You wouldn’t buy a high-performance vehicle, park it in the
garage for a decade without starting the engine or performing maintenance and
expect it to run perfectly when you need it. Yet, this is exactly how many
high-net-worth families treat their estate plans.
Many mistakenly believe that once trust documents are signed
and wills are notarized, the job of wealth preservation is "done."
However, a static estate plan is often a decaying one. While you are busy
growing your wealth, silent threats from tax code changes to shifting family
dynamics may be eroding the protection you think you have.
The most immediate threat to a "set it and forget
it" plan is your evolving financial standing. Odds are, you are in a much
more affluent situation today than you were even a year ago, let alone five or
more years ago. Consequently, your current plan likely harbors blind spots.
Additionally, we are in a constantly evolving legislative environment. Tax laws
are not static; strategies that were efficient five or ten years ago may now
trigger unnecessary losses.
With the Tax Cuts and Jobs Act provisions set to sunset and
new proposals constantly entering the conversation in Washington, the exemption
limits and tax brackets you built your plan around could look drastically
different by the time your plan is executed. Without a regular stress test of
your financial plan against current laws, you may be leaving a significant
portion of your hard-earned legacy to the IRS rather than your heirs.
Beyond taxes, the most overlooked variable is the family
itself. Financial documents are rigid, but life is fluid.
- Has a
child gone through a divorce or faced liability issues since the plan was
written?
- Has a
beneficiary struggled with substance abuse or spending habits?
- Have
new grandchildren entered the picture?
If your plan doesn’t reflect the current reality of your
beneficiaries' lives, an inheritance that was meant to be a blessing can
quickly turn into a burden or worse, be lost to creditors or ex-spouses.
Wealth preservation is not a product you buy; it is a
process you manage. It requires coordination between your financial advisor,
your CPA, and your estate attorney to ensure all the moving parts are working
in sync.
If it has been more than three years since you reviewed your
plan, or if you have experienced a significant life event, it is time to look
under the hood. Don't let a "set it and forget it" mindset jeopardize
the legacy you’ve spent a lifetime building.
