How and Where To Store Your Will

September 18, 2025

If you’ve recently had your will created or your estate plan updated, congratulations! You’ve ticked a big check mark on your grown-up to-do list. However, you’re not done with estate planning, according to a recent article from USA Today, “You Made a Will—Now What? Storing It Properly Is Just as Important.” It is important to identify how and where to store your will.

Less than a third of Americans have a will, which should be concerning for their families and loved ones. Perhaps more worrisome: those who do have a will and other estate planning documents have their materials in a drawer, a filing cabinet, or a home safe they haven’t looked at in years—or decades.

Once the ink is dry, the estate plan isn’t done. If your family doesn’t know where to find the will, and unless it’s updated, secure and accessible, even the best estate planning documents won’t work as intended. If the will can’t be found or is out-of-date, the entire estate will need to go through probate, regardless of all the planning you’ve done. Paperwork piles up, court fees get bigger and families who should be focusing on grieving and helping each other during a major loss are instead dealing with bureaucracy and managing a rudderless ship.

For more tech-savvy individuals, a digital vault may be the solution. These are encrypted, cloud-based platforms used to store wills, trusts, passwords and essential documents in one online location. The goal of the platforms is to allow executors, attorneys and family members to access the documents they need when they are needed. The systems are built with permission and authentication for security.

If you’re not comfortable putting your life online, an alternative is to have a fire- and flood-proof safe in your home and ensure that your spouse, executor and trusted family member know where it is and how to open it when needed.

The digital vault offers some significant benefits. If adult children and grandchildren live in another state or another country, they will be able to access documents regardless of their location. This also allows you to store digital assets, including photos, utility logins and even instructions for final wishes, so that others can access them.

Many people already have a digital vault through their financial advisor’s office. However, they may not have considered that it could also serve as an estate planning tool. Be sure to learn how to share the login information with the intended recipients properly.

If a will can’t be found, if multiple wills are found, or if the will is so out-of-date as to be found invalid, planning can be undone. Securing the will is as important as creating an estate plan. Work with the assistance of an experienced estate planning attorney to determine how and where to store your will. Peace of mind comes from knowing that everything is in place and that anyone who needs your information will be able to access it in a timely manner. If you would like to learn more about creating a will or trust, please visit our previous posts.

Reference: USA Today (Aug. 15, 2025) “You Made a Will—Now What? Storing It Properly Is Just as Important”

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How Wealth is Distributed in Blended Families

September 2, 2025

This summer’s passing of Ozzy Osbourne was mourned by heavy metal fans. Whether you liked his music or not, Osbourne left an estate estimated to be worth $230 million plus future royalties, reports a recent article from Think Advisor, “What Wealthy Families Can Learn From a Rock Star’s Estate.” It caught the attention of estate planning attorneys for lessons about how wealth is distributed in blended families. Whether you liked his music or not, Osbourne left an estate estimated to be worth $230 million plus future royalties, reports a recent article from Think Advisor, “What Wealthy Families Can Learn From a Rock Star’s Estate.”

There’s no estate battle for now. However, only time will tell if the Osbourne family faces issues like those of many blended families. There’s no simple playbook for these situations, and the best outcomes require the counsel of an experienced estate planning attorney and savvy planning.

Creating trust structures to balance a surviving spouse’s financial well-being with inheritances for children from prior marriages takes knowledge and experience. A plan needs to be proactively created and regularly revisited to affirm the choices made. The challenge is anticipating potential disputes.

An ill-conceived plan would be to place all the assets in a single trust to benefit the surviving spouse during their lifetime and then have the assets flow to the biological children after their death. This sounds like a good solution. However, the arrangement puts the surviving spouse’s interests at odds with those of the children. They’re waiting for the surviving spouse to die for their inheritance and have no control over how much money is spent. They might end up with nothing, despite the best intentions of the deceased spouse.

Another solution with potential for disaster is creating an estate for the benefit of the surviving spouse and putting one or more of the biological children in charge of the estate in an attempt to balance the structure. The surviving spouse is now dependent upon the biological children to ask for money, which can create more problems than it solves.

A controlling trustee is often considered a potential solution for blended family estate plans. If the surviving spouse is intent on blowing through the money, the children can go to court and file a lawsuit to ensure that their rights and interests are protected. However, litigation is expensive and divisive.

A better idea might be to leave the house and a portion of the liquid estate to the surviving spouse, while leaving the rest of the estate to the children. The goal is to prevent tension between family members over access and control of assets.

An estate plan for a blended family requires effective communication, thorough planning and a delicate balance to protect the interests of all parties. It’s not easy. An experienced estate planning attorney can help you understand how wealth is distributed in blended families to ensure that it remains effective over time. The result of a blended family remaining a family after one of the spouses has passed can be more of a legacy than wealth. If you would like to learn more about planning for blended families, please visit our previous posts.

Reference: Think Advisor (Aug. 11, 2025) “What Wealthy Families Can Learn From a Rock Star’s Estate”

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Choosing the Right Estate Planning Attorney in Texas: Questions to Ask Before You Hire

September 1, 2025

When it comes to estate planning, choosing the right attorney can make all the difference. Your estate plan isn’t just about documents—it’s about protecting your family, your assets, and your future. With so many estate planning attorneys in Texas, how do you choose the right estate planning attorney for your needs? This article covers the questions to ask, tips for selecting a qualified professional, and how the right estate planning attorney can give you peace of mind for years to come.

Outline

What Does an Estate Planning Attorney Do?
Why Is It Important to Hire an Attorney in Texas for Estate Planning?
What Should You Ask an Estate Planning Attorney Before Hiring?
What Documents Should a Comprehensive Estate Plan Include?
What’s the Difference Between a Will and a Trust?
How Can Estate Planning Help You Avoid Probate?
Why Experience in Estate Law Matters
How Do You Know If the Attorney Is a Good Fit?
How Much Do Estate Planning Attorneys Typically Charge?
When Should You Start Estate Planning?

What Does an Estate Planning Attorney Do?

An estate planning attorney helps individuals and families draft legal documents to manage their estate during life and after death. These documents include wills, trusts, powers of attorney, and other tools used to distribute assets, reduce estate taxes, and plan for incapacity.

Beyond simply filling out paperwork, a planning attorney brings legal knowledge and experience in estate law to ensure everything is valid under Texas law. The attorney you select should also be able to explain how different estate planning tools work and customize a strategy to suit your situation.

Why Is It Important to Hire an Attorney in Texas for Estate Planning?

Each state has unique laws around estate planning and probate. Working with an attorney in Texas ensures that your documents are compliant with current Texas laws. For example, how a revocable living trust functions or how witnesses must sign a will can vary by state.

A local estate planning lawyer also understands the nuances of Texas estate procedures, including trust administration and the probate process. This local insight is essential for protecting your estate and ensuring your estate plan functions as intended when your family needs it most.

What Should You Ask an Estate Planning Attorney Before Hiring?

One of the best things you can do during a consultation is to come prepared with the right questions to ask. Some smart questions to ask an estate planning attorney include:

How long have you been practicing estate planning?
Do you focus only on estate law, or do you handle other areas like business law?
Can you help with both wills and trusts?
What’s your approach to tax planning and minimizing estate exposure?

Make sure you ask about their communication style, how they charge (whether hourly or flat fee), and what ongoing support they provide. The answers will help you choose someone you feel confident working with.

What Documents Should a Comprehensive Estate Plan Include?

A strong estate plan usually includes a will, a revocable living trust (if appropriate), a power of attorney, and advance healthcare directives. Depending on your situation, your attorney may also suggest other legal documents, such as a HIPAA release or guardianship designations.

Working with an experienced estate planning attorney ensures that all documents are properly drafted and tailored to your specific goals. This helps prevent confusion, delays, or probate disputes down the road.

What’s the Difference Between a Will and a Trust?

A will outlines how your assets should be distributed after death and appoints a guardian if you have minor children. It also must go through probate. A trust, on the other hand, allows your assets to pass outside of probate, often saving time and money.

Your estate planning attorney can explain whether a revocable living trust makes sense for your estate or if a simple will meets your needs. Understanding the benefits of each helps you make informed decisions.

How Can Estate Planning Help You Avoid Probate?

One of the biggest benefits of estate planning is the ability to avoid probate. Assets held in a trust, those with named beneficiaries (like life insurance or retirement accounts), or jointly owned property can pass directly to heirs without going through the probate process.

Avoiding probate can reduce costs, shorten delays, and give your family peace of mind. A good attorney will identify which assets may pass outside of probate and build a plan that aligns with your goals.

Why Experience in Estate Law Matters

Choosing an attorney who specializes in estate planning—rather than a general lawyer—ensures you’re working with someone who understands all the details of estate law. These include everything from Texas estate planning regulations to federal tax planning strategies.

Look for Texas estate planning lawyers who have handled similar cases, particularly if your situation involves blended families, large estates, or special trust arrangements. Their experience can save you from costly errors.

How Do You Know If the Attorney Is a Good Fit?

Your estate plan is personal, so it’s important to find the right attorney for your comfort level and communication style. During your consultation, pay attention to how they explain things. Do they listen well? Do they answer your questions clearly?

You want an attorney who doesn’t just draft documents—but one who truly understands your goals and treats your family’s legacy with care. When you feel heard and respected, you’ve likely found the right estate planning attorney.

How Much Do Estate Planning Attorneys Typically Charge?

Planning attorneys in Texas may charge by the hour or offer flat fee packages. For a comprehensive estate plan, costs typically range from $1,500 to $5,000, depending on the complexity of your needs.

Don’t hesitate to ask about pricing and what’s included. Some law firms bundle their services, while others charge separately for each legal document. Getting a clear understanding of costs up front is one tip that can prevent surprises later on.

When Should You Start Estate Planning?

The short answer: now. Estate planning can feel overwhelming, but delaying it can leave your family vulnerable. Life is unpredictable, and having a plan in place ensures your wishes are known, your children are protected, and your estate is handled properly.

Whether you’re starting from scratch or need to update your existing plan, working with an attorney ensures nothing gets missed. The sooner you start planning, the sooner you’ll gain peace of mind.

Summary: What to Remember

A strong estate plan protects your family, assets, and legacy.
Choose an estate planning attorney who understands Texas estate planning laws.
Prepare smart questions to ask during your consultation.
Your plan should include a will, trust, power of attorney, and healthcare directives.
Avoiding probate and minimizing taxes are major benefits of planning ahead.
Cost varies, but many attorneys offer flat fee options.
Start early to ensure your plan reflects your current wishes and life stage.

If you’re ready to secure your family’s future, now is the time to act. Contact us today to schedule a consultation with one of our trusted estate planning attorneys in Texas. Let us help you build a plan that brings clarity, confidence, and peace of mind.

Options when Inheriting a House

August 21, 2025

When someone inherits a home, the emotional connection often competes with practical concerns. You may want to preserve the memory, move in, rent it, or sell it. However, each path comes with financial, legal and tax implications. Understanding your options when inheriting a house can help you make informed decisions that align with both your personal goals and long-term stability.

Assess the Property’s Condition and Financial Obligations

Start by evaluating the home’s physical state. A property that needs extensive repairs or updates may not be worth keeping if you can’t afford the upkeep. Get an inspection if necessary to understand the costs involved.

Next, confirm whether there’s a mortgage or any liens. Just because you inherited the house doesn’t mean it’s fully paid off. If the mortgage is assumable, you may be able to assume it. If not, the balance will need to be paid off, refinanced, or covered through the estate.

You should also factor in property taxes, insurance, maintenance costs and potential homeowners association fees. These factors will impact the long-term affordability of maintaining the house.

Consider Your Use and Intentions

Decide whether you want to live in the home, rent it out, or sell it. Each choice has different tax implications:

Selling the home may trigger capital gains tax. However, heirs typically benefit from a step-up in basis, meaning the home’s value resets to fair market value at the date of death. That often reduces or eliminates capital gains.
Renting the home can generate income. However, it turns you into a landlord with all the responsibilities that entails. You’ll need to address local rental laws and potential property management needs.
Living in the home could be beneficial if it aligns with your lifestyle and financial situation. However, you’ll need to ensure that it is properly titled and insured in your name.

Address Estate and Title Matters

The home must be legally transferred to you before you can make changes. This typically happens through the probate process, unless the home was held in a trust or jointly titled with rights of survivorship.

An estate or probate attorney can help navigate these legal processes, especially if other heirs are involved or if disputes arise. Once the title is in your name, you can take formal ownership actions, such as refinancing or selling.

Don’t Delay Financial Planning for the Property

Remember, you have options when inheriting a house. Inheriting a home may significantly affect your estate and tax planning. You should update your will, consider creating a trust and review your insurance coverage. If you plan to keep the home in the long term, it should be integrated into your personal financial strategy.

Some heirs feel overwhelmed by the burden of inherited property. Selling may feel like a loss. However, it may be the wisest choice depending on your goals and the home’s condition. If you would like to learn more about how to manage inherited property, please visit our previous posts.

Reference: SmartAsset (February 17, 2025) “What to Do When You Inherit a House”

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Common Trust Mistakes to Avoid

August 19, 2025

A trust helps manage your assets during your lifetime and after death. It allows you to avoid probate, plan for incapacity and maintain privacy. However, creating a trust is only the beginning. Many people fail to maintain or properly structure their trusts, which can jeopardize their intended benefits. There are some common trust mistakes to avoid.

Failing to Fund the Trust

The most common and critical mistake is failing to transfer assets into the trust. A trust without assets—sometimes called an “empty trust”—offers no legal control. If your real estate, accounts, or investments aren’t retitled in the trust’s name, they remain subject to probate.

This oversight defeats one of the primary purposes of a trust. Ensuring that assets are properly titled or assigned to the trust is essential. Work with an attorney to confirm that your trust is fully funded, especially if your assets change over time.

Choosing the Wrong Trustee

The trustee plays a vital role in managing and distributing the trust’s assets. Selecting someone based on family ties rather than capability can lead to conflicts or mismanagement. A trustee should be financially literate, organized and impartial.

Some people name co-trustees, thinking it will balance power. However, this can complicate decision-making. If there’s any concern about fairness, consider naming a professional fiduciary or trust company that is more familiar with managing assets instead.

Not Updating the Trust

Major life events—such as marriage, divorce, births and deaths—require updates to your trust. Yet many people forget to review their documents for years. This can result in outdated beneficiaries, removed heirs, or outdated guardianship preferences.

Changes in tax or state law may impact how your trust operates. Regular legal reviews help ensure that your trust accurately reflects your current wishes and complies with current laws and regulations.

Overlooking Tax Implications

Trusts can offer tax benefits. However, they can also trigger tax obligations if not properly structured and administered. For example, irrevocable trusts may have different tax rules than revocable ones. Failing to coordinate your trust with your overall tax and estate plan may reduce your assets and increase liability for your heirs.

These common trust mistakes to avoid happen every day, because people do not take the time to create them properly. By working with a financial advisor and estate planning attorney, you can optimize your trust in a tax-efficient manner. If you would like to learn more about trusts, please visit our previous posts.

Reference: Investopedia (March 04, 2025) “Lessons From the Ultra-Wealthy: Avoid These Common Trust Mistakes”

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Common Reasons to Avoid Probate Court

August 7, 2025

Probate is the legal process of distributing a person’s assets after death. While it serves an important function, it often comes with drawbacks: delays, expenses and public records. For families seeking to settle affairs smoothly and maintain privacy, avoiding probate through effective planning can be a more efficient approach. There are some common reasons to avoid probate court.

1. Probate Often Involves Significant Delays

Probate cases can take months or even years to resolve. Court schedules, required notices to creditors and potential disputes all slow the timeline. During this period, heirs may not be able to access key assets, which can lead to financial strain, mainly when a surviving spouse or dependent relies on those funds.

2. The Process Can Be Expensive

Court filing fees, executor compensation, attorney fees, appraisals and other administrative costs reduce the value of the estate. These expenses are often paid out of the estate’s assets, leaving less for beneficiaries. In complex or contested estates, costs can escalate rapidly and frequently exceed initial expectations.

3. Public Records Compromise Privacy

Once a will is entered into probate, it becomes a public record. Anyone can review the details of the estate, including its contents, beneficiaries and asset distribution. For families that value discretion, avoiding probate helps keep financial and personal matters private and confidential.

4. Disputes are More Likely

Probate offers an open door for challenges. Heirs, creditors, or estranged relatives may contest the will, resulting in prolonged legal battles and increased stress. With proper estate planning—such as creating trusts or utilizing beneficiary designations—assets can be transferred more directly, thereby reducing the likelihood of conflict.

5. There are Better Alternatives to Probate

Revocable living trusts, payable-on-death accounts and joint ownership arrangements can bypass probate altogether. These strategies enable assets to be passed to beneficiaries quickly and efficiently without requiring court oversight. While not suitable for every asset or family, they offer powerful tools when used correctly in a broader estate plan.

These are just five of the most common reasons to avoid probate court. An estate planning attorney can help you weigh these options and structure your affairs to serve your family’s needs best, during your lifetime and beyond. If you would like to learn more about probate, please visit our many previous posts on the subject.

Reference: Charles Schwab (July 14, 2023) “The Benefits of Avoiding Probate”

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The Estate of The Union Season 4|Episode 7

The Estate of The Union Season 4|Episode 5 is out now!

August 5, 2025

The Estate of The Union Season 4|Episode 5 is out now! We’re all aware of various “certifications.”

Organic food is certified, used cars are certified and most doctors are certified. In the law, however, certification, especially Board Certification, is surprising rare. For instance, less than 1% of all Texas lawyers are Board Certified in Estate Planning!

In this brief edition of Estate of the Union, Brad will enlighten you on exactly what Board Certification means and answer the question about why so few Texas lawyers are.

In each episode of The Estate of The Union podcast, host and lawyer Brad Wiewel will give valuable insights into the confusing world of estate planning, making an often daunting subject easier to understand. It is Estate Planning Made Simple! The Estate of The Union Season 4|Episode 5 is out now! The episode can be found on Spotify, Apple podcasts, or anywhere you get your podcasts. If you would prefer to watch the video version, please visit our YouTube page. Please click on the links to listen to or watch the new installment of The Estate of The Union podcast. We hope you enjoy it.

Texas Trust Law focuses its practice exclusively in the area of wills, probate, estate planning, asset protection, and special needs planning. Brad Wiewel is Board Certified in Estate Planning and Probate Law by the Texas Board of Legal Specialization. We provide estate planning services, asset protection planning, business planning, and retirement exit strategies.

Moving to Another State can Impact Your Will

July 29, 2025

Relocating to a new state often prompts a fresh look at housing, healthcare and taxes. However, many people overlook revisiting their estate plan. A will drafted in one state doesn’t necessarily become void elsewhere. However, differences in state laws can create complications if it isn’t updated. To ensure that your wishes are carried out as intended, it’s important to understand how moving to another state can impact the validity and execution of your will.

Your Will May Still Be Valid—But That’s Not Enough

Most states honor wills created legally in another state. However, just because a will is valid doesn’t mean it’s well-suited to your new residence. Probate laws, witness requirements and rules governing executor eligibility can vary widely. For example, your new state may not accept handwritten wills or may require two witnesses instead of one.

Some states also impose additional requirements on out-of-state executors. If you named someone who lives in your former state, they may be unable to serve without appointing a local co-executor or taking other legal steps. These requirements can delay probate and increase administrative costs for your loved ones.

Community Property and Spousal Rights

If you move from or to a community property state, your spouse’s inheritance rights could change. Community property states treat most assets acquired during marriage as jointly owned, regardless of how they’re titled. This could affect how your estate is divided, especially if your existing will was drafted with different assumptions.

Similarly, elective share laws vary from state to state. In some places, a surviving spouse is entitled to a percentage of the estate even if they are disinherited in the will. These rules can override your stated intentions, particularly if your estate plan hasn’t been updated since the move.

Update Beneficiary Designations and Ancillary Documents

Relocation is also a good time to review related documents, such as powers of attorney, advance directives and healthcare proxies. Some states require specific language or forms for these to be enforceable. A new address or a change in family circumstances may also necessitate revisions to your chosen agents or instructions.

Reviewing beneficiary designations on retirement accounts and life insurance policies is equally important. These assets often pass outside the will, and inconsistencies between documents can lead to unintended results. If you’re not certain your estate plan is robust and consistent, an estate planning attorney can help. If you are planning on moving to another state, work with an estate planning attorney to see how the state’s laws impact your will. If you would like to learn more about estate planning, please visit our previous posts.

Reference: The American College of Trust and Estate Counsel (Jul 17, 2019) “Should I Sign New Estate Planning Documents When I Move to a New State?”

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Estate Planning Mistakes Financial Advisors Make

July 24, 2025

Many families rely on financial advisors to assist with retirement planning, investments and estate planning. While advisors often provide sound financial advice, they are not estate planning attorneys. Relying on them alone can result in costly oversights, especially when it comes to protecting your estate from taxes, probate delays, or unintended beneficiaries. There are certain estate planning mistakes financial advisors make that can be avoided.

Misunderstanding the Limits of Beneficiary Designations

One of the most common mistakes is assuming that beneficiary designations on accounts, such as IRAs or life insurance, fully replace the need for a will or trust. While these designations do allow assets to bypass probate, they don’t address complex family dynamics, minor children, or long-term asset protection. Advisors may also fail to remind clients to update their beneficiaries after significant life events, such as divorce or remarriage, which can lead to unintended consequences.

For example, an outdated beneficiary form can result in a 401(k) payout being left to an ex-spouse, despite the instructions in your will. Coordinating these designations with your estate planning documents is critical.

Failing to Recommend Trust Structures

Advisors sometimes overlook the role that trusts can play in preserving wealth. Trusts offer more control than simple beneficiary designations or joint accounts. In certain situations, they can offer privacy, provide for children with special needs and delay distributions to young or financially immature heirs.

Advisors may hesitate to suggest trusts because they fall outside their direct scope of service. However, when significant assets or family complexities are involved, trusts are often essential. An estate planning attorney can work with your advisor to build a more protective structure.

Overemphasizing Tax Avoidance

While minimizing taxes is important, it should not come at the expense of a clear and functional estate plan. Advisors sometimes focus too much on strategies to reduce estate taxes and neglect broader concerns, such as family dynamics, asset protection, or incapacity planning.

Estate planning is about more than saving money—it’s about making sure the right people have access to the right assets at the right time. A plan that’s tax-efficient but fails to name guardians for minor children or does not include powers of attorney for healthcare and finances, is incomplete.

Inadequate Planning for Incapacity

Advisors often overlook what happens if a client becomes incapacitated. Without a power of attorney and healthcare directives, families may be required to undergo court proceedings to gain decision-making authority. Planning for incapacity is just as important as planning for death.

Clients need to understand that their investment accounts—and their broader financial lives—must be managed even if they’re unable to make decisions. This requires legal documents that go beyond an advisor’s purview.

The Importance of Collaborating with an Estate Planning Attorney

Many of these estate planning mistakes financial advisors make that can be avoided by working with an estate planning attorney. A good financial advisor should encourage collaboration with an estate planning attorney. The law surrounding wills, trusts and incapacity is complex and varies from state to state. Advisors who try to handle everything risk leaving their clients vulnerable.

Your advisor and attorney should instead work together. The advisor brings knowledge of your financial goals and accounts; the attorney brings the legal tools to protect those assets and pass them on according to your wishes. If you would like to learn more about estate planning, please visit our previous posts.

Reference: U.S. News & World Report (Sept. 10, 2021) “5 Estate Planning Mistakes Financial Advisors Make

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Using Life Insurance to Fund a Trust

July 14, 2025

Using life insurance to fund a trust is a strategy that combines estate planning with asset protection. It can provide liquidity for estate taxes, offer support to beneficiaries and provide control over how and when assets are distributed. When structured properly, this approach helps preserve wealth, while minimizing tax exposure and family conflict.

Why Use a Trust to Hold a Life Insurance Policy?

When a person owns a life insurance policy in their name, the death benefit becomes part of their estate. This can increase the taxable estate and delay access to funds during the probate process. By contrast, placing the policy in an irrevocable life insurance trust (ILIT) removes it from the taxable estate.

In this arrangement, the trust serves as both the policy owner and beneficiary. When the insured dies, the death benefit goes directly into the trust. The trustee can then distribute funds according to instructions in the trust document, whether for paying estate taxes, supporting minor children, or funding a business transition.

Advantages of Using an Irrevocable Life Insurance Trust (ILIT)

An ILIT offers greater control over how the life insurance proceeds are used. The trustee can manage the funds over time, rather than issuing a lump sum payment to the beneficiaries. This is especially useful when the beneficiaries are minors, have disabilities, or are at risk of financial mismanagement.

The proceeds also avoid probate and are generally protected from creditors, depending on the jurisdiction in which they are held. The trust can also contain rules for triggering distributions – for example, funding education, medical expenses, or home purchases – without handing over complete control.

Points to Consider Before Creating a Trust

An ILIT must be irrevocable, meaning you cannot make changes once the trust is funded. It must also be created before applying for the life insurance policy, or the IRS may still consider the policy part of your estate.

Annual premiums paid into the trust may be considered gifts to the trust’s beneficiaries. To avoid gift tax, these payments should be structured carefully, often using what’s known as “Crummey notices” to qualify for the annual gift tax exclusion.

Because of these technical requirements, an experienced estate planning attorney should be involved from the start. Using life insurance to fund a trust can be a wise choice. Life insurance trusts can be powerful tools, but only if set up and managed correctly.

Key Takeaways

Life insurance trusts protect estate value: Placing a policy in a trust keeps the death benefit out of the taxable estate and out of probate.
ILITs offer control and protection: Trustees can distribute proceeds according to long-term goals rather than in a lump sum.
Setup must follow IRS guidelines: To avoid tax consequences, the trust must be properly structured from the beginning.
Gifting rules apply to premium payments: Careful planning ensures that premium payments qualify under gift tax exclusions.
Legal advice is essential: Trust and tax laws are complex, and mistakes can undermine the benefits of the trust.

If you would like to learn more about the role of life insurance in estate planning, please visit our previous posts.

Reference: J.P. Morgan (Nov 27, 2024) “When Does It Make Sense for a Trust to Own Your Life Insurance Policy?”

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Category: Probate