Estate planning is a crucial process that determines how your wealth will be transferred to your heirs and beneficiaries. A well-crafted estate plan serves two primary purposes: ensuring your assets are distributed according to your wishes and minimizing the tax implications that often come with transferring significant wealth to the next generation.

Even if you're not subject to estate taxes or don't have immediate family, having an estate plan is essential. It gives you control over which individuals and charitable organizations will receive your assets after your passing. Without a plan in place, you're essentially allowing the government to make these important decisions on your behalf—an outcome few people find appealing.

​If you believe your current estate plan is adequate, you might want to reconsider. Here's why it may be time for a review.

There's encouraging news: According to a survey by AES Nation, approximately 80% of affluent individuals (those with investable assets exceeding $500,000) have established some form of estate plan.

However, here's the concerning part: You might not be as prepared as you think, even with an existing estate plan. The survey revealed that more than half of these affluent individuals are relying on estate plans that are over three years old (see Exhibit 1).

This age factor is significant and should raise concerns about the effectiveness of your plan for several reasons:

* Please consult with a tax professional for all tax-related matters.

To maximize the benefits of estate planning, regular reviews and updates are essential, particularly when significant life events occur that impact your wealth.

​An outdated estate plan can create significant uncertainty. Consider this: The AES Nation survey found that 71.4% of individuals with estate plans older than three years weren't sure if their plan would achieve their intended outcomes (see Exhibit 2). Only 17% expressed confidence in their plan's effectiveness, while slightly over 10% believed their plan would fail to meet their objectives.

In contrast, more recent estate plans tend to inspire greater confidence. Among those with plans less than three years old, nearly 50% were confident their plan would deliver the desired results (see Exhibit 3). Approximately 15% recognized their plan needed revision, while fewer than 40% were uncertain about their plan's effectiveness.

While the results are more favorable for those with newer plans, the data clearly shows that a significant portion of individuals from both groups harbor uncertainties about their estate plans' effectiveness.
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The key takeaways from these findings are straightforward:

Your Action Item: If you have an existing estate plan, consider conducting a stress test to evaluate its ability to achieve your wealth transfer goals, especially given recent tax law changes. Stress testing allows you to assess potential outcomes under various scenarios. Many families regularly employ this testing method to evaluate both their current strategies and potential new approaches.*