While you may feel at ease because you have created an estate plan, it’s important to remember that in order for it to remain effective and successful, you must review and make alterations on an annual basis. This article discusses the 3 major tax threats of which everyone should be aware.
One such issue is not fixing FLPs. It is so important to meet with financial advisors or your estate planning team to reevaluate your FLP or LLC. Do the initial reasons for creating the entity remain? If not, you should address it and consider your options. It could be better that the entity is dissolved altogether to negate any detrimental discounts. Even just revising the legal documents and correcting any oversights would prove advisable.
Another common threat to your plan is not swapping out. If you have an irrevocable trust, both you and the trustee should be aware of the swap powers they might contain and review this annually. It’s important to also note that your attorney can prepare the legal documents in advance so that a swap can be exercised quickly if health issues arise.
One last thing to consider is the selection of trust situs, or the state where your trust is based. While you may default to the state where you live, you should consider a few factors first. What is your home state’s income tax system? Is your home state the best environment for your trust? Is there a state with better tax laws? Discuss the pros and cons with your planning team and find the best trust situs for you.
If you are ready to review your trust, call Rhodes Law Firm today.