While estate planning fees generally are not deductible on your income tax returns, they may be deductible or partially deductible for the following reasons:

1. If the fee is considered a business expense.
2. If the fee is an expense for the production or collection of income, for the management, conservation, or maintenance of property held for the production of income, or in connection with the determination, collection, or refund of any tax.

Under item 2 above, you may be able to deduct a portion of the legal fees if they relate to tax planning.

If this applies to you, the lawyer you are working with may be able to estimate the portion of your legal fees that relate to tax planning. It is also a good idea to discuss this with your accountant to determine what is appropriate in your specific situation. For some of you, tax planning may be one of the most important aspects of your estate plan, so it doesn't hurt to ask!

College education planning is a huge part of estate planning, and doing it in the right way can help you save money in the long run. A gift that the federal government has given everyone is the 529 Account, which allows you to make annual exclusion gifts ($15,000 in 2018) to a special account established for your child's education. In addition, the money contributed grows income tax deferred, and is generally not included in your estate for estate tax purposes.

Financial Management

One of the key aspects of planning for college, however, isn't the available tax techniques but rather the management of your finances. If you're heavily in debt or don't have the money available to put away for your child's education, a 529 Account is pointless. After all, you have to take care of your families basic needs before planning for future ones.

That being said, if you and your family have additional resources, placing them into a 529 Account can be a huge benefit to your children. The money that you put into a 529 Account, if you invest it wisely while the child is still young, can grow over time, so that when you do eventually need to pull money out, it may be substantially greater than what you put in.

Estate Planning

On the gift tax, income tax, and estate tax side, a 529 Account makes a great deal of sense as well.

First, because you are making an annual exclusion gift, there is no gift tax that is due on your contribution.

Second, because the account grows with income tax deferred, there is no income tax to pay on the growth of the account.

Finally, the amounts you contribute aren't considered part of your estate for estate tax purposes, so they will not be counted when determining whether any estate tax is due.

Potential Risks

Although 529 Accounts have a great number of benefits, there are some things to be aware of.

First, if you elect to contribute 5 years worth of annual exclusion gifts to a 529 account in a single year (a special feature that's available for these types of accounts) and you die prior to the 5 year period, a proportion of your contribution will be included in your estate tax for estate tax purposes.

Second, while withdrawals for qualified educational expenses are completely tax free, non-qualified distributions are subject to a 10% penalty on the account's earnings as well as taxation at the recipient's income tax rate.

For many, the benefits of a 529 Account far outweigh the risks, and are a very useful way to help families afford the high cost of college education. 

Learning about how your state handles estate planning is a great starting point to gaining a better understanding of why it is important. Conveniently, the State Bar of California has a wealth of information to serve the general public on a variety of legal topics topics. Here's the page for free legal information.

If you go to that page, you will see that 3 of the 12 guides is about estate planning, which just goes to show you how important the topic is. They include the following guides:

1. Do I Need a Will?
2. Estate Planning
3. Living Trust

Having an understanding of why estate planning is important for everyone--young or old; poor or wealthy--is super important, and one of the best starting points if you're on the fence about getting started.

Even if you already have an estate plan, it's still important to review it periodically to ensure that your wishes are accurately reflected. By reviewing your estate plan every 1-3 years, you can make sure that you and your family's needs are appropriately met. 

Updating Your Estate Planning Documents

If some time has passed since you created your estate plan, you may want to consider reviewing it (either with or without an estate planning lawyer) to see if there's anything you want to update.

If circumstances have changed since you initially created your estate plan, then you may need to hire an estate planning lawyer to help you make updates. Here are some common situations that prompt people to update their estate planning documents:

1. The death or birth of family members.
2. A substantial increase or decrease in wealth.
3. Changes in the law.

Partial Amendment or Restatement? 

If the changes to your Revocable Living Trust or Will are minor, you may only need a partial amendment or codicil, respectively.

However, if the changes are substantial, it's often best for the lawyer to "restate" or re-write the entirety of your trust or Will. This is often because your existing trust may contain provisions that depend on one another and making too many changes may detrimentally affect how your trust operates.

Indeed, with the rise of word processing and document assembly programs, restating documents can often be much cheaper than trying to hobble together changes to an existing document.

In simple situations, estate planning documents rarely need a complete overhaul. However, it's still a good idea to review your estate planning documents periodically, and at the very least, when there are major events such as the birth or death of a family member. In fact, you might consider setting a date every year where you review your financial situation, as well as your estate planning documents to ensure that both are performing properly.

Be Prepared

Kudos to you if you've already established an estate plan. You're among the small minority of responsible adults! You (and more importantly, your family) are likely in a much better position than other people you know. Interestingly, after a client finishes signing their estate planning documents, they often sigh and tell me how relieved they are. When I ask how it feels to be done, they reply, "I honestly can't believe I waited so long. I feel a sense of relief about concerns that I didn't even know I had!"