Every year and with every new administration, both state and federal law makers talk about changing the tax code. The most recent federal change was in 2017, but the most recent proposed change, at least on the federal level, is the Build Back Better Act. If passed, it would make sweeping changes to the tax code, including significant changes to estate planning law. So, does that mean that we should revisit our estate plan to include the proposed BBB changes?
No. Until the BBB passes and is signed into law, nothing in the Act is law. Even after it is signed, it will not become effective immediately. Though, even then, estate planners will have many months to make changes. Wealthier clients have major concerns, but until those fears become reality, which they may not, it is all banter.
Of course, even if no new tax laws are passed, estate plans should still be updated periodically. For example, as one’s wealth grows or drops significantly, one’s estate plan should reflect these changes. Plus, as wealth ebbs and flows, the tax implications planned for originally may have changed, which may necessitate changing the estate plan.
This is not just about making sure that all the assets, debts and taxes are accounted for, but also to ensure that our beneficiaries get an appropriate inheritance that is customized for them. This can mean creating separate trusts with separate rules on distributions. Or, it could mean reducing a beneficiaries’ percentage if that percentage now means more money than originally anticipated.
Heath and death planning
As we get older, what we want at the end of our lives and how we want our body treated will likely change as well. Perhaps, one originally wanted to be cremated, but now wants to be buried. This needs to be planned and paid for in the estate plan. As it relates to health, maybe one does not want to be kept on life support forever. Ones wishes change, and that is okay, but the estate plan should be updated to reflect those changing preferences.
For our Woodbury, New York, readers, and those in Nassau, Suffolk County and Queens County, the key takeaway is that everyone’s estate plan should be updated periodically. As we grow and change, so too should our estate plan.