Estate planning goes beyond taxes

With the estate and gift tax stabilized at $5.25 million for individuals, Texas readers might think that estate planning is only for the very rich. However, the reality is that tax planning and gift planning is only one portion of the full estate planning picture, and that there are many other elements that are important to consider.

For example, people at every income level who have children need to take the time to choose and designate a guardian in the event that they die or are otherwise unable to care for their kids. This is a truly unpleasant thing to think about, but it is even concerning to avoid planning for it and to leave relatives or the state with the responsibility of choosing a guardian.

Another important thing to consider is will revisions. Often once we’ve drafted a will we believe that the job is done and we can stop thinking about it. However, with family members getting married or divorced, having more children or changing careers, the original plan for disbursing assets may not suit the new situation.

There is also the matter of changing estate tax laws. While the current exemption has stabilized for the foreseeable future, Congress could choose to alter it or enact additional laws that modify estate planning and tax liabilities considerably. When that happens, it is crucial to take another look at the previously made plan and making sure it still works given the new laws.

Acquiring new property or opening a new investment or retirement account can also impact estate planning. Many people don’t realize this, but if a will instructs the executor to give all investments to your only child, but the investment account lists your spouse as the beneficiary, the money will go to the spouse when the beneficiary designation form overrides the will. Revisiting these issues to iron out conflicting choices can help simplify the process in the long run and avoid conflict.

Source: New York Times, “Estate Planning Remains a Moving Target Under the New Tax Law,” Paul Sullivan, April 26, 2013.