Retirees Should Adjust Planning With Four Big Changes in Mind

November 20, 2025

Retirement planning is never static. Tax laws evolve, healthcare costs shift and investment conditions change sometimes dramatically. For retirees, these changes can affect everything from monthly income to estate strategies. Understanding recent adjustments in tax policy and retirement rules can help ensure that your plan remains stable and sustainable. Retirees should adjust planning with four big changes in mind.

Changing Tax Rules for Retirees

Tax planning remains one of the most potent tools for preserving retirement income. Recent federal adjustments have affected both Social Security taxation and retirement account withdrawals. For instance, higher-income retirees may see a greater portion of their Social Security benefits taxed, while inflation adjustments have shifted income brackets slightly upward.

These changes make tax diversification more critical than ever. Retirees who rely solely on traditional 401(k)s or IRAs, where withdrawals are taxed as income, could face higher overall taxes in retirement. Combining pre-tax, Roth and taxable investment accounts provides flexibility to manage income levels strategically each year.

Adjusting to Required Minimum Distribution Rules

One of the most significant changes in recent years involves Required Minimum Distributions (RMDs). The starting age for RMDs has risen to 73, giving retirees more time to grow assets tax deferred. However, waiting too long to begin withdrawals can result in larger future distributions and higher tax bills later in life.

Some retirees may benefit from partial Roth conversions in their early 60s, especially during lower-income years before Social Security or RMDs begin. Spreading conversions over several years can reduce future taxes and provide more control over income in later retirement.

The Ongoing Impact of Healthcare and Long-Term Care Costs

Healthcare remains one of the most significant expenses for retirees. Medicare premiums are expected to rise, and out-of-pocket costs for prescription drugs and long-term care continue to increase. Without planning, these expenses can quickly erode savings meant for other goals.

Health Savings Accounts (HSAs), when used properly, offer a tax-efficient way to prepare for medical costs. Funds grow tax-free and can be used for qualified expenses at any time, even in retirement. Retirees should also consider long-term care insurance or hybrid life insurance policies that include care benefits to reduce financial strain later.

Inflation and Market Volatility

Even modest inflation can significantly affect retirees who live on fixed incomes. While 2024 and 2025 have seen periods of stabilization, retirees should continue planning for long-term inflation by balancing income and growth investments.

Bond-heavy portfolios, while stable, may struggle to keep pace with inflation over the long term. Adding moderate exposure to dividend-paying stocks, real estate, or inflation-protected securities (TIPS) can provide resilience. Working with a financial advisor to review investment allocations annually ensures that risk levels remain appropriate.

Integrating Legal and Financial Planning

Estate planning and retirement planning are inseparable. Changes to tax law, account rules and estate exemptions can affect how assets transfer to heirs. Retirees should review beneficiary designations, update wills or trusts and ensure that powers of attorney and healthcare directives are current.

An estate planning attorney can help retirees adjust their planning with these four big changes in mind. They can align investment and withdrawal strategies with legacy goals. This integration ensures not only tax efficiency but also future protection for beneficiaries. If you would like to learn more about planning for retirement, please visit our previous posts.

Reference: Kiplinger (Aug. 10, 2025) “Retirees Should Watch These Four Key Tax Changes in 2025”

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A Cross-Border Strategy is Needed for Estate Planning with Assets Overseas

November 11, 2025

Ultra-high-net-worth families often live, invest and give across borders. A plan that works in one country can misfire in another. Different rules on domicile, tax residency, marital property and forced heirship can alter who inherits and how much tax is due. Institutions may also block access to accounts until local requirements are met. A cross-border strategy is needed for estate planning with assets overseas. It brings these moving parts into one coherent framework, so heirs receive what you intend with fewer delays and fewer surprises.

Where Plans Break Across Borders

Countries define domicile and tax residency in different ways. One country may view you as a resident based on days present, another based on ties such as a home or family. Several civil law jurisdictions enforce forced heirship, which reserves a portion of an estate for children or a spouse regardless of what your will says.

Community property and separate property systems divide marital wealth differently. Without alignment, the same asset can face competing claims or double taxation. Bank secrecy and data rules can also slow access, especially when fiduciaries lack translated and apostilled documents.

Building A Multi-Jurisdiction Framework

Begin by documenting where you are treated as tax resident and where you are domiciled. Keep residency certificates, visa records and professional analyses that explain treaty positions.

Next, identify succession rules that could override your choices. Some jurisdictions allow you to elect the law of your nationality or habitual residence to govern your estate. Make that election clearly in your will or trust if it is available and ensure that each country where you hold assets will honor it.

Align legal structures with asset locations. Company shares, private funds and real estate often benefit from situs-appropriate holding entities or trusts that are recognized locally.

Confirm whether the jurisdictions you care about recognize common law trusts, civil law foundations, or both. Where recognition is limited, consider alternatives such as shareholder agreements, life insurance wrappers, or local testamentary tools.

Coordinating Fiduciaries and Access

Execution details matter. Appoint executors and trustees who can act in each country or name local co-fiduciaries where required. Prepare notarized and apostilled copies of core documents and translations into the languages your institutions require.

Maintain a secure inventory of accounts, safekeeping locations and key relationships, along with device passcodes and instructions for two factor authentication. These access steps are as necessary as the legal documents, since many institutions will not release information without them.

Philanthropy, Art, And Liquidity

Cross-border philanthropy can trigger registration, reporting, or withholding. Decide whether to use a single foundation, parallel entities, or donor-advised funds in more than one country, for art, yachts, aircraft and collectibles, track situs, export and cultural property restrictions and insurance conditions.

Plan liquidity for taxes that may be due before private business interests or real estate can be sold. Consider credit facilities, life insurance, or staged distributions to avoid forced sales at a discount.

Using Multiple Wills Safely

Many families benefit from separate wills for different countries. Each will should cover only assets in its jurisdiction and should state that it is limited in scope so it does not revoke the other will. Coordinate signing formalities, witnesses and governing law choices. Keep originals and certified copies in a location where fiduciaries can easily access them.

How An Estate Planning Law Firm Can Help

An estate planning law firm with cross-border experience can map domiciles and residencies, make governing law choices where permitted and tailor trusts or entities that local courts and registries recognize. A cross-border strategy is needed for estate planning with assets overseas. If your life spans more than one country, schedule a consultation so a lawyer can align documents, structures and access protocols before a crisis forces hurried decisions. If you would like to learn more about estate planning for assets overseas, please visit our previous posts.

Reference: Forbes (September 24, 2025) “Cross-Border Estate Planning Guide, Essential Strategies For Ultra High-Net-Worth Families”

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Keep Certain Assets Out of a Trust to Avoid Probate

October 30, 2025

Living trusts are often praised as the cornerstone of avoiding probate. By transferring assets into a trust, individuals can ensure a smoother transition of wealth to heirs, often bypassing costly and time-consuming court proceedings. Yet, despite their benefits, not all property is well-suited for titling in a living trust. Including the wrong assets can create unintended tax consequences, legal complications, or unnecessary administrative burdens. It is wise to keep certain assets out of a living trust to avoid probate.

Understanding Living Trusts

A living trust is a legal entity that holds assets during a person’s lifetime and directs their distribution upon death. It provides flexibility, privacy, and efficiency compared to a will. However, it is not a one-size-fits-all solution. Certain assets are best kept outside of the trust to ensure they function as intended.

Retirement Accounts and Living Trusts

One of the most common mistakes in trust planning is transferring retirement accounts, such as IRAs, 401(k)s, or pensions, into a living trust. Federal tax rules treat these accounts differently, requiring that they remain in the individual’s name until withdrawal or distribution.

If a retirement account is retitled in the name of a trust, it could trigger immediate taxation of the full balance. Instead, individuals should use beneficiary designations to transfer these assets directly to their heirs, preserving tax advantages such as “stretch IRA” benefits where applicable.

Vehicles and Living Trusts

Cars, trucks, and other vehicles are generally poor candidates for trust ownership. The administrative burden of retitling, insurance complications, and the frequency of buying or selling make them impractical to place in a trust.

In most states, small estate provisions allow vehicles to pass outside of probate without issue. Unless a car is a valuable collector’s item or part of a business, keeping it in personal ownership usually makes more sense.

Health and Medical Savings Accounts

Like retirement accounts, Health Savings Accounts (HSAs) and Medical Savings Accounts (MSAs) have unique tax treatments that do not align with trust ownership. Instead, owners should assign beneficiaries directly through the account provider. Upon death, the funds transfer smoothly to the named beneficiary.

Assets with Named Beneficiaries

Life insurance policies, payable-on-death (POD) bank accounts, and transfer-on-death (TOD) securities accounts already bypass probate when a beneficiary is named. Including these assets in a trust is redundant and can even complicate matters. Ensuring that beneficiary designations are up to date often provides a more straightforward path.

Mortgaged Property

While real estate is often placed into a trust, property with outstanding mortgages requires careful planning and consideration. Transferring a home with a mortgage into a trust may trigger concerns or due-on-sale clauses from lenders. Proper legal guidance ensures compliance with both trust law and lending agreements.

When to Seek Guidance

It is wise to keep certain assets out of a living trust to avoid probate. Estate planning is a deeply personal process, and what works for one family may not be suitable for another. An estate planning attorney can help evaluate which assets should be placed in a trust and which should remain outside. They also ensure that excluded assets are transferred through other probate-avoidance methods, such as beneficiary designations or joint ownership structures.

If you are considering creating or updating a living trust, consulting with an estate planning attorney ensures your trust is both practical and efficient. If you would like to learn more about placing assets in a trust, please visit our previous posts.

Reference: Yahoo Finance (September 11, 2025) “If you want your kids bypass probate when you die, here are 5 assets to avoid putting in a living trust”

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Beneficiary Designations Usually Take Precedence over Will

June 2, 2025

Estate planning is more than just writing a will. Some of people’s most valuable assets—retirement accounts, life insurance policies, and certain bank accounts—do not pass through a will at all. Instead, these assets are controlled by beneficiary designations filed with financial institutions. This distinction is critical. If the information in a will conflicts with what’s listed on a beneficiary form, the beneficiary designations usually takes precedence over a will. Understanding how these two tools work together helps prevent unintended outcomes, legal disputes, and family confusion.

How Beneficiary Designations Work

Beneficiary designations are instructions you provide directly to financial institutions indicating who should receive specific assets upon your death. These forms are typically used for:

Life insurance policies
IRAs and 401(k)s
Payable-on-death (POD) or transfer-on-death (TOD) accounts
Annuities and some brokerage accounts

When you pass away, the institution distributes the asset to the named beneficiary—no probate required. Because these transfers occur outside of the will, courts and executors are not involved.

This is why it’s crucial to keep these designations updated. For example, an outdated form listing an ex-spouse can result in that person receiving your retirement account even if your will says otherwise.

When the Will and Beneficiary Form Don’t Match

If your will names your son as the heir to your IRA but your beneficiary form lists your daughter, the financial institution must follow the form, not the will. The same applies if your will states that all assets should be divided equally among your children, but a retirement account names only one of them.

These inconsistencies can create confusion, especially if family members interpret the will as the “final word.” Unfortunately, courts always side with the financial institution’s records when a valid beneficiary form is in place.

That’s why periodic reviews of beneficiary designations are essential, especially after significant life events such as marriage, divorce, birth of a child, or death of a loved one.

When the Will Takes Priority

Assets not subject to beneficiary designations typically pass through probate and are governed by the terms of the will. These may include:

Personal property (furniture, jewelry, household goods)
Real estate not held in joint ownership or a trust.
Bank or investment accounts without a TOD or POD designation

In these cases, the executor follows the will’s instructions, and the assets are distributed through probate. For this reason, a will is still a vital part of every estate plan—but it is only one piece of the puzzle.

Coordinating Your Estate Plan

Beneficiary designations usually takes precedence over a will. Ideally, your beneficiary designations, will, and trust documents should work together to avoid conflicts. An estate planning attorney can help review each component, confirm that assets are appropriately titled, and ensure your wishes are carried out consistently across all accounts and documents.

If you intend for a trust to receive retirement funds or life insurance proceeds, you must name the trust as a beneficiary or reference it in your will. Failing to do so may result in assets going to the wrong person or being subject to unnecessary taxes.

Estate planning is not a one-time event. Regular updates ensure that your legal documents reflect your current wishes, relationships, and financial circumstances. If you would like to learn more about beneficiary designations, please visit our previous posts.

Reference: Forbes (June 2, 2015) “Your Will And Trusts Aren’t Enough: Using Beneficiary Designations As An Estate Plan”

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Older Couples Should Consider Premarital Agreement

May 29, 2025

Marriage later in life brings special joys—and specific legal and financial considerations. Whether it’s a second marriage, a partnership after raising children, or finding love after retirement, older couples often have more complex financial situations than younger newlyweds. Older couples should consider a premarital agreement.

Assets, retirement savings, real estate and inheritances accumulated over decades must be handled with care. A premarital agreement (often called a prenuptial agreement) is one of the most practical tools to protect individual and family interests. Far from being a sign of mistrust, a well-crafted agreement fosters transparency, protects loved ones and reduces the risk of disputes if the marriage ends through death or divorce.

Why Older Couples Should Plan with a Premarital Agreement

Older couples frequently bring established financial histories into marriage. They may own homes, businesses, investment portfolios, or have obligations like alimony or child support from previous relationships. Some may wish to preserve assets for adult children or grandchildren.

Without a premarital agreement, state laws—rather than personal wishes—may determine how property is divided upon divorce or death. In many cases, a surviving spouse is entitled to a significant portion of the estate, even if the deceased spouse intended to leave more to children from a prior marriage.

A premarital agreement allows couples to customize these outcomes, ensuring that their wishes are respected and that their marriage starts with full financial clarity.

Key Issues to Address in a Premarital Agreement

Premarital agreements typically address how assets and debts will be handled both during the marriage and in the event of divorce or death. Common topics include:

Identifying separate versus marital property
Defining how jointly acquired assets will be divided
Specifying inheritance rights for children from previous relationships
Clarifying responsibility for debts incurred before or during the marriage
Determining spousal support or waiving it altogether

Couples may also include agreements about healthcare decision-making, although these issues are often handled through separate estate planning documents.

While some topics, like child custody or child support for minor children, cannot typically be negotiated in advance, most financial and property-related matters are fair game.

Protecting Heirs and Family Interests

For older individuals with children from previous marriages, a premarital agreement can protect family inheritances. Without one, surviving spouses could inherit property that parents intended to pass directly on to their children.

Using a premarital agreement in combination with updated wills, trusts and beneficiary designations creates a comprehensive plan that reflects your true intentions and avoids accidental disinheritance.

It’s also an act of love—shielding family members from costly, painful legal disputes and ensuring that everyone understands and respects your wishes.

Premarital Agreements Strengthen Communication

Discussing finances can be uncomfortable. However, it builds stronger foundations. A premarital agreement encourages open conversations about money, values and expectations. It forces couples to talk about important topics—retirement plans, caregiving needs and financial obligations to others—that might otherwise be overlooked.

Rather than undermining romance, these discussions show respect for each other’s histories and futures. They create shared understanding and prevent surprises down the road.

The Importance of Independent Legal Advice for Each Spouse

For a premarital agreement to be legally enforceable, each party should have their own attorney review the document. This ensures that both individuals understand their rights and obligations and that the agreement cannot be challenged later due to claims of coercion or misunderstanding.

Older couples should consider a premarital agreement. Working with an experienced estate planning or family law attorney ensures that the agreement is tailored to your state’s specific requirements and your unique circumstances. If you would like to learn more about planning for older couples, please visit our previous posts.

References: American College of Trust and Estate Counsel (ACTEC) (Nov. 5, 2020) “What Is a Prenuptial Agreement?” and Hello! Magazine (April 2025) “King Charles and Queen Camilla’s Separate Homes: Was a Marital Agreement Involved?”

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The Estate of The Union Season 4|Episode 3 is out now!

May 7, 2025

The Estate of The Union Season 4|Episode 3 is out now! The Catholic cardinals are in the process of electing a new pope. While that can seem like a riveting process, a much quieter group, Catholic Charities of Central Texas, is working behind the scenes helping the people who need it the most.

In this edition of the Estate of the Union brought to you by Texas Trust Law, we are fortunate to have Kara Henderson, Director of Marketing, for Catholic Charities of Central Texas as a guest. Kara explains the challenges faced by our fellow Texans and how her organization provides a loving waystation to move people to more successful lives.

Plus, Kara has a manner of explaining all of this in a tone and form that make it easy to “get”.

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 3 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.

The Estate of The Union Season 4|Episode 2 is out now!

April 10, 2025

The Estate of The Union Season 4|Episode 2 is out now! In this episode of the ESTATE OF THE UNION, Brad Wiewel is going to discuss gifting to grandchildren – is it a blessing or a curse?

As a great general rule, people who have grandchildren are entranced by them! They typically have plenty of photographs to share and stories to tell. These kids are perfect and always will be – right?

In this edition of the Estate of the Union bought to you by Texas Trust Law, Brad Wiewel has some advice for grandparents which may seem to be contrary to the general idea that making substantial gifts to those adorable grandkids is always the right and proper thing to do. Maybe Brad is getting a little bit jaded as he ages, or maybe his advice is worth considering – you get to decide! Is gifting to grandchildren a blessing or a curse?

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 2 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.

A Well-Planned Strategy ensures Families maximize Financial Aid when planning for College

March 13, 2025

Higher education costs continue to rise, making early financial planning essential for families. Whether parents set aside money in a 529 plan, navigating financial aid applications, or managing estate planning alongside college savings, avoiding common mistakes can save thousands of dollars. A well-planned strategy ensures that families maximize financial aid when planning for college.

Many families unknowingly reduce their financial aid eligibility by incorrectly filling out the FAFSA (Free Application for Federal Student Aid) or structuring college savings accounts in ways that negatively impact aid calculations.

Understanding College Savings Options

Several financial tools help families prepare for the high cost of tuition. However, each option affects financial aid differently. Knowing how assets are counted in the FAFSA calculation can help parents avoid decisions that reduce aid eligibility.

529 College Savings Plans

A 529 plan is one of the most popular ways to save for college. These tax-advantaged accounts allow parents, grandparents, or guardians to invest money for education expenses, while benefiting from tax-free withdrawals when funds are used for tuition, books and housing.

While 529 plans offer tax benefits, they also impact financial aid calculations. Assets held in a parent-owned 529 account count as a parental asset on the FAFSA, reducing eligibility for need-based aid. However, the impact is relatively small—about 5.64% of the account’s value is considered in aid calculations, compared to 20% for student-owned assets.

Custodial Accounts (UGMA/UTMA)

Some families use Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts to save for their child’s future. These accounts are considered the student’s assets and carry a much higher financial aid penalty than a 529 plan.

Because the FAFSA formula expects students to contribute 20% of their assets toward tuition, families with large UGMA/UTMA accounts may receive less financial aid than those using a 529 plan.

Trusts and Estate Planning Considerations

Families with substantial assets often use trusts to protect wealth and structure inheritance. While some trusts help secure long-term financial stability, others can unexpectedly reduce financial aid eligibility.

Revocable trusts, where parents maintain control over assets, are counted in the FAFSA calculation as parental assets. Irrevocable trusts, however, may not be considered available for college expenses, depending on how they are structured. Consulting an estate planning attorney can help families balance asset protection with college savings goals.

Common FAFSA Mistakes that Reduce Financial Aid

The FAFSA is the key to unlocking federal financial aid, grants and scholarships. However, errors in the application can reduce assistance or cause costly delays.

Overreporting Retirement Assets

Retirement savings in 401(k)s, IRAs and pension accounts do not need to be reported on the FAFSA. However, many families mistakenly include these figures, inflating reported assets and lowering aid eligibility.

Incorrectly Reporting Parent and Student Income

FAFSA uses tax information from a prior year, meaning financial aid applications for the 2025-26 school year will use 2023 tax data. Families should ensure income and tax figures match IRS records to prevent application errors that could delay aid processing.

Not Using the IRS Data Retrieval Tool (DRT)

The IRS Data Retrieval Tool automatically transfers tax information to the FAFSA, reducing errors and simplifying the application process. Families who manually enter tax data risk inconsistencies that could flag their application for verification, delaying aid decisions.

Failing to Update Household Size or Number of Students in College

Families often overlook changes in household size or the number of children in college, both of which significantly have an impact on aid eligibility. If an older sibling graduates, the remaining student’s aid amount may be lower than in previous years. Keeping this information accurate prevents unexpected reductions in financial aid.

How Estate Planning has an Impact on College Funding

Estate planning ensures financial security for future generations but can also impact how much financial aid a student receives. Families with substantial assets in trusts, large inheritances, or investments should work with an estate planning attorney to:

Minimize FAFSA-reportable assets by structuring trusts appropriately
Use strategic gifting to reduce parental assets while funding education
Ensure inheritance planning does not unintentionally disqualify students from financial aid

Careful coordination between college savings strategies and estate planning ensures that families optimize education funding and long-term wealth protection.

Plan for College and Protect Your Assets

Balancing college savings, estate planning and financial aid eligibility requires careful planning. Whether you are structuring a 529 plan, managing trust assets, or optimizing FAFSA eligibility, a well-planned strategy ensures that families maximize financial aid when planning for college. If you would like to read more about planning for young adult children, please visit our previous posts.

References: Saving for College (Aug. 10, 2023) “FAFSA Errors That Affect the Amount of Financial Aid”

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The Estate of The Union Season 4|Episode 1 is out now!

March 3, 2025

The Estate of The Union Season 4|Episode 1 is out now! In this episode of the ESTATE OF THE UNION, Brad Wiewel is going to share with you how to SUPER STRETCH an IRA!

Here’s some background: Retirement accounts like IRAs, 401ks and 403bs are subject to a myriad of new rules on how fast the money needs to be distributed to a non-spouse beneficiary. While there are exceptions, for the vast majority of beneficiaries, the money must be emptied out in ten years, which means that those funds are going to be subject to taxes more quickly and now they are growing in a “taxable” environment.

Enter the Testamentary Charitable Remainder Trust (weird name, right?). As Brad describes it, this trust which can be part of a revocable living trust or a will, and it allows the ultimate beneficiaries (kids, etc.) to take the retirement account distributions over their LIFETIME (Super Stretch), not just ten years! Brad paints the BIG picture and gives enough details for it to make sense to you.

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 1 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.

Self-Employed must take a Proactive Approach to Estate Planning

January 16, 2025

Freelancers and the self-employed must take a proactive approach to estate planning. These types of jobs operate without the safety nets provided by traditional employment. This independence brings freedom. However, it also adds complexity to financial and estate planning. From managing irregular income to protecting business assets, creating an estate plan ensures that your hard work is preserved and distributed according to your wishes.

Unlike salaried employees, freelancers often lack access to employer-sponsored benefits, such as life insurance, retirement plans, or disability coverage. Their business assets and personal finances are frequently intertwined, making careful planning essential to avoid unnecessary complications for heirs.

A well-crafted estate plan for freelancers addresses:

Transfer of business assets or intellectual property.
Continuity of income for dependents.
Minimization of taxes and legal hurdles.

Freelancers and the self-employed must create a plan that considers their unique financial circumstances and provides long-term security for loved ones.

Freelancers often rely on their business as their primary source of income. Without a plan, the value of that business could be lost upon their death. Key steps include:

Appointing a Successor: Identify someone to take over the business or handle its sale.
Creating a Buy-Sell Agreement: Outline how ownership interests will be transferred for partnerships or joint ventures.
Documenting Procedures: Maintain clear records and instructions to help successors understand ongoing operations or intellectual property management.

Freelancers often experience fluctuations in income, which can complicate traditional estate planning strategies. To account for this:

Establish a rainy-day fund to provide a financial buffer for your estate.
Work with an estate planning attorney to identify flexible asset protection strategies.
Consider annuities or investments that provide steady income streams for beneficiaries.

Unlike traditional employees, freelancers must set up their own retirement savings plans. Options include:

SEP IRAs or Solo 401(k)s: Tax-advantaged accounts tailored for self-employed individuals.
Roth IRAs: Flexible savings accounts that grow tax-free, offering greater liquidity for heirs.

Ensuring that retirement savings are properly designated to beneficiaries avoids complications later.

The self-employed often own valuable digital assets like intellectual property, domain names, or online portfolios. These assets must be included in your estate plan to ensure seamless transfer. Create an inventory of:

Login credentials for key accounts.
Ownership documentation for websites or digital products.
Instructions for transferring or licensing intellectual property.

Many self-employed generate income from intellectual property, such as writing, artwork, or designs. An estate plan should specify how copyrights, patents, or trademarks are managed after death. This may include:

Assigning ownership to heirs or beneficiaries.
Creating trusts to manage royalty payments.
Licensing or selling rights to preserve income streams.

The first step to creating an estate plan is drafting a will that distributes assets, business interests and personal property according to your wishes. Without one, state laws determine asset distribution, which can result in unintended consequences. However, there’s much more to an estate plan than just making a will.

Establish Powers of Attorney

Freelancers should designate a trusted person to handle financial and healthcare decisions, if they become incapacitated. Powers of attorney ensure continuity in managing personal and business affairs during emergencies.

Consider a Living Trust

A living trust can help freelancers avoid probate and ensure that assets are distributed efficiently. Trusts are beneficial for managing complex assets, like intellectual property or business income.

Secure Life Insurance

Life insurance provides a safety net for freelancers with dependents by replacing lost income and covering future expenses. Policies should be aligned with your estate plan to ensure that benefits are directed appropriately.

Reach Out to an Estate Planning Attorney

Freelancers should consult estate planning attorneys and financial/tax advisors to create a plan that addresses their unique circumstances. Regular reviews ensure that the plan evolves alongside income, assets, or family structure changes.

Freelancers and the self-employed must take a proactive approach to estate planning. You can ensure your hard-earned legacy benefits your loved ones by addressing business continuity, income fluctuations and digital assets. An estate plan tailored to your needs secures your financial future and provides peace of mind, knowing that your assets and values will be protected. If you would like to learn more about planning for the self-employed, please visit our previous posts.

Reference: American College of Trust and Estate Counsel (ACTEC) (Oct. 19, 2023) “Estate Planning for Freelancers and the Gig Economy”

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Category: Retirement Planning