Time to Update Your Estate Plan – What Fewer IRS Audits Mean

News that IRS audits are on the decline may sound like a welcome relief, especially for high-income individuals. Yet, for anyone focused on long-term wealth preservation, a fundamental shift in enforcement isn’t a free pass. Now may be the best time to review your estate planning strategy. 

A recent report from The New York Times highlights a consistent drop in IRS audits. For context, the most recent IRS data shows audit rates for taxpayers have declined about two-thirds since 2010. Years of budget cuts and staffing shortages have left the agency stretched thin. 

What Fewer IRS Audits mean for your estate planning

Still, wealth scrutiny is as high as ever, and the agency is prioritizing high-value returns involving assets. Behind the scenes, the IRS is reallocating its resources and leveraging advanced technology. Reduced enforcement might create a temporary sense of security, but it’s a missed opportunity to update your estate plan before new policy shifts take effect.

Are Fewer IRS Audits a Green Light or a Red Flag?

The article mentions that individuals earning well into the seven-figure range may be getting a reprieve from fewer IRS audits, but this trend deserves more examination. While overall audits have decreased, the IRS is strategically reallocating its limited resources to focus on portfolios with the highest potential return on investment. Auditing high-income individuals is more time-consuming, but yields significantly higher revenue. 

A study from the National Bureau of Economic Research found that audits of taxpayers in the top 0.1% returned more than $6 for every dollar spent. As a high-net-worth individual, an audit doesn’t just carry financial risk – it sends a message. Even one high-profile enforcement action can trigger a ripple effect across similar income brackets, pushing others to tighten their compliance. 

The IRS knows this, and it’s why, even with limited resources, targeting the wealthiest taxpayers delivers a far greater return. The return comes as recovered revenue and a behavioral shift among those with the most to lose. Politically, focusing on high earners aligns with public sentiment supporting tax fairness. 

In this context, reduced IRS audits increase the value of proactive estate planning when safeguarding your assets.  

A Quiet Tax Environment Is the Best Time to Act

When enforcement is quiet, opportunity knocks. Without looming deadlines or reactive decisions getting in the way, you can take a thoughtful approach to refine your estate plan by: 

  • Doing Tax-Efficient Estate Planning
  • Maximizing Charitable Giving
  • Exploring Well-timed Asset Transfers to Reduce Your Future Tax Burdens

Revisiting your estate plan now isn’t just about optimization, but timing as well. The birth of a child or grandchild, a marriage, and acquiring new assets can all affect your estate plan. Still, many people will delay updating their estate plans until they’re forced to take action. 

Instead of letting urgency take the lead, use the calm to make smart planning decisions. If you make adjustments now, it can protect your loved ones and allow your legacy to unfold on your terms. 

Signs It’s Time to Review Your Estate Plan

Even the most well-structured estate plans need regular attention, especially if your financial picture is likely to change. Here are a few signals that a bespoke estate planning review is in order: 

  • No Named Guardian for Minor Children: This critical gap could leave your family vulnerable in emergencies. 
  • Significant Growth in Assets: If your portfolio value has increased, your tax exposure may have, too. 
  • Your Will or Trust is Outdated: Staying on top of your plan is necessary. For example, documents more than five years old may not reflect your current assets or goals. 

In California, real estate values and wealth accumulation can rise quickly – a home purchased in Newport Beach for $1.2 million a decade ago might be worth over $3 million. Regular check-ins help your estate plan keep pace. 

Speak with an Estate Planning Lawyer in Orange County

Estate planning isn’t a one-size-fits-all solution. From unique property laws to evolving tax codes, any decision you make could carry long-term implications for your legacy. Regular updates protect you from avoidable taxes or unintended heirs, which could impact your legacy for generations. 

That’s why working with Law Stein Anderson, a local estate planning attorney who understands the ins and outs of estate planning in Orange County is critical for high-net-worth individuals. Expert, state-specific guidance during times of low enforcement will provide clarity, confidence, and lasting protection for the future.