Does My Will or Trust Need to be Updated?
The answer to this question depends on two things: (1) what changes have occurred in your life since you created or last updated your will and trust? and (2) when did you create or last update your estate plan?
Life changes may require you to update your estate plan.
In general, any major changes to your marriage, net worth, or beneficiaries, will require an update to your will or trust. Likewise, if your estate plan was done more than five years ago then it likely needs to be updated.
Significant events or changes in your life often require you to update your will and trust. For example, it is worthwhile to review or modify your estate plan in the event of any of the following:
You marry or have a child
You move to another state
You change your name
Your spouse dies
A beneficiary dies
You acquire or purchase significant assets
You have sold or no longer own property included in your will or trust
Changes to the law may require you to update your estate plan.
There have also been major changes in the law regarding estate planning. So if your will and trust haven't been updated in over five years then your estate plan may no longer work the way you intended. For example, a timeline of some of the significant changes in law include:
April 14, 2003 - This is the required compliance date under HIPPA. This means that if your power of attorney, health care directive, will, or trust was executed before this date you may not be able to work with your insurers and medical providers.
December 17, 2010 - This is the date the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act was enacted. This Act increased the threshold for owing federal estate taxes. If your estate plan was created before this date, your estate planning documents may contain federal tax-planning provisions that are no longer needed.
January 2, 2013 - The American Taxpayer Relief Act of 2012 became law on this date. This Act lets a surviving spouse use his or her deceased spouse's unused federal estate tax exclusion. This is known as the "portability election". If your trust or will was drafted or last updated before this date, and you're married, you could be missing valuable tax planning opportunities.
As part of the 2017 Tax Cuts and Jobs Act, estate tax rules were adjusted again. The estate tax exemption was raised to $11.2 million, a doubling of the $5.6 million that previously existed. Married couples were able to pass as much as $22.4 million to their heirs. As of 2022, that rate has risen to $12.06 million per individual (and $24.12 million for married couples). The Act is set to expire in 2025.
If any of the above applies to you, it is important that you meet with a trusted estate planning attorney to review all of your estate planning documents.