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Navigating Estate Tax Planning

Navigating the intricacies of your financial legacy can be a daunting task. Understanding the nuances of the estate tax and implementing robust estate tax planning strategies can ensure that your beneficiaries enjoy the fruits of your labor without being overburdened by tax liabilities.

What Is Estate Tax and Who Is Subject to Estate Tax?

The estate tax, often called the “death tax,” is a tax levied on the total value of a person’s estate upon their death. If the estate exceeds certain thresholds, it becomes subject to federal estate tax, potentially diminishing the wealth passed on to heirs.

Understanding who is subject to estate tax requires knowledge of current tax laws, which often change. These laws dictate specific exemption amounts and continually adjust what constitutes a taxable estate.

Why Is Estate Tax Planning Essential?

Proactive estate tax planning is crucial to preventing your heirs from facing unexpected tax burdens. Without careful planning, a significant portion of the estate you’ve worked hard to build could end up in the hands of the government, instead of your loved ones.

Tax planning involves a comprehensive look at your assets and potential tax liabilities, ensuring that your beneficiaries are safeguarded. The goal is to reduce estate tax significantly, allowing more wealth to transition to the next generation.

How Can Trusts Benefit Your Estate Plan?

Incorporating trusts into your estate plan can be a strategic move to minimize estate taxes. Trusts, particularly irrevocable ones, allow you to transfer wealth from your estate, reducing the overall value subject to estate taxes upon your death.

Trusts offer control over assets even after death, ensuring that your wishes concerning asset distribution are honored. Grantor trusts and other types of trust arrangements are advanced estate planning tools that can significantly reduce your taxable estate.

Are Gift Taxes and Estate Taxes Interconnected?

Yes, gift taxes and estate taxes are closely linked. Strategically gifting assets during your lifetime can reduce your estate’s size, subsequently decreasing estate tax liability. However, it’s essential to understand the gift tax exclusion limits in your tax planning.

Large gifts that exceed these exclusions may still be taxable. These count towards your estate and are potentially subject to estate tax if they surpass the lifetime exemption limit. It’s wise to consider the long-term implications of gifting on your overall estate.

What Changes in Tax Laws Mean for Your Estate Planning Strategies?

Estate tax laws are not static; they undergo changes and adjustments that could impact your estate. These changes in tax laws could influence exemption thresholds, tax rates and what assets are considered part of your taxable estate.

Keeping abreast of these changes is critical. Working with a tax professional who understands the latest federal estate tax laws ensures that your estate plan remains effective and compliant, safeguarding your estate from increased tax liability.

Can You Minimize Estate Taxes with Charitable Contributions?

Making charitable contributions is an effective strategy to minimize estate taxes. Donations to qualifying charitable organizations can reduce your taxable estate’s size, while allowing you to contribute to causes you care about.

This estate planning tool requires proper documentation and adherence to tax laws to ensure that your estate benefits from the tax reductions applicable to charitable contributions.

Do All States Impose Own Estate Taxes?

The estate tax isn’t just a federal matter. Several states impose their own estate taxes, with exemption thresholds and tax rates that differ from federal guidelines. State estate taxes can complicate estate planning, especially if you own assets in multiple states.

Understanding how state tax laws affect your estate is crucial. It involves complex considerations, particularly if you’re planning for properties in states with distinct estate or inheritance taxes.

How Does the Tax Cuts and Jobs Act Affect Estate Tax Planning?

The Tax Cuts and Jobs Act significantly impacted estate tax planning by increasing the federal estate tax exemption. This change means fewer estates will be subject to the estate tax. However, it is essential to remember that many parts of the Jobs Act are temporary.

Estate plans should consider future changes, possibly with lower exemptions. Careful planning and continual review of your estate strategy are necessary to adapt to legislative shifts and protect your estate from excessive taxation.

Closing Thoughts: Estate Tax Planning Takeaways

To encapsulate, here are the key points to remember in your estate tax planning journey:

  • Understand the implications of the estate tax on your assets.
  • Utilize trusts and lifetime gifts strategically to reduce estate size.
  • Keep updated with changes in tax laws, including state estate taxes.
  • Consider charitable contributions as part of your estate strategy.
  • Consult with a tax professional to navigate complex estate scenarios.

Effective estate tax planning can preserve your wealth for future generations, ensuring that your legacy endures as you envision.

When Should You Update Your Estate Plan?

We know we need to see our doctor for annual checkups and see the dentist every six months, not to mention getting a good night’s sleep, brushing and flossing our teeth. In the same way, your estate plan needs regular maintenance, according to an article from The Street, which asks, “When Is It Time to Update Your Estate Plan?”

Far too often, estate plans are created with the best intentions and then lie dormant, in many cases, for decades. Provisions no longer make sense, or people in key roles, like executors, either move away or die.

Failing to update an estate plan can lead to a beloved child being disinherited or an animal companion ending up in a shelter.

This is an easy problem to solve. However, it requires taking action. Scanning your estate plan once a year won’t take long. However, when certain events occur, it’s time to bring all your estate planning documents to an estate planning attorney’s office.

Here are a few trigger events when you may want to make changes:

Welcoming a new child into the family. Wills and trusts often contemplate future children. However, when the children arrive, you’ll need to update wills, trusts and beneficiary designations. Life insurance policies, investment accounts and retirement accounts allow you to name a beneficiary, and the proceeds from these accounts go directly to the beneficiaries, bypassing probate.

If no beneficiary is named or cannot be located, the asset usually goes back into the estate, meaning it goes through probate and there may be tax liabilities.

Charitable giving goals often change over time. An organization with great personal meaning in your twenties may be less important or may have closed. If you’ve become involved with a charitable mission and want to leave assets to the organization, you’ll want to create a charitable bequest in your will or trust. Those changes need to be reflected in your estate plan.

People’s ability to serve in fiduciary roles may have changed. If the people you assigned certain roles to—like trustees, executors, agents, or the guardian named for minor children—may no longer be suitable for the role. The person you selected to serve as a guardian for minor children may not be available or willing to manage adolescents. If your trustees are over 70, you may want to name an adult child to serve in this role.

Reviewing insurance policies needs to be done regularly. In some cases, the value of life insurance proceeds may be subject to estate tax. Proper planning should be able to avoid this by making certain the policy is not included in your taxable estate.

If you are considering taking out a new life insurance policy, revisit your existing plans with your estate planning attorney. It may make sense for you to create an insurance trust, which allows you to exempt certain assets from your taxable estate.

Are pets an important part of your life? If so, you may want to make plans for who should take care of your pet if you pass away. In many cases, a pet trust works to name a trustee to manage funds for the pet’s care and formally outlines how you want your pet to be cared for.

Reviewing your estate plan every three to five years with your estate planning attorney or whenever a significant life event occurs will ensure that your wishes are followed.

Reference: The Street (Oct. 30, 2023) “When Is It Time to Update Your Estate Plan?”

Should You Gift Kids Inheritance Now, or After You’ve Passed?

This is a genuine dilemma facing millions of parents and grandparents as they prepare to pass an enormous amount of wealth—$73 trillion—to the next generation. There are pros and cons to both approaches, according to the article, “Give the Kids Their Inheritance Now or Make Them Wait? 3 Things to Keep in Mind,” from Barron’s.

Giving too much too early could put parents in an economic bind in their later years. Therefore, this needs to be considered in light of today’s longer life spans. However, if you can afford to make a generous gift and your children could use the money now for a good purpose, it’s hard to justify making them wait.

How much to give is as critical as when to make the gift. The predominant concern is if you give your children too much, they won’t be motivated to earn their own wealth, or other family members will resent the gift. Estate planning attorneys and financial advisors routinely speak with families about these issues. These conversations always consider the values they want to instill in their children.

In some cases, parental support can help a child while working at an entry-level (i.e., low paying) job in their dream career. Covering the cost of rent for a few years can offer young adults a support net until they achieve financial stability.

This is very different than paying the expenses of a young adult with no career goal whose primary focus is a robust social life.

Anyone can make a yearly gift to any other person of up to $17,000 tax-free, or $34,000 per couple, but there are ways to make gifts without triggering gift taxes. Direct tuition payments to schools are tax-free. Unlike putting money into a 529 account, there is no limit to how much can be paid directly to a college or university. Parents and grandparents could also help with a downpayment on a child’s home without paying gift taxes.

Gifts don’t have to be large to have an impact. Some parents and grandparents give their children or grandchildren a small amount to start saving for retirement. A gift of a few thousand dollars during their 20s can grow into a nice sum over many decades. If the recipient has earned income, you can contribute to their IRA or Roth IRA accounts.

If assets are limited, consider giving personal possessions, such as jewelry or family heirlooms, to younger generations. You’ll get to see them enjoy their gifts, without putting your own financial situation at risk.

Whenever the decision is made to make these gifts, families should talk about their values and intentions around money.

If there are concerns about children losing an incentive to work because of the family’s wealth, a spendthrift trust might pass wealth along while controlling its distribution.

Remember that today’s generous federal estate tax rules are set to expire in 2026. Currently, individuals can gift up to about $13 million ($26 million for couples) tax-free in their estate plans. If the exemptions expire, this amount will be cut by approximately half.

Reference: Barron’s (Nov. 4, 2023) “Give the Kids Their Inheritance Now or Make Them Wait? 3 Things to Keep in Mind”

Should I Give the Kids My House in My Estate Planning?

Houses make for terrible wealth transfer vehicles. Bequeathing a house can mean passing along financial burdens, red tape, home maintenance responsibilities, potential family conflict and housing market volatility, says Kiplinger’s recent article, “Your Home Would Be a Terrible Inheritance for Your Kids.”

Communication about plans is critical. A study from Money & Family found that 68% of homeowners plan to leave a home or property to heirs. However, 56% haven’t told them about their plans. That will surprise the recipients who may or may not want or be able to service an inherited home.

Suppose you bequeath a house to an heir or heirs. In that case, they’ll have to make an immediate plan for home maintenance, mortgage payments (if necessary), utilities, property taxes, repairs and homeowners’ insurance. Zillow says this can amount to as much as $9,400 annually, not including mortgage payments.

The psychology of the home. Owners often have deep emotional attachments to their homes. Therefore, when people gift their homes to children and heirs, they’re not just giving an asset — they’re endowing them with all the good memories that were made on that property. Emotional connections to the home can be nearly as powerful as a strong attachment to a living being.

Beneficiaries may struggle to make practical choices about the inherited property because of the home’s sentimental value. This emotional aspect can cloud judgment and hinder the effective management and allocation of assets.

The financial burdens and family conflicts for beneficiaries. Inheriting a home entails a range of financial responsibilities that can quickly add up.

Property taxes, insurance premiums, ongoing maintenance costs and unexpected repairs can strain beneficiaries’ financial resources dramatically. If beneficiaries already have their own homes, inheriting an additional property can exacerbate financial burdens and potentially hinder their own financial goals, retirement plans and aspirations. The passing of a family member can also sometimes lead to conflicts among heirs, potentially exacerbating existing fractures in relationships among siblings and other family members.

According to a 2018 study, nearly half (44%) of respondents saw family strife during an estate settlement. Disagreements can cause tension, strain relationships and even result in lengthy legal battles.

Is Mick Jagger Thinking about Estate Planning?

The “Satisfaction” singer, who is putting out a new album with the band, said that while the Rolling Stones have no plans right now to sell their post-1971 catalog — which includes Black and Blue and Tattoo You — but have some ideas of what to do with it eventually.

People’s recent article entitled, “Mick Jagger Hints Rolling Stones May Leave $500M Album Fortune to Charity to ‘Do Some Good in the World,’” reports that in a new interview with WSJ Magazine, the 80-year-old rock legend said they could give the approximately half a billion dollars they would get from selling it to their heirs, but “the children don’t need $500 million to live well. Come on.”

So he said that “maybe” the money could go to charity instead. “You maybe do some good in the world,” added Jagger.

Meanwhile, he and fellow bandmembers Keith Richards and Ronnie Wood are releasing another album. Their upcoming release, Hackney Diamonds, is the band’s first album of original music in 18 years.

Jagger noted to WSJ that there are a number of guests featured on the album, including Paul McCartney, who contributed bass, Elton John and Stevie Wonder on the piano, and Lady Gaga, who contributed vocals to their song “Sweet Sound of Heaven,” while working in the same studio as the band during one session.

Jagger revealed that he had put a deadline pressure on the group to keep the album on track, saying, “What I want to do is write some songs, go into the studio, and finish the record by Valentine’s Day. Which was just a day I picked out of the hat — but everyone can remember it. And then we’ll go on tour with it, the way we used to.”

When Richards, 79, pushed back, Jagger said he told him, “‘It may never happen, Keith, but that’s the aim. We’re going to have a f—ing deadline.’ ”

“Otherwise, we’re just going to go into the studio, for two weeks, and come out again, and then six weeks later, we’re going to go back in there. Like, no. Let’s make a deadline,” he added.

In the end, the deadline pressure worked. The band recorded basic tracks in four weeks, missing their Valentine’s Day target by just a few weeks.

In an emotional moment, the trio also touched on what it was like to record the album without their longtime drummer, Charlie Watts, who died in August 2021 at age 80.

“Ever since Charlie’s gone it’s different, he’s number four,” Richards said. “He’s missing, he’s up there. Of course he’s missed incredibly.”

Reference: People (Oct. 3, 2023) “Mick Jagger Hints Rolling Stones May Leave $500M Album Fortune to Charity to ‘Do Some Good in the World’”

Does Your State Have an Inheritance Tax?

Most Americans aren’t concerned with the $12.92 million threshold for the federal estate tax. However, some states are not as generous with estate tax exemptions, and others impose inheritance taxes on heirs, reports the article “States That Won’t Tax Your Death” from Kiplinger. State death taxes can become expensive for loved ones.

Death taxes are tax liabilities incurred by heirs when you die. In some states, heirs pay death taxes on even small inheritances. For example, heirs in Nebraska pay a death tax rate of 15% on inheritances over $25,000. The good news is that if you live in a state with no estate or inheritance tax, you don’t have to worry about a state death tax.

If taxes are a big consideration for where you live, consider the pros and cons before making any big decisions. Not every state is as tax-friendly regarding other taxes, fees, or the overall cost of living.

  • Alabama has no death taxes and low grocery taxes.
  • Alaska has no death taxes, and Alaska pays residents to live in the state through the Permanent Fund Dividend. In 2023, the payment was $1,312.
  • Arizona has no death tax, low-income taxes and a flat income rate of 2.5%.
  • Arkansas has no estate or death taxes, and a recent tax cut bill reduced income taxes.
  • California is generally a high-tax state with high costs of living, but there is no death tax.
  • Colorado has no death tax and the highest EV credit of any state.
  • Delaware is known to be very business friendly. However, it’s also a state with no sales tax, no state estate tax and no inheritance tax.
  • Florida has no death taxes, and what appeals to many new arrivals is no state income tax.
  • Georgia has no estate or inheritance tax.
  • Idaho doesn’t have an inheritance tax, but some types of retirement income, including pensions, are taxable.
  • Indiana has no inheritance tax and a fairly low flat-income tax rate of 3.15% (although some counties impose income taxes of their own).
  • Kansas has no inheritance tax or estate tax.
  • Louisiana has no death taxes and some of the lowest property taxes in the country.
  • Michigan has no estate tax or inheritance tax.
  • Mississippi taxes groceries but has no death tax or estate tax.
  • Missouri has no state death tax.
  • Montana has no state death tax.
  • Nevada has no inheritance taxes and no income tax.
  • New Hampshire doesn’t have a death tax, and there’s no personal income tax, but there is a tax on interest in dividends.
  • New Mexico has no estate or inheritance tax.
  • North Carolina has no death taxes and low property taxes.
  • North Dakota has no estate or inheritance tax, and the highest income tax rate is 2.5%.
  • Ohio has no death taxes but does have high property taxes.
  • Oklahoma has no death tax; low property and income tax rates never reach 5%.
  • South Carolina has no death tax or inheritance tax.
  • South Dakota has no inheritance tax and no state income taxes.
  • Tennessee has no estate, inheritance, or income tax.
  • Texas has no income tax and no inheritance tax.
  • Utah has no death tax but is one of 11 states that taxes Social Security retirement benefits.
  • Virginia has high income tax rates but no inheritance or state estate taxes.
  • West Virginia has no death tax.
  • Wisconsin has no death or state estate taxes. However, property and income tax rates are high.
  • Kiplinger ranks Wyoming as one of the best states for middle-class families because of the state’s overall low tax burden. There’s also no inheritance tax.

Reference: Kiplinger (Oct. 12, 2023) “States That Won’t Tax Your Death”

Why Your Will Is Just One Part of an Estate Plan

When a veterinarian’s third wife left him, he rushed to update his will and estate planning documents to ensure that she wouldn’t get anything when he died. However, the handwritten change he faxed to his life insurance company wasn’t accepted, so his three children from his first marriage spent six years embroiled in a fight with her after he died.

Most people make the mistake of assuming their will is the last word on who receives what when they die, according to a recent article, “Your Will Alone Won’t Guarantee Your Money Goes to Your Heirs,” from The Wall Street Journal. However, certain documents override wills, and chances are you’ve got more than a few: beneficiary forms for retirement accounts, life insurance and some bank and investment accounts. This is the case regardless of whether the accounts were opened through the workplace or on your own.

Failure to update them and your assets could end up in an ex-spouse’s accounts or a court battle. Estate planning attorneys say this is a growing issue as Americans juggle multiple accounts and have more of their net worth in retirement accounts.

You must be sure that all beneficiary forms match your current intent and estate plan. For one employee benefits attorney, the hardest part of the job is writing denial letters to children and parents, advising them they are not entitled to the accounts.

Some laws regarding pensions and spouses need to be explored and clarified. For example, an employee divorces and names an adult child as the new 401(k) beneficiary. The employee then remarries. Under federal law, the new spouse gets the 401(k), no matter what the beneficiary form or will says. The rules vary for beneficiary forms for different accounts, so each needs to be examined.

With 401(k)s, married spouses are automatically entitled to the money unless they formally waive it, and the waiver must be notarized. If no beneficiary and spouse are listed, the employer plan documents determine who is next in line.

With IRAs, in most states, you can name someone other than your spouse as a beneficiary without needing a waiver. You will need a waiver if you live in a community property state, like California or Texas. If no beneficiary is listed, the terms of the IRA agreement determine who inherits the IRA.

With insurance payouts, the employer plan documents control the payout, if the policy is a workplace plan obtained through your employer. If you purchased the policy independently, the insurance company’s rules govern. Litigation typically ends up in state court.

Want to protect your heirs?

Take beneficiary forms seriously, and don’t just sign and forget them. Be sure to include the beneficiaries’ proper name, date of birth and Social Security number.

Keep the documents updated according to the institution’s guidelines anytime there is a major life event, like getting married, divorced, or having children. Some states have laws automatically revoking designation upon divorce, but many do not.

For banks and investment accounts, people sometimes add a “payable on death” designation by filling out a special beneficiary form and then forget about it. If one child is named and not the other, this can lead to hurt feelings and fractured relationships.

These accounts and insurance policies must be aligned with your overall estate plan, or they may not work as you want.

Keep copies of beneficiary forms with your estate planning documents. You may want to send duplicate beneficiary forms to the bank, brokerage house, or insurance company and ask for one back with a stamp indicating it was received. You can sometimes check your account profile online to see if the change you requested has been made.

Reference: The Wall Street Journal (Sep. 30, 2023) “Your Will Alone Won’t Guarantee Your Money Goes to Your Heirs”

What Is in Senator Dianne Feinstein’s Estate?

The properties demonstrate Feinstein and her husband’s expansive wealth and success in their respective fields, according to BNN’s recent article, “Feinstein’s Billionaire Legacy: Children to Inherit Prominent Properties Amid Disputes.”

Feinstein, who was raised with money, has been one of the wealthiest members of Congress for years. She was independently wealthy when she married Richard Blum in 1980. After her election to the Senate, she placed her securities into a blind trust valued between $5 million and $25 million.

The couple’s combined fortunes have thrived, surpassing even the senator’s previous standard of living. Her primary residence is a 9,500-square-foot mansion in the posh Pacific Heights neighborhood of San Francisco. Until recently, their vacation homes included the 36-acre Bear Paw Ranch in Aspen, Colorado, and a seven-bedroom Lake Tahoe compound. Current holdings include a property on the Hawaii island of Kauai and a home in Washington, D.C.

However, the battle over Blum’s estate raises questions about the extent of his wealth and the out-of-pocket cost of home health care that Senator Feinstein has received since her bout with shingles earlier this year. During his lifetime, Blum, a private equity magnate, was often publicly referred to as a billionaire. However, the pandemic reportedly significantly impacted his investments, particularly his extensive hotel holdings.

An ugly dispute has arisen among the couple’s children, casting a new light on their fortune, and hinting at a potential court battle over the estate. Feinstein’s daughter, Katherine, and Blum’s three daughters, Annette Blum, Heidi Blum Riley, and Eileen Blum Bourgarde, will split the estate equally.  However, a dispute has come up concerning a waterfront house in Marin County, California, valued at $7.5 million, which was at the center of a dispute between Katherine and Blum’s daughters this year.

The couple’s wealth is largely attributed to his success as an investor. Feinstein’s daughter and three stepdaughters are set to inherit the late senator’s $102 million property portfolio and her $62 million private jet.

The distribution of the portfolio, estimated to be worth over $160 million, is now a big issue among the couple’s children.

Reference: BNN (Oct. 3, 2023) “Feinstein’s Billionaire Legacy: Children to Inherit Prominent Properties Amid Disputes”

Why You Need to Include Digital Assets in Your Estate Plan

A new form of wealth, with different ownership, storage, and transferability terms, has created a new challenge for estate planning from traditional forms of wealth. These are digital assets, electronic records in which an individual has a right or interest, as explained in a recent article, “Planning for Digital Assets 101,” from Wealth Management.

Digital assets can be divided into two groups: sentimental digital assets and investment digital assets.

Sentimental digital assets are those with an emotional tie, like photos, videos, social media accounts, etc. For these assets, the goal is to provide access to loved ones after a person’s death. Some platforms allow settings to name a legacy contact. A list of accounts, usernames and passwords will be helpful for family members.

The IRS defines investment digital assets as “any digital representation of value which is recorded on a cryptographically secured distributed ledger, like a blockchain, or any similar technology as specified by the Secretary.” This type of asset includes cryptocurrency, stablecoins and non-fungible tokens.

The challenge of digital investment assets in estate planning centers on how they are owned and stored.

Digital assets are stored in digital wallets, web-based or hardware-based. “Hot wallets” are web-based and run on smartphones or computers. Many investors use them for small amounts of cryptocurrency and frequent trading. “Cold wallets” are hardware-based wallets stored on devices not connected to the internet, reducing the risk of unauthorized access. A cold wallet can only communicate with an internet-connected device when plugged in. An investor will have a seed phrase or backup code to access the cold wallet, which the owner must store in a secure place.

Understanding the storage system is essential for estate planning for two main reasons:

Beneficiary Access. The recipient of a gift or bequest of the digital asset must have access to the relevant storage device to access the actual investment. Sharing this information comes with an element of risk, as access is inherently tied to value.

Fiduciary Access. If only the owner has access, heirs will have no way to gain access to the digital assets when the owner dies. Digital exchanges don’t allow users to name a contact to access the investment information upon death. Most exchanges don’t have centralized entities to record information. If access is denied to the heir, the investment could be lost.

Transferring digital assets requires providing access to beneficiaries and/or fiduciaries. There are several ways to structure such a transfer while minimizing the risk of theft or loss.

Digital assets can be transferred to a Limited Liability Company, and subject to certain limitations, retain control of the digital assets’ management by serving as LLC manager. Transferred LLC interests can also provide a mechanism to discount the value of the transferred interest. In addition, LLCs can provide asset protection since, in most states, LLCs protect a member’s personal assets from an LLC’s liabilities.

A directed trust is another way to transfer digital assets, while maintaining control and decision-making with the owner. In some states, a directed trust can have an “investment trustee” or “investment trust director” to exclusively handle investment responsibilities, including managing and storing digital assets.

Even using these two methods, someone other than the original owner must be granted access to the digital assets. One way to do this is by naming a “digital fiduciary”—someone tasked with managing the digital assets.

Estate plans involving digital assets must clearly outline heirs for the digital investment and its tangible storage devices. The assets can pass with the residuary, and complexities can arise if the residuary beneficiaries differ from tangible property beneficiaries who will receive the storage device. Speak with an experienced estate planning attorney to be sure that your digital assets are included in your estate plan.

Reference: Wealth Management (Sep. 19, 2023) “Planning for Digital Assets 101”

Now Is the Time for Estate Planning

Individuals in their twenties are usually focused on their careers, acquiring assets and enjoying life—death is one of the last things on their minds, according to a recent article from The National Law Review, “Don’t Wait until Time Is Up.” However, unexpected things happen, even to healthy young people.

Estate planning documents, including Power of Attorney, Healthcare Proxy and Living Will, should be prepared because they go into effect as soon as they are executed, allowing others to carry out legal, financial and health wishes in case of incapacity.

Thirty-somethings may have reached various milestones, such as marriage, having children, owning property, starting a business, or working in the family business. This is also a time when life-changing events occur, such as divorce, death in the family, inheritance, moving to another state and more. Estate planning documents should be in place now, including a will and ancillary documents. This may also be the time to establish trusts to accomplish estate planning goals.

If you are getting married, already married, divorced, or remarried, it’s time to call your estate planning attorney. Estate planning is often negotiated as part of prenuptial, postnuptial and separation agreements. Upon getting married or remarried, your estate plan must be updated to include your new spouse and/or remove your ex-spouse. A new spouse may have elective rights to a portion of their spouse’s estate if they remain married at death and the deceased spouse has failed to provide for their surviving spouse.

One of the most important provisions of a will is the designation of a guardian of minor children. The guardian will take legal custody and responsibility for minor children if both natural parents die while the child is under legal age. Any new parent must execute a will or update their will to designate a guardian. Within the will, you may also request guidelines for guardians to file while raising minor children. The court must find and appoint a guardian if there is no will or the will does not designate a guardian.

If you die without a will, the state laws of intestacy control, which means your spouse and nearest heirs will inherit your estate. If this is not your intention and you want to leave assets to friends, charities, or other relatives, then you need a will.

An estate plan is also needed to streamline the probate and administrative process of the estate. An estate plan can be designed to effectively minimize the expense, delay, and loss of privacy of the probate process. This is typically done by establishing a Living Revocable Trust in addition to the will. The trust can be funded during your lifetime and controlled by you before death. Assets don’t pass through the will, avoiding the need for probate.

One of the first steps of probate is filing the will with the appropriate court when the will becomes part of the public record, and anyone can access it. Probate varies from state to state, and courts experiencing back-ups can delay admitting the will and appointing an executor to manage and distribute the assets. This process can take up to a year in some New York Surrogate courts.

Having an estate plan in place and updating it regularly can help protect assets and beneficiaries. If you haven’t already implemented it, now is the best time to begin.

Reference: The National Law Review (Sep. 12, 2023) “Don’t Wait until Time Is Up”

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