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Reviewing an estate plan with estate tax changes in mind

New York residents who have designed an estate plan to protect them from federal estate tax may wonder what changes will need to be made if it is repealed. For people who have large estates, reducing the value of the estate so the estate tax is lower or nonexistent is a major aspect of the plan.

For example, people might have used the generation-skipping tax exemption to create a multi-generation trust that could pass assets to children and grandchildren. The other assets may have been placed in a marital trust.

In addition to the estate tax, the gift tax or the generation-skipping tax could be repealed. With the tax landscape uncertain, the advantage of looking over the estate plan and thinking about future strategies is that the changes may come quickly. With a plan in place, it will be less difficult to react to those changes.

Even if a person's estate is not large enough to raise concerns about estate tax or there are no potential changes in tax law ahead, there are good reasons to review an estate plan regularly. A person might have a change in assets, or families may change through birth, death, divorce and marriage. One common error is forgetting to update beneficiaries on retirement accounts, life insurance policies and similar types of accounts. This could result in a person leaving a retirement account to a former spouse and failing to provide for a current spouse and children. If the beneficiary designation conflicts with the will, the beneficiary designation takes precedence, so simply changing a will may not be sufficient in some cases. People might also want to review who they have chosen to manage their financial affairs and health care in the event that they become incapacitated.

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