New Yorkers who have created their own wealth and independence through entrepreneurship are often guilty of failing to keep their estate planning documents current. Much like creating a business, drafting estate planning documents is often viewed in the now with the future a consideration, but something to think about later. In some instances, later is pushed forward and pushed forward until the estate plan is hopelessly out of date. People who are vigilant about their estate plan have a better chance of passing on their assets to heirs and avoiding family disputes.
In the current political climate, the estate tax is up for debate. Assets and passing them along can be affected by how this debate goes and whether the estate tax is repealed or altered. People who are preparing their estate plan should be cognizant of this. The main idea for the transfer of wealth is to do so according to the desires of the testator. Every person is different and seeks to pass along assets in varying ways. Tax efficiency is vital regardless of the goals. This can be sabotaged if there is a failure to keep estate plans up to date.
Financial changes must also be considered. A survey of 262 people who are viewed as successful entrepreneurs showed that nine of 10 took the steps to have an estate plan with the baseline criteria having, at minimum, a will. Eighty-five percent of these estate planning documents, however, are more than five years old. The failure to update these documents can have tax implications and not account for other changes that took place in the interim. For example, if the person took out the estate plan in 2012 and the portfolio grew, that will make it necessary to change the terms of the estate plan.
Other changes that can take place are a divorce, a remarriage, the birth of children and grandchildren and more. When crafting an estate plan, these issues should be factored in and the document must be updated regularly. A legal professional who is experienced in estate planning can help people who have spent their lives in entrepreneurship craft a plan and keep it current to make sure that the assets and tax-shielding strategies work as desired.
Source: forbes.com, “Most Successful Entrepreneurs Have Out Of Date Estate Plans,” Russ Alan Prince, Oct. 9, 2017