Your net worth is an important piece of information to have in hand when you are discussing things with your estate planning attorney.
The federal estate tax can reduce the legacy that you pass along to those that you love. As a result, you must know where you stand with regard to the estate tax exclusion at all times.
If the total value of your assets does not exceed the estate tax exclusion, you are in the clear; however, if your assets exceed the exclusion, you are going to have to work with your attorney to implement tax efficiency strategies.
Some people look at estate planning as a “one and done” endeavor, but in fact it is an ongoing process. Your attorney may evaluate your situation when you first develop an estate plan, recognize that your net worth is within the exclusion amount, and advise particular courses of action.
As time goes on, you may enjoy more and more financial success and your net worth may rise considerably. As a result, you could suddenly be exposed to the estate tax.
In addition to the above, the estate tax exclusion could be reduced because laws are subject to change, and this too could be a contributing factor.
By creating and continually updating a net worth statement, you will always have the information that you need when you consult with your attorney about estate tax exposure. It is also useful in a retirement planning context as you see exactly where you are in the present and use this information to gauge whether or not you are on track for the future.
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