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Reviewing an Estate Plan

Reviewing an Estate Plan

What is an Estate Plan?

An estate plan lays out the foundation for how to distribute or manage your finances, assets, and affairs in the case of your death or incapacitation. An estate plan should be reviewed at minimum every 3-5 years to take into account life changes and changes in laws. It is important to periodically review your estate plan to reflect life changes as some events such as marriage may be affected by state laws and may invalidate parts of your plan if not properly updated. Without specifying certain beneficiaries in an estate plan, laws may default to decisions that go against your wishes. This is especially true for stepchildren, who if not mentioned will be excluded by default. To assure your assets go exactly where they are meant to, your plan should be kept current to include them.

As time goes by, life goals and family relationships change. Since an estate plan is an embodiment of your intentions, it is important that your current intentions are laid out and not former intentions that you may no longer desire. There are a few common life events which when they occur, have a substantial impact on the distribution of your assets.

The Importance of Keeping an Updated Plan

  • A marriage or divorce when you no longer want to provide for an ex-spouse or would like to add a new partner as a beneficiary.

  • A named guardian may not be able to look after your children any longer due to changed circumstances such as illness or death. It will save much confusion and complications if an able bodied guardian is designated.

  • Newly acquired assets if not included in the Estate Plan may not be distributed, as you would have liked such as inheritances or property.


These examples as well as others will only fall in line to your intentions if you actively managed your estate Plan. It is best to consult with your attorney to review your plan so that it works for you.

Major Events That Warrant a Plan Review

  • Marriage or divorce.

  • An addition to the family (birth, adoption, stepchildren, etc.).

  • A family member has died, become seriously ill, or has become incapacitated.

  • Any substantial change in assets such as property, an inheritance, monetary gift, or even loss of value of assets.

  • A family member has become a dependent of yours.

  • There has been a change in your income such as a career change or retirement.

  • Children or grandchildren have become adults.

  • A change in long-term care or life insurance.

  • Borrowing substantial amounts of money or taking on other liability.

  • Substantial investment changes in either gains or losses.


Estate Tax

Individuals who have an estate with a value greater than $5 million may be affected by recent tax laws such as the Tax Cuts and Jobs Act (TCJA). From 2018 until 2025, the Estate Tax and Gift Tax Exemption increased to $11.2 million for individuals and $22.4 million for married couples. After 2025, the rate will return to pre-2018 rates of $5.49 million for individuals. All rates are should be adjusted for inflation depending on the year. What this means is, if your individual estate’s value is worth less than $11.2 million, you will not have to pay the estate tax. Any amount exceeding this figure will be taxed at generally 40%.

Annual Gift Exclusion

Monetary gifts made during your lifetime may be subject to taxes, but annual gifts under a certain amount will not be taxed or counted towards this lifetime gift. From 2018, the annual gift tax exclusion will increase to $15,000 for individuals or $30,000 for married couples. What this means is, a married couple may gift up to $30,000 to any number of individuals in a year and not have it count against their lifetime exemption amount. Any amount to an individual over the $30,000 for married couples ($15,000 for single) will have to file a gift tax return and may be subject to taxes.

In the case of the death of a spouse, any unused exclusion amount ($11.2 million) of the deceased spouse’s estate may be transferred to the surviving spouse.  For example, the deceased spouse’s estate elects to transfer $5 million to the surviving spouse. That surviving spouse will now have an exclusion amount of their base individual $11.2 million in addition to the $5 million for a total exclusion amount of $16.2 million. They will not have to pay the estate tax until their estate’s worth is more than this $16.2 million. This transfer of exclusion costs is referred to as portability.

Generation Skip Tax (GST)

Along with the other tax changes from 2017, the tax exemption amount for the Generation Skip Tax has been doubled to $11.18 million (to be adjusted for inflation depending on year) and will also return to pre-2018 levels after 2025.

A Generation Skip Tax is a tax similar to the gift tax but applies when funds are transferred to a skip person. This tax is applied on top of the other taxes such as the Estate Tax and the Gift Tax.

A skip person is anyone who is two or more generations younger than you such as a grandchild. Anything over the exclusion amount of $11.18 million will be taxed at generally 40%.

It is important to note this tax may apply to certain transfers such as from trusts and that the tax exemption for the Generation Skip Tax is non-portable. Any unused exclusion amount cannot be transferred to a surviving spouse in the case one spouse’s death. Other considerations;

  • Having a list of family members, relations, and noting any special circumstances can help organize specific instructions in your plan.

  • Is your choice for executor or guardian for your children still appropriate?

  • Is your living will up to date?

  • Does the will contain power of attorney in case of your incapacitation?

  • Are medical decisions such as a Do Not Resuscitate order included?

  • Will you be giving to a charity?

  • Living Trusts have some benefits, which can make the distribution of asset process simpler, but may also be costly.


Lastly, if you have moved to another state, it is important to review your plan to assure it meets state laws so that parts do not become invalid due to being subject to the different laws of that state.

For information on how the Marsalese Law Group can provide professional, effective, and efficient legal advice, contact us anytime at 586-915-2184 or

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