Taxation & Estate Planning

As you read about the state of finances in the world, and look at your own financial situation - you may be wondering if you need to change your Will or Trust to account for the change in your finances.  As is often the answer, it depends. 

It depends on how the document is written, so you'll want to read over your Will or Trust, and it's a good idea to have your attorney review the documents as well.

If your estate planning documents distribute your property by percentages, or have all your property distributed to one person, they probably don't need to be revised just because the size of your overall estate has shrunk. For instance, if you have 50% of your property distributed to your son and 50% to your daughter, then the distributions will be equal whether your estate has $500,000 or $50,000 in it. 

However, if you made specific distributions of certain property to people, thinking that they would be approximately equal - you may want to revisit those.  For example, say you drafted your will a couple of years ago and you left your house (worth $600,000) to your son, and your stock accounts (worth $600,000) to your daughter thinking that would make for an equal distribution to each child, as you wanted.  And today your house is worth $500,000 but the stocks have gone down to $350,000.  If you were to pass away today, the distributions to your children would be unequal, which may not be what you want.  You should speak to your attorney about how to revise your will to make sure the distributions reflect your wishes. 

Another way an estate can end up being distributed unequally is if you spend a large portion on the cash or stocks, and leave the child who is inheriting those items with a smaller distribution than you may have wanted.  Or, in the above example, if you sold the house and put the proceeds into stock - you would no longer have a house to leave to one child, and the stock account would be significantly larger than you had intended.

Your attorney can help you draft your will or trust so that your wishes can continue to be carried out even as the size your estate or how it is held fluctuates.  It's a good idea to revisit your estate plan every 3 to 5 years, but you don't want to have to be doing it every time the stock market takes a dip. 

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Estate Planning, Probate and Trusts involve complex areas of law. Individual circumstances must be considered before any advice can be given.  The general information above is not to be construed as legal advice, which can only be given after consideration of the unique facts of each matter. Please seek the advice or counsel of your attorney, financial advisor or CPA as it may be appropriate.