, an estate plan is likely to be inconsistent with current wishes and circumstances.
Properly Accounting For Estate Tax Liability
The accumulation of assets is generally considered a positive thing. However, when wealth outgrows an estate plan, there can be negative consequences. Those wealthy enough to be concerned about estate tax liability must review their estate plans carefully or risk paying more than their fair share of taxes. Current federal law provides a tax exemption for up to $11.58 million in assets belonging to the deceased individual’s estate. This amount is indexed for inflation and expected to steadily increase in the near term. However, in 2026 the exclusion amount will revert back to previous exclusion levels, which are significantly lower. Therefore, it is important for high net worth individuals to review their estate plan to adequately address potential changes in estate tax law.
Changes in Residency
Each state has its own laws that can affect an estate plan. Therefore, it is vital for those who have, or who plan to move from one state to another update their estate plans accordingly. This can help avoid unintended consequences. For example, Texas does not have estate or inheritance taxes. Those moving from states that do will want to update their documents to take advantage of their new circumstances. Furthermore, those who own property in their former states of residency will want to adjust their plan to avoid the time and expense of multi-state probate. These are just a couple of the issues that can be addressed prospectively, and highlight the importance of updating an estate plan following a change in residency.
Is It Time To Review Your Houston Estate Plan?
If it has been a while since you last reviewed your estate plan, the attorneys at McCulloch & Miller, PLLC, can help you make sure it still fits your needs. The attorneys in our Houston estate planning law firm have the experience to recognize where your plan may be due for an adjustment, and the knowledge and skill to update your estate plan accordingly. To schedule a consultation, contact our office at 713-333-8900.