By Gary H. Ruddell
This question is frequently asked by clients. My response is that there is no magic review deadline, but prudence dictates that you take a look at your documents every two or three years. In addition, you should be alert to family, business, and tax circumstances that might trigger a review of your estate program.
For example, if you and your spouse have more children, a review would be warranted to not only add the children to your estate planning documents, where appropriate, but to also review the guardianship provisions in your will. A change in family financial circumstances, such as the receipt of an inheritance, could warrant a review of your program. Tax law changes might require changes in your estate plan. I tell my clients to call about any circumstances that might trigger a review. I can usually determine in a few minutes whether a meeting is necessary.
On January 1, 2013, Congress passed the American Taxpayer Relief Act. Although the Act left open the possibility and probability of future income tax changes, estate and gift tax laws appear to have some level of permanency. The Unified Estate and Gift tax exemption, i.e. the amount of money/property that each of us can give away tax free either during our lives or at our deaths, is now $5,340,000. The exemption is indexed to inflation so it will likely go up in 2015. In addition, the law allows for annual exclusion gifts of $14,000 per year, per person. So, husband and wife can give away $28,000 per year per recipient. This is "in addition to" the exemption. Other changes which are outside the scope of this short blog were also made.
As a result of the significant increase in the exemption amount between 2001 through 2010 [increased from $1,000,000 to $3,500,000], we are discovering that many plans that were created between 2000 and 2010 to minimize estate taxes are no longer needed. Wills and trusts with complicated funding formulas and multiple sub-trusts may no longer be needed. Simplification is a good thing. You should take a good look at your documents and determine if changes are needed. If you would like more information, please call us for a consultation with one of our estate planning attorneys.