Savant Wealth Management

Now that we’ve reached the middle of 2022, many people are thinking about their Independence Day cookout plans or upcoming summer vacations, not whether they should update their estate plans! But just as your financial plan requires regular updates, so does your estate plan. Regular reviews work much like health checkups: They can ensure your plan is working and that you’re catching any potential problems early.

Estate planning attorneys often refer to estate plans as “living documents.” That’s because your plan should grow with you and change as needed when things change in your life. Is it time to update your estate plan? It may be if you’ve experienced one of these situations recently:

A Marriage or Divorce

A change in your marital status will likely change where you want your assets to go upon your death and who will be in charge of your financial affairs in the event of your death or incapacity. Typically, you may name different individuals to act as your executor, trustee, and agent under your powers of attorney for healthcare and property.

Losing a Loved One

Similar to a marital status change, the loss of a loved one may affect who you want to receive your assets upon your death. Based on the circumstances of the passing, we often see survivors who want to name charitable organizations surrounding their loved one’s illness (e.g. American Cancer Society or a local hospice).

A Move to a New State

If you moved recently, you may wonder whether your old estate documents will work in your new state. Typically, they do. However, we still recommend that families update their documents using an estate planning attorney licensed in their new state. While out-of-state powers of attorney are valid in other states, healthcare providers and financial institutions are accustomed to seeing the forms applicable to their own state. Providing them with the local forms may prevent headaches and unnecessary delays down the road. Each state also has its own unique estate and tax laws, which create nuances in how wills and trusts can be drafted to best take advantage of the differences.

A Child Coming of Age

If your son or daughter is 18 or older, they should have their own estate planning documents drafted (minimally, powers of attorney for health and property giving you the ability to act on their behalf as their agent). Without these documents in place, should something happen to your child while they are at college or otherwise living on their own, you may be unable to manage their financial affairs, assist them with important medical decisions – or find yourself in a situation when a hospital may not share important health information with you.

Entrusting Your Adult Children with More Financial Responsibility

As children grow older and more mature, parents often name them to act as their executor, trustee, or power of attorney agent. Occasionally, we also see parents changing the distribution provisions of their estates – either to accelerate or further postpone access to assets.

A Change in Tax Laws

Over the last several years, we have seen tax law changes that have significantly impacted how estate planning attorneys structure their clients’ documents. In 2022, the federal estate tax exemption (the amount you can pass on to your heirs estate-tax free) has leaped to $12.06 million per decedent. Even after 2025, when the federal exemptions are scheduled to “sunset,” the inflation-adjusted estate exemption could be between $6.5 million to $7 million per decedent, which is not a small sum.

These historically high estate-tax exemptions have fundamentally shifted the estate planner’s focus away from drafting for estate-tax minimization for the decedent, to income-tax minimization and distribution planning for heirs (because almost no estates had to worry about federal estate tax). If the federal exemption returns to a level that will subject many families to estate tax, estate planners will likely refocus on crafting a plan to minimize potential estate tax. Keep in mind that several states have state-based estate taxes with state exemption amounts much lower than the federal exemption.

These are just a few issues that could warrant an update to your estate plan. That’s why it’s important to have an ongoing relationship with a professional who can help you make changes and ensure that your plan is cohesive and workable. Communication about your estate plan should be a two-way street: You should let your financial advisor and your estate planning professional know about any changes in your life, and your advisor and estate planning professional should communicate with you about any external forces that could affect your plan. Doing so can help you – and ultimately, your heirs – carry out your final wishes.

Author Dominick J. Parillo Director of Wealth Transfer

Dominick earned a JD degree from the George Mason University School of Law. He focuses on estate planning and wealth transfer strategies for high net worth families and business owners and advises clients on all facets of trust and estate administration.

About Savant Wealth Management

Savant Wealth Management is a leading independent, nationally recognized, fee-only firm serving clients for over 30 years. As a trusted advisor, Savant Wealth Management offers investment management, financial planning, retirement plan and family office services to financially established individuals and institutions. Savant also offers corporate accounting, tax preparation, payroll and consulting through its affiliate, Savant Tax & Consulting.

©2022 Savant Capital, LLC dba Savant Wealth Management. All rights reserved.

Savant Wealth Management (“Savant”) is an SEC registered investment adviser headquartered in Rockford, Illinois. Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments and/or investment strategies recommended and/or undertaken by Savant, or any non-investment related services, will be profitable, equal any historical performance levels, be suitable for your portfolio or individual situation, or prove successful. Please see our Important Disclosures.