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Four reasons to update your estate plan

There are many reasons to update an estate plan. One particularly relevant is the recent passage of the Tax Cuts and Jobs Act. This new law resulted in an overhaul of the tax system that could impact an estate plan in a number of ways.

The increased exemption rate is one example. Trusts, for example, were often structured to help reduce tax obligations. It was not uncommon to create a trust with language transferring the "maximum amount to a credit shelter trust that would not create an estate tax and the rest to my [spouse]." With the previous tax law of the early 2000s, this meant approximately $1 million would go into the trust and the rest would go to the spouse. With the new law, over $20 million could transfer into the trust. This may not be the creator's intention. The creator should review the plan and make adjustments as needed to better ensure the plan reflects his or her wishes.

Although the new tax law may serve as a catalyst to review your estate plan, it is wise to keep these three additional triggers in mind as well.

Life events: Major life events are a common trigger for a review of an estate plan. This can include the birth or death of a family member as well as marriage or divorce within the family.

Guardianship: An estate plan is designed to cover more than just the transfer of assets. One additional goal of the plan for families with minor children is to provide guidance on the care of children. Families with children that suffer a disability or medical condition should also ensure the plan addresses these needs.

Health and financial documents: It is also wise to include documents that address healthcare and financial needs in the event of incapacitation. These documents, such as a power of attorney document, outline when another individual would be able to make these choices on your behalf. They can also provide guidance on the extent of intervention preferred.

These events are just an example of current triggers for a review of an estate plan. High net worth individuals are often wise to seek legal counsel to aid in the review of a plan. Your attorney can not only help to better ensure your plan meets your wishes, but can also provide additional legal tools that can help you to make the most of your estate.

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