5 Areas to Consider When Reviewing Your Estate Plan in 2024
It’s a New Year which means a fresh start and new commitments to New Year’s Resolutions. While you may be busy focusing on your resolutions like exercising or saving more, it’s essential to consider an important, yet often overlooked, aspect of sound financial management – estate planning.
Studies have shown that only one third of Americans have an estate plan. Changes in personal circumstances, tax laws, and family dynamics can all impact the effectiveness of your estate plan. Here are five considerations to keep in mind as you embark on the process of reviewing your estate plan in 2024.
1. Life Changes and Family Dynamics
Life is dynamic and family structures are in constant transition. Significant events such as marriages, divorces, births, and deaths can impact your financial situation. It’s critical that you review your will and other estate planning documents to ensure they accurately reflect your current circumstances. Confirm that your chosen beneficiaries, executors, and guardians are still suitable, considering any changes in relationships or family dynamics that may have occurred since you last updated your estate plan.
2. Estate Tax Law Changes
The IRS released the new (2024) federal estate tax exemption amount, which will be $13.61 million per individual and $27.22 million per married couple. However, if no action is taken by Congress, effective January 1, 2026, the exemption will drop back to a level of $5 million adjusted for inflation (estimated to be just under $7 million per individual). Additionally, the current maximum estate and gift tax rate of 40% is set to increase to 45%. Absent new legislation, this will make a larger portion of your wealth subject to higher estate tax rate upon death.
Regarding annual gifts, the new 2024 federal annual gift tax exclusion amount is $18,000 per individual and $36,000 per married couple. The evolving and changing tax landscape highlights the importance of implementing current planning strategies and reviewing and updating your overall estate plan.
3. Financial Review and Market Conditions
The value of your estate may fluctuate due to market conditions or changes in your investment portfolio. Today’s higher interest environment and inflation rates introduce potential impacts on both your long-term financial plan and your estate plan. It’s essential to regularly assess the value of your assets, taking into account your current life stage and current market conditions. The needs and goals for individuals in the wealth accumulation stage will differ than those in or near retirement. During your estate plan review, consider your current life stage and current market conditions to ensure your on track to meet your financial goals.
4. Retirement Planning and Beneficiary Designations
Retirement planning not only is a key component of achieving a successful retirement but is also a crucial aspect of estate planning. Conducting a thorough review of your retirement accounts is essential to monitor whether you’re on track to meet your retirement goals. As you approach retirement, you should review your retirement portfolio with an experienced Financial Advisor to understand current funding, tax planning opportunities, investment performance and whether you’re on track to meet your retirement goals.
Additionally, the periodic review of beneficiary designations on your non-probate assets, including life insurance polices, 401(k)s, 403(b)s, and individual retirement accounts (IRAs), are crucial as beneficiary designations supersede what’s in your will and will ultimately control who receives these assets.
5. Legacy and Charitable Intentions
Philanthropy has emerged as a significant aspect of estate and legacy planning for individuals with substantial wealth or complicated family dynamics. For those who prioritize philanthropy in their estate plan, it is crucial to reassess charitable goals, tax planning opportunities and charitable beneficiaries. Confirm that the charitable organizations align with your current values and evaluate how changes in your financial situation affect your charitable contributions and estate plan.
If you have yet to explore charitable giving strategies, such as maximizing charitable contributions, utilizing charitable trusts or funding foundations, consult with your Financial Advisor to learn more about the various options for potentially reducing your tax liability and cementing your legacy. Additionally, establishing donor-advised funds may also be advisable for high-net-worth individuals. It’s important to seek professional guidance and to regularly revisit your philanthropic goals to ensure that your legacy reflects your values and continues to create a positive impact on the causes you support
FCA Corp is here to help you
A New Year is a new beginning to reflect on your financial goals and priorities. Considering life changes, financial updates, tax law changes, beneficiary designations, and charitable intentions will help ensure that your estate plan remains a relevant and accurate reflection of your wishes. Consulting with your FCA Corp Advisor and your estate planning attorney can provide valuable guidance throughout this process, ensuring that your legacy is preserved and your loved ones are well taken care of. Contact FCA Corp today to get started.
The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
