The 2013 Game-Changer: Portability
Something very important happened in estate planning in 2013: the advent of portability. This means that between married couples, when the first spouse dies, any unused exemption amount can be "ported over" to the surviving spouse.
The Problem with Pre-2013 Trusts
Trusts drafted before 2013 (when portability didn't exist) were typically designed to fully use up the first spouse's exemption amount. While appropriate then, in today's environment with portability and changing tax laws, you may face:
- Adverse income tax consequences
- Lack of flexibility for the surviving spouse
Recommendation
If you have a trust drafted before 2013, have it reviewed by a lawyer to see if updating makes sense for your situation. Don't let outdated planning create problems—learn about current living trust advantages.
How Often Should My Estate Plan Be Updated?
Regular Updates Are Important
Planning should be updated regularly, especially during major life changes:
- Death in the family
- Divorce
- Major financial changes
Minimum Review Schedule
I recommend reviewing your plan at least once every 3 years to ensure it's current and will fulfill all your goals.
Don't let estate planning procrastination leave your plan outdated. Stay informed about tax law changes that may affect your planning.
