In our previous topic, we began by pointing out the importance of doing estate planning, no matter who you are. Both the wealthy and the not so wealthy can benefit from appropriate estate planning. Here we'd like to point out the importance of not considering estate planning a task to complete and forget.
A better understanding of estate planning is to think of it as a process. The practical implication is that estate planning is something we do periodically. There are good reasons for thinking of estate planning this way. One reason is that the life circumstances that applied when the plan was set up may have changed.
Another reason is that the goals one has in setting up an estate plan very well may change over time. Laws affecting estate planning can and do change as well. That is the case with the federal estate tax exclusion amount, which is set to drop from over $5 million to $1 million in 2013 if Congress does nothing. This change is, as we've noted, expected to cause somewhat of a scramble toward the end of the year by folks who want to take advantage of tax savings for gifts.
Wealthy families, especially those with family-owned businesses, are being advised to consider whether their estate plan needs updating before the end of the year. Others may benefit as well.
Whatever the case may be with respect to changes in federal tax law, there are plenty of reasons to return periodically to review one's estate plan. Doing so ensures the plan will serve the right purposes as effectively as possible.
Source: Forbes, "A Wellness Checkup for Your Estate Plan," Steve Parrish, August 7, 2012.