Why Tax Season is a Good Time to Update Your Will
Tax season comes around once a year, and though it may have you burying your head in a pillow, it also is a great time to think about your financial situation, your assets and your future. Since tax season forces you to take a close look at your finances, it’s the perfect opportunity to also review your estate plan. Checking your financial situation for taxes can help you spot any changes that may need to be reflected in your will or other estate planning documents.

Tax Scenarios That Could Impact Estate Planning
Extra Retirement Contributions
As you prepare for the annual assessment of your taxes, you might have the opportunity to contribute extra money to your retirement accounts for some added tax savings. Since retirement accounts often make up a large part of your overall wealth, these extra contributions can affect your estate planning decisions, so it’s important to stay updated on contribution limits.
Another key factor to keep in mind is required minimum distributions (RMDs). Once you reach a certain age, you’ll need to start withdrawing money from accounts like IRAs and 401(k)s. This can impact how your estate is managed and how much of your retirement savings pass on to your heirs tax-free.
Taking Inventory to Understand Your Worth
With everything on the table during tax season, it’s a good time to review and take inventory of your net worth. Every year, the value of your assets, savings, and liabilities change. As you or your accountant calculate the current balance for tax purposes, it’s also a great time to ensure your estate plan reflects your current financial picture. If your net worth has changed significantly, it’s worth reviewing your will, trusts, or other estate planning documents to make any necessary adjustments. This is especially important in light of changes to estate tax exemptions or new laws surrounding gifting.
Planning for the Future
As you dig up the documents to assess your financial state, you may reflect on how to proceed for the next year, and the years to come. Estate planning vehicles, such as trusts, can be powerful tools for managing future tax liabilities and protecting your legacy. Consider looking ahead to the next few years—if you're expecting income changes, tax law shifts, or significant financial events, it may be time to adjust your estate planning strategy to accommodate these fluctuations.
Changes in the Law
Tax laws and estate laws change frequently, and some shifts may have an impact on your estate planning. For example, federal estate tax exemption limits and state-specific laws on inheritance tax have evolved over the past few years. You may now be able to take advantage of increased exemption amounts or benefit from different strategies for reducing your tax burden. Additionally, new tools like digital asset planning (cryptocurrency, online accounts, etc.) have become an important aspect of modern estate planning. Consulting with an estate planning attorney can help guide you stay informed of your options and avoid getting blindsided by changes in the law.
It is imperative to have a clear outlook on your financial situation when considering your estate plan, which is why tax season is a great place to start. At Anselmo & Wojcicki, LLP, we have estate planning attorneys and experts to help you navigate the process and keep you informed about the latest legal changes affecting you and your dependents’ financial future. Contact us now to set up an appointment!
About Anselmo & Wojcicki, LLP
Anselmo & Wojcicki, LLP is a multi-disciplinary law practice based in Schaumburg, Illinois, specializing in real estate, estate planning, tax planning, business formation, and the sale and purchase of businesses. Our commitment to our clients and our values set us apart from the crowd. Our team of legal specialists has a wealth of experience and expertise to help you meet your legal needs. We are dedicated to providing quality service and building lasting relationships with our clients.
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