“The only thing constant is change,” said the philosopher Heraclitus. Over the past year, I’ve learned his wisdom in spades.
On a daily basis, just when I conclude that I’ve got things figured out or settled with regard to people or situations, I’m quickly humbled to learn that I know nothing. This awareness has vast implications for my personal financial plan. Change is constant. If I am not nimble and flexible then sooner or later I could be sinking in quicksand (perhaps without even knowing it).
In reality, most people understand the changing nature of their household spending, their investments, or their work environments. But when the topic shifts to estate planning — we might hear only silence but for the crickets.
I meet folks all the time with non-existent if not ancient estate documents. Not only do tax and estate rules and regulations change, but so does corresponding family life: birth, death, disability, or divorce — not to mention changes in our mental acuity or physical health.
Consider the beleaguered life of actor Michael Douglas. In recent years, he has battled cancer, had an on/off relationship with his wife, and seen his eldest son jailed for dealing drugs. I imagine that his estate planning is far from ever settled.
Consider my own family: The backup legal guardian for my children moved to Florida, but since then two of my children have reached age 21. As we updated (in our will) the guardian appointee for our remaining minor child, we also made changes to the contingent trustees that would oversee assets for my heirs in the unlikely event that my wife and I both perished. And even since those updates, state and federal estate regulations have changed.
With the federal estate tax exemption now at $5.4 million and with no inheritance tax in the state of Tennessee, many people need to review and/or revise their estate plans with the support of an estate attorney. Older trust provisions designed to preserve your estate from death taxes may now be obsolete and may unnecessarily reduce financial flexibility for your surviving family members.
There simply is no single estate-planning template. Your family’s plan should be customized in order to maximize its effectiveness. The best plans manage to cover as many bases as possible. Then we must accept that the only certainty in life, other than death and taxes, is change.
Your legacy is important. Otherwise, what is the point of your lifelong effort to build financial security and freedom? So, do everyone a favor, be alert for change and willing to update your estate plans. Communicate with your family and talk about what is in your estate documents before you become incapacitated or die. No one likes surprises. Instead, you can pass on the hard-earned wisdom of what you have learned over the years via your estate plan.