Colorado residents who are creating an estate plan should also make sure they review the documents regularly and update them if necessary. Failing to do this can lead to other problems. For example, a North Dakota congresswoman has talked a great deal about how the federal estate tax hurt her family when her father was killed in a farming accident. However, a closer look at the documents shows that the issue was more one of not updating his will. Furthermore, his family did not take advantage of several opportunities that could have made the tax they had to pay less onerous.
The man had written a will in 1976, and he did not update it before his death in 1994. The will left half of his estate to his wife and half to a trust his brothers managed. In 1981, a spousal exemption to the estate tax was added. However, since he did not update his will to include this, his family had to pay the tax.
Furthermore, there are general deferrals available for estate tax, and it would also have been possible to get a low-interest loan from the IRS. A special-use valuation for the farm would also have reduced taxes. Today, the estate tax only applies to the very wealthy, as the exemption for 2018 is $5.6 million per individual.
There are a number of other reasons to review an estate plan regularly. Other laws may be passed that affect trusts or other estate planning vehicles. There might also be changes in the family such as births, deaths, divorces and marriages. Talking to family members about these issues may be important as well to be sure they understand why changes are being made.