I sat down with a long-term client earlier this week and was reminded once again of the importance of regularly reviewing your estate and succession planning. This client is the majority owner of a family owned company and has his children involved in leadership roles. He is in his second marriage to a woman who is not his children’s mother.

As you are most assuredly aware, high net worth estate planning usually involves putting trusts in place to take advantage of tax laws and minimize the amount of taxes that the family will have to pay Uncle Sam. Under most circumstances, the assets are simply divided into a couple of different trusts for estate planning purposes, but the surviving spouse retains the right to income and principal from the various trusts. When we put this particular clients estate plan together several years ago the estate tax exemption amount was different than it is today. As it turned out, the client wanted to designate a particular amount to go to his spouse that just so happened to coincide with the exemption amount at the time.

When we reviewed his plan recently, we realized that with the current estate tax laws, his wife would now be receiving a substantially larger portion of the assets through income and principal rights. This would unfortunately necessitate, at this point, the wife sharing ownership of assets related to the businesses his sons are running.  With this realization and through my following discussions with the client, it became clear that he now believes it would be best to have zero strings attaching his wife to his sons in the estate plan which is going to require wholesale changes to his estate planning documents.

What made sense to this gentleman a few years ago, no longer makes sense. Perhaps it’s time for you to review your planning to make sure it still makes sense for your situation.

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