If you own property in California, it may be a good idea to create a will or trust. It may also be a good idea to designate a financial agent who can manage your assets in the event that you can’t do so yourself. If you have already created a will, a trust or other estate plan documents, it’s generally a good idea to review them at regular intervals.
Major life events can change your estate planning goals and needs
When you get married, there is a good chance that your spouse will need to be added as the primary beneficiary of your 401(k). After the birth of a child, you may want to use your will or trust to appoint a guardian for your son or daughter. If the person you chose to serve as your estate representative passes away, you’ll need to choose someone else to fulfill that role after you pass.
Planning strategies may change over time
In 1997, the federal estate tax exemption was $600,000, and the top estate tax rate in that same year was 55%. In 2021, the federal estate tax exemption is $11.7 million, and the top estate tax rate is 40%. Therefore, a trust that you created in 1997 in an effort to minimize your tax bill may be obsolete today. It’s also possible that other estate planning steps you took several decades ago are no longer applicable in 2021 and beyond.
A thorough estate plan may allow you to exert greater control over your assets for years to come. However, it’s important to ensure that plan documents are created and executed in accordance with state law to minimize the chances of a legal challenge after your passing.