A new year is upon us, which means it is time to start to think about taking care of the things that we tend to annually. Estate planning attorneys would like to think that our clients prioritize an estate plan review each year, and many are diligent in this regard. But estate planning lawyers are used to seeing a lot of procrastination when it comes to setting up an initial plan and the subsequent updating of plans that already exist. It is human nature to put off things that don’t seem relevant in the immediate future, and for many people an estate plan update would fit this category.
Of course nobody expects to total their car, and we all have motor vehicle insurance and we update our coverage when we purchase a new car or truck. And traffic accidents are not inevitable, but death is something that we all will face. So the motivation for keeping your estate plan current has nothing to do with the expectation of impending demise; the reason for revisiting your estate plan regularly is to protect your family “just in case.” And there is no one among us who has not known or heard about someone who passed away suddenly in a totally unexpected manner.
This having been emphasized, 2011 is an especially important year for estate plan reviews and adjustments. We passed along information about the new estate tax legislation right as it was happening, but to review, the estate tax exclusion had been scheduled to be just $1 million in 2011 with a top rate of 55%. On December 17th the president signed a measure into law that upped the exclusion to $5 million and reduced the maximum rate to 35%. Procrastination may be understandable at times, but in a year when the tax laws have changed this significantly there is really no way you can justify postponing an estate plan review.