Is it Time to Update Your Estate Plan?

There have been significant revisions to the federal estate and gift tax laws over the past five years. In 2010, the federal estate tax was repealed for one year only. When the federal estate tax was reinstated in 2011, an exclusion amount significantly higher than the New Jersey Estate Tax exclusion amount was included.

For many years, when the New Jersey and federal exclusion amounts were virtually identical, New Jersey attorneys often drafted tax provisions with reference to the federal exclusion amount and the “credit for state death taxes.” The credit for state death taxes was phased out in 2005 and continued reliance on this repealed credit can trigger an unnecessary New Jersey Estate Tax payment.

A simple Will revision that implements a current formula or allows tax planning at the option of the surviving spouse or Executor can rectify the problem. Any married New Jersey residents who signed their Wills before 2010 should have their existing Wills reviewed to confirm that they are not volunteering to pay an unnecessary tax.

There are other practical, non-tax reasons to update your Will, including:

  • a change in financial situation, including significant asset increase or decrease
  • changes in family relationships, including marriage, re-marriage, divorce or adoption
  • the death of a beneficiary, executor, or trustee
  • change of intentions about a beneficiary or fiduciary
  • you are considering moving out of state
  • An estate plan is not a boilerplate Will or trust. Estate planning is an effective way to control your legacy and preserve your assets and values according to your wishes. It is very important, however, to have your estate plan reviewed periodically to ensure your plan still represents your current situation and desires and reflects the current estate tax laws.