Studies are conducted on an ongoing basis that are intended to evaluate the inheritance planning preparedness of American adults. They consistently find that the vast majority of people in the United States are going forward with no estate planning documents at all. As you might imagine, younger adults are quite remiss, but a surprising number of people in their 50s and 60s have not taken any action.
Because it is so difficult to get people into gear in the first place, once they have an estate plan in place, they tend to put the documents away somewhere and consider the matter to be closed. In fact, this is a major mistake, because inheritance planning should be looked at as an ongoing process. Let’s examine some of the details.
Relevant Federal Laws
When you put your original estate plan in place, it will be based on a snapshot of your life as it existed at that time. Over the years, legislative changes can impact the estate planning playing field.
For example, let’s say that you devised your initial estate plan in 2014. The exclusion is the amount that can be transferred before the estate tax would be applied on the remainder. At that time, the federal estate tax exclusion was $5.34 million.
We will assume that your estate was valued at $9 million. It would have been constructed with estate tax efficiency in mind given the fact that your resources exceeded the amount of the exclusion. At the end of 2017, a piece of legislation was enacted that raised the estate tax exclusion to $11.18 million in 2018.
After an adjustment to account for inflation, it is now $11.4 million. Under this scenario, the federal estate tax is no longer a factor for you, because the value of your estate falls within the amount of the exclusion. As a result, you would want to adjust your existing estate plan.
There are many other possibilities along these lines, and one of them is the elder law situation. Medicare will not pay for nursing home care, but Medi-Cal will pick up the tab if you can qualify. The parameters are always subject to alterations, so your estate can potentially require an update to react to changes of this nature.
Family Dynamic and Marital Status
In addition to the events that are outside of our individual control, there are also family issues that can render your existing estate plan obsolete. For example, you may have a falling out with someone on your inheritance list. Under these circumstances, you can take disinheritance steps if you want to take the matter to this extreme.
About half of marriages do not withstand the test of time, and the majority of second and third marriages fail. When you undergo a change in marital status, you should certainly review your estate plan with our assistance so that you can make the appropriate upgrades. These are two different possible circumstances that can arise, but there are others.
Access Our Special Reports
This blog is a veritable treasure trove useful information, and it is regularly updated, so we urge you to check back often. However, it is not the only written resource that you can tap into right here on our website. Our inheritance planning attorneys have prepared a number of free special reports that cover multiple different important topics, and you can visit our reports page to see the titles.
Schedule a Consultation!
If you would like to go over your existing estate plan with a knowledgeable inheritance planning attorney from our firm, or if you are ready to put an initial plan in place, we are here to help. We know that it can be a bit disconcerting to discuss these matters with someone that you have just met, but our clients tell us that we have the uncanny knack for putting them at ease.
You can send us a message to request a consultation appointment, and we can be reached by phone at 310-337-7696 or 562-346-3209.
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