As everyone is well aware, the U.S. Congress passed a major new tax law in December.  One provision included increasing the estate tax exemption to $22.4 million for a couple and $11.2 million for individuals, essentially doubling the previous exemption amount.

These high exemption limits mean that very few Americans will be subject to estate tax, at least for now. These higher limits “sunset” in 2025, which means the exemptions revert back to the old law.

This is nothing new, as the estate law has been in an almost constant state of flux, proving that even when the lawmakers say something is “permanent” it rarely ever stays that way. In addition, 12 states impose a state estate tax; some provide the same exemptions as the federal law and some do not. 

While most people will not be subject to estate taxes, you will benefit by ensuring that your affairs are in order. In fact, the biggest estate planning mistake people make is failing to plan for a world of constant change.

Here are four steps that will help you keep your estate plan in shape, which in turn will help ease the burden on your family after your death.

1. Consider a revocable trust and/or make sure the one you have is meeting your present needs. A revocable living trust holds your assets while you are alive and helps your estate avoid any delays and publicity of probate court. It costs more to set up a trust than a will, but a trust can lower the fees on your estate after you die. If you have a revocable trust, make sure any newly acquired assets are titled in the name of the trust, and if you need to add (or delete) beneficiaries, do so now. If you have a trust, make sure you have a pour-over will to shift assets that aren’t held in the trust into it in the event of your death.
2. Update your will, especially guardianships for minor children. Even if you have a trust, a will is still necessary to name guardians for your children. Has there been a death, divorce or a change in someone’s financial situation that could preclude them from taking care of your children in the event of your death? You don’t want to think about your children growing up without you, but you owe it to them to keep the terms of your will up-to-date. In addition, are there other family members (i.e. aging parents or disabled siblings) who would need support if you were to pass away?
3. Think over what you’re leaving to your children, and when. Some parents regret giving their children too much, too early. As your children and grandchildren grow up, you’ll be able to see more clearly what their needs and capacities are; health problems or addictions may have emerged in the past year, or been resolved. Adjust your will and any trusts accordingly.
4. Update beneficiaries. Assets that have named beneficiaries may include retirement plans, annuities, insurance policies and even some bank accounts. It may be years since you looked at the beneficiaries you named when you first opened these accounts. Far too often, ex-spouses and deceased family members are named as beneficiaries.  While they may have been appropriate at the time, these now should be reviewed and updated.