how to update my estate plan

Knowing When to Update Your Estate Plan

Many Iowans think Estate Planning is a one-and-done task. But updating your plan as circumstances change could prove fundamental in preserving your loved ones later down the line. 

Families change, assets change, relationships change and legislation always seems to be in flux, so keeping your estate plan current is an ongoing priority. Let’s look at a few of the reasons to update your estate plan.

Relationships Change

Having an explicit estate plan has never been more important. As you continue to age, relationships can become complicated, especially in the last few generations. In the past, it was common for your spouse to be the go-to person for questions of your estate, and your eldest son typically ended up as the default executor after your spouse’s death.

One common example in today’s world is divorce, which may even happen more than once. As you establish your plan as a young adult, you might have a child, which means your plan needs revision. In time, families can grow or become blended, which is becoming more common which would make your beneficiaries a mix of biological and stepchildren. Later in life, grandkids who you want to include in your legacy might enter the picture. Your estate plan should reflect these big life moments.

Increase or Decrease in Assets

If your estate is small, you don’t have to worry about estate taxes because only estates over a certain amount, depending on current state and federal law, are subject to estate taxes. As your estate grows, you may want to create a plan that helps to minimize your estate taxes. If you have a plan that focuses on tax planning, but you experience a decrease in assets, you may want to change your plan.

In the state of Iowa if your total assets approach $5 million or more, the possibility of being subject to estate tax rates as high as 40 percent can be a compelling reason to consider land preservation. Because tax rules are always subject to change, professional advice and planning are recommended. You may want to discuss these general topics with your trusted wealth management advisors.

Changes in Federal or State Laws Covering Taxes/Investments

Unlike federal estate taxes, which are paid by the estate, Iowa’s inheritance tax is paid by the beneficiary. These tax rates are based upon the relationship of the beneficiary to the deceased, with no inheritance tax due from spouses and direct lineal descendants or ascendants (i.e. children, grandchildren, parents). 

Heirs who are not part of your direct family line, such as friends or nieces/nephews, may face Iowa inheritance taxes. If conservation safeguards potentially reduce your estate’s value, it may in turn reduce your heirs’ inheritance taxes.

Be Prepared

There is more to estate planning than just deciding how to divvy up your assets when you are no longer around. It’s about making sure your family members and beneficiaries are provided for and have access to your assets with as little stress as possible. 

By being prepared and proactive in your planning, you can spell out your healthcare wishes and help ensure that they’re carried out – even if you are unable to communicate. It can even designate someone to manage your financial affairs should you be unable to do so. 

Let’s Get You Started

With a proper estate plan in place, settling your affairs after you go could help eliminate a long-lasting—and costly—impact on your loved ones. 

At Johnson Wealth and Income Management, we understand Iowans need to have a solid, professional and clear estate plan in place. With our financial advice, you can look forward to a more enjoyable and stress-free retirement – Knowing you and your family are taken care of, in case of any life-threatening event. 

Take the first step in creating your estate plan by reaching out to us here today. 

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