If you want to be totally prepared at all times as you get older, you would do well to recognize that your estate plan is going to need to be updated as your life changes. People inevitably have additions and unfortunate subtractions to their families, and your financial profile may change significantly at different times over the years. It may not be the most pleasant thing in the world to consider, but divorce is very common and divorce and subsequent remarriage are two separate events that would impact your existing estate plan.
The events that take place in your own life are not the only ones that can have an effect on your estate plan. Matters that concern society as a whole can also make estate plan changes necessary. With this in mind it might be a good idea to take something away from the recent deal that was struck on Capitol Hill regarding raising the debt ceiling.
That agreement did not impact the estate tax on the surface and it does not mandate any increases in revenue at this time. But, there was strong sentiment in favor of a two-pronged approach to reducing the federal deficit: an increase in revenue (read “tax increase” on “the wealthy”) coupled with a reduction in spending.
When you hear mention of a tax increase on those who are designated as being wealthy by the powers that be, you have to be concerned about an expansion of the estate tax, because it is widely perceived as a tax that is imposed only on the rich. In reality, this is already scheduled to take place. When the recent extension of the Bush era tax cuts expires at the end of next year, the estate tax rate will be rising to 55% and the exclusion will be dropped to just $1 million.
Given the present political climate simply expecting another extension of the Bush cuts may be overly optimistic. For this reason it would be wise to stay in touch with your estate planning lawyer and be prepared to make any adjustments that may become necessary.
- Own Property Out of State? You Need a Living Trust - October 21, 2021
- Three Misconceptions That Lead to Estate Plan Mistakes - October 19, 2021
- Your Original Estate Plan May Not Be the Final Version - October 14, 2021