Keeping Up with Changes in the Law
Federal or state legislation might also have a significant influence on an existing plan. For example, increases in the applicable credit amount sometimes called the unified credit) mean larger gift and estate tax breaks. In 2006, the amount excluded from payment of gift and/or estate taxes will be $1 million (up from $675,000 in 2001). This increase will greatly affect marital deduction planning.
In addition, several forms of estate and gift tax reform have been proposed over the past several years. In fact, a gradual repeal of federal estate, gift and generation-shipping taxes coupled with the elimination of the income tax basis set-up has been passed by Congress and vetoed by the President in each of the two previous years. Obviously, any estate and gift tax amendments would indicate the need to review an estate plan.
With respect to non-tax issues, many state probate laws, as well as laws affecting trusts, living wills, and powers of attorney, have undergone substantial changes in the past few years. Depending on the date of the estate plan's execution, changes at the state level could point to an estate plan overhaul.