For something as final as a “last will and testament,” it surprises many of our clients that an estate plan can become stale years after the client signs it. But an estate plan is a living, breathing organism (much like our clients who haven’t needed to use their estate plans yet). An estate plan requires periodic update passes to account for changes in clients’ family and financial situations and changes in the law to work as the client intends. Otherwise, a neglected estate plan might become ineffective, or potentially even counterproductive.

GCT’s estate planning team generally recommends that each client reach out to us every eight years (or so) to review his or her estate plan as a matter of course. However, sometimes things happen sooner that require us to revise a client’s estate plan before the eight-year mark. This article sets out the three main reasons that most of our clients are updating their estate plans in 2024, regardless of how old their plans are.

Reason No. 1: Most of Our Clients’ Family and Financial Situations Have Changed

An estate plan is only effective if the assumptions a client made when she signed it are still true when she dies. An old estate plan might ultimately be counterproductive if the client’s family has grown or shrunk, if the client has become substantially wealthier or poorer, or if the client’s values and goals have changed.

Clients should always revisit their estate plan after what we call a “Big and Sudden Life Change”—or, because we estate planning lawyers love acronyms, a “BSLC.”

BSLCs can be either family or financial. A family BSLC can include getting married (or divorced), having a child or grandchildren, learning that a family member has a disability or terminal illness, or moving to another state. A financial BSLC might include a big tax bill, starting or selling a business, buying real property, making a gift to a family member, or receiving an inheritance. Sadly, BSLCs can also include the death of a parent, spouse, or child—especially someone the client expected to survive them. In any event, BSLCs almost always warrant a review of a client’s existing estate plan.

At the risk of using a “we live in unprecedented times” cliché, the last four years have been nothing if not unprecedented times. Most of our clients have undergone a BSLC of some sort since 2020. Many of them have already visited us to update their estate plans. If you have undergone a BSLC since you last looked at your estate planning documents, we suggest that you revisit them now to make sure they still accomplish your goals.

Reason No. 2: Tax Planning Opportunities Closing in 2025

Do you remember the tax law that Donald Trump championed back in 2016-2017? If so, you might remember that many of its changes to the Internal Revenue Code were set to expire after nine years. Well… it’s been almost nine years, and those provisions will expire as of December 31, 2025.

We strongly encourage all of our clients to reach out to us well in advance of the December 31, 2025 expiration date so we can identify any tax planning strategies that they should take advantage of before they expire.

The most important upcoming change is that the federal gift and estate tax exemption (i.e., the amount that you can give away during life or at your death free of the 40% gift or estate tax) is scheduled to be cut in half at the end of 2025. The only way to avoid this serious tax cliff is if Congress passes a law to keep the exemptions at their current levels. We are counseling our clients to assume the total gift and estate tax exemption amount will be reduced from approximately $13.5 million to approximately $6.5 million at that time. The extra $7-ish million of tax-free exemption? It’s use-it-or-lose-it.

Clients should plan to make any large gifts or transfers before the end of 2025 so that they can use that extra exemption. That means that if you think it is even possible that you might have a net worth of $6.5 million or more when you die, or if you might want to make any large gifts in the next couple years, then you should come talk to us now so that we can minimize your gift and estate tax bill.

Reason No. 3: New State and Federal Laws

Every now and then, a legislature decides to completely replace an entire body of law. Unfortunately, both the Illinois state legislature and the federal Congress had this bright idea in 2020.

Illinois adopted the Illinois Trust Code, effective as of January 1, 2020. To be clear—any Illinois trust instrument drafted before 2020 is still technically valid and enforceable. However, the new Illinois Trust Code allows substantially more flexibility and predictability in how trusts are governed and administered. The new Trust Code is widely popular with our clients (both those who set up the trusts, and those who administer the trusts). A client who fails to update her pre-2020 trust will end up missing key opportunities to make it easier and cheaper to administer the trust. If you have a trust that has not been revised since 2020, we strongly recommend that you have us update the trust to bring it in line with the new Illinois Trust Code.

Similarly, Congress overhauled the law governing retirement plans in 2020 and 2022 (the SECURE and SECURE 2.0 acts). These laws were intended (among other things) to counteract a very common estate planning strategy that was used to avoid income tax on retirement plan benefits after the plan owner dies by not taking any distributions. As a result, the SECURE acts imposed a new and more complicated regime to force anyone who inherits a retirement plan to take taxable distributions from that plan. The impact from the SECURE acts is still not entirely settled, but it is clear that anyone with substantial retirement assets will be impacted. Retirement plans are the largest asset for many of our clients, so we encourage all of our clients to adjust their estate plans to reflect the new SECURE acts.