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Promotions and estate planning

On Behalf of | Jan 27, 2016 | Estate Tax Planning |

One of the more exciting bits of news a person can get at work is that they got a promotion. This can be a big thing for a person, financially and professionally. It is important though for individuals to not let the excitement of getting promoted cause them to miss the fact that there could be some important legal issues to address in connection to their promotion. For example, a promotion could end up necessitating an update of one’s estate plan, as there are a variety of estate planning concerns a promotion could trigger.

It is not uncommon for substantial compensation hikes to accompany a promotion. Thus, a promotion can end up significantly boosting the amount of assets a person has.

Asset boosts could, in some instances, put a person’s asset totals up to a level that could trigger estate tax concerns. If this occurs, adjusting one’s estate plan to address these concerns can be important.

Increases in assets can also change the types of asset protection goals a person has for their estate plan. A person may find that their estate plan, as it currently stands, is not well-arrayed for these new goals.

A promotion could also involve a person getting new types of assets, such as new sorts of employment-related benefits. Some of these assets may not be able to be controlled by a person’s current estate plan, as they may be controlled by beneficiary designations. They could also raise special tax issues. Thus, when a promotion leads to a person getting new types of assets, it can be important for them to understand what will need to be done to control what will happen with these assets upon their death and what impacts the assets could have on what tax issues arise in relation to their estate plan.

As this discussion on promotions illustrates, a lot of different changes in one’s life have the potential to trigger a need to look at estate planning issues. When a person gets a promotion or experiences another significant change in their life (such as a change in their family, job, health or financial state), they should speak to an estate planning attorney about what estate planning issues the changes raise and whether adjustments should be made to their estate plan.

Source: myAJC, “What to do – and not do – with a raise or bonus,” Lisa Brown, Jan. 16, 2016