A financial review is top-of-mind for many people after the start of a new year. Estate planning often remains a low-priority because of its connection with death, but experts say 2012 is a pivotal year for those wishing to bequeath assets to heirs and beneficiaries.

As uncomfortable as the subjects of incapacity or death sound for Central Florida residents, even more unsettling is the knowledge that control of assets could end up in the wrong hands.

While mental or physical incapacity can happen at any age, the probability of either one or both increases the older a person gets. Establishing a health care proxy and living will gives an individual a choice in end-stage medical care. A durable power of attorney ensures a trusted manager takes care of financial decisions.

Additionally, an up-to-date estate plan will reflect any beneficiary changes resulting from birth, death, divorce or change of heart. For workplace pension plans, including 401(k) plans, permission from a spouse is often necessary to designate any beneficiary other than a married partner.

Changing tax laws regularly impinge on estate plans. The 2012 federal estate tax exemption is an inflation-adjusted $5.12 million, up from the $5 million limit in 2011. Estates worth more than the limit are taxed at 35 percent.

A secondary focus would include taxation at the state level. Individuals who reside in a state where no estate tax is imposed may be affected, if they own property in a state that levies the tax. Specialized attorneys help create flexibility within an estate plan to ride possible changes in the federal estate and gift tax laws.

One possibility to avoid unnecessary taxation may be asset transfers in the present. A legal advisor may suggest placing assets in a trust or taking advantage of tax-free gift giving.

Individuals may gift $13,000 annually without a federal tax penalty. Other options include investments in tuition, college savings or medical care for a relative.

Trusts benefit estate plans in multiple situations. Some are designed to prevent taxation of assets for certain heirs, like grandchildren or children from earlier marriages. Others help establish pay out limits to heirs who may not be fiscally responsible.

Using a trust to transfer assets to charities or to protect assets from creditors or ex-spouses also may be beneficial.

Source: Forbes, "Make a New Year's Resolution to Give Your Estate Plan a Checkup," Debra L. Jacobs, Jan. 4, 2012