Portability Doesn’t Happen Automatically

November 13, 2025

Portability allows a surviving spouse to use any “leftover” estate tax exclusion from the first spouse to die. It’s a powerful estate planning technique, according to a recent article in Think Advisor, “This Estate Tax Filing Mistake Can Cost Clients Millions.” However, portability doesn’t happen automatically.

To secure portability, the executor of the first deceased spouse’s estate must file a Form 706—known as an estate tax return—to elect portability, and it must be filed in a timely manner and be properly prepared.

This is necessary even if no estate tax is otherwise due from the deceased spouse’s estate. Given the high federal estate tax exemption, most affluent couples nearing the threshold don’t need to file the form. However, it’s still worth filling it out. Here’s why.

A husband who dies with $5 million in assets passes that along to his wife, who may have $10 million of her own. If she lives another 20 years and is invested in markets, her wealth upon her death could be very close to or over the maximum estate tax exemption for a single person. If she secures portability at the time of her husband’s death, she can use his remaining estate tax exemption amount and avoid significant estate tax when passing wealth onto her heirs.

Even if the first spouse to pass doesn’t come close to the federal estate tax threshold, it still makes sense to take the right steps to secure portability. A recent Tax Court case illustrates how this can go wrong if not done correctly. A successful midwestern business owner died, and the form wasn’t filled out correctly. The filing mistake cost heirs an additional $1.5 million in estate taxes from the surviving spouse’s estate.

The deadline to elect portability of a deceased spouse’s unused federal estate tax exemption is nine months after the date of death. While your estate planning attorney can request a six-month extension, it’s best to do this in a timely manner. If the estate isn’t otherwise required to file an estate tax return, you can use the Revenue Procedure 2022-32. This was added after many estates failed to file for portability because they didn’t realize it was needed until after the federal estate tax return was due.

This process is not easy and involves several important steps, especially if any of the first-to-die spouse’s assets flow to anyone other than the surviving spouse or a charity. In these situations, assets flowing out of the first estate must be assigned a fair market value using a valuation professional.

The IRS provides a valuation method for estates filing solely to capture portability. An executor may use a good-faith estimate of the value. However, securing a professional valuation may be recommended by your estate planning attorney.

The Tax Court case referred to above illustrates how this process can go wrong. The assets passed down by the first spouse to die went to other family members, not her spouse or a charity. A proper valuation was not done. The executor also applied for an automatic extension to file Form 706 but failed to mail the return until five months after the extended deadline. There are some instances when the IRS provides a “safe harbor” for late filing. However, this only applies when the value of the first deceased spouse’s estate is less than the applicable exclusion amount. The return was not complete, nor was it properly prepared.

Portability is a beneficial option and shouldn’t be missed, even when it seems unlikely to be needed. Just remember – portability doesn’t happen automatically. An experienced estate planning attorney should be consulted to protect the estate upon the death of the first spouse to secure portability. If you would like to learn more about portability and estate planning, please visit our previous posts.

Reference: Think Advisor (October 15, 2025) “This Estate Tax Filing Mistake Can Cost Clients Millions”

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Pour-Over Will is a Safety Net for Your Estate Plan

November 4, 2025

Many families use a living trust to avoid probate and maintain private distribution. In real life, assets are acquired, accounts are opened and paperwork is often overlooked. A pour-over will is a safety net for your estate plan. It directs anything left in your name at death to “pour over” into your trust, so your trustee can follow one set of instructions.

What a Pour-Over Will Does

It names your trust as the beneficiary of your probate estate. If you forget to retitle an account or receive an unexpected payment, the trustee will gather those items and route them to the trust. You get unified control of who inherits, when and how, because the trust’s terms apply to everything that pours over.

Benefits of a Pour-Over Will

Use it whenever you have a revocable living trust. It is helpful if you own property in multiple places, expect new accounts or inheritances, or want the trustee to manage holdbacks for minors, spendthrift protections, or staged distributions.

When Not to Use a Pour-Over Will

A pour-over will does not avoid probate for assets still titled in your name. Those items may still require a court process before they reach the trust. It does not replace beneficiary designations on life insurance or retirement accounts. It does not solve funding errors for out-of-state real property without additional planning.

How To Set Up a Pour-Over Will Correctly

Coordinate Documents

Your will must correctly identify your trust by name and date. Keep the trust and will stored together and update both after significant life events.

Fund the Trust During Life

Retitle key assets into the trust now, then use the pour-over will as a backstop. Add transfer-on-death or payable-on-death designations where appropriate, aligned with the trust plan.

Name the Right Fiduciaries

Choose an executor who can move promptly and a trustee who understands the trust’s instructions. Add alternates in case a first choice is unavailable.

Coordination With Beneficiaries and Taxes

A pour-over will is a safety net for your estate plan. Confirm that beneficiary designations on retirement plans and insurance align with the trust. If your trust includes tax planning or special needs provisions, verify that the pour-over will capture assets that must pass through those provisions. Keep a concise asset list with locations, so your executor and trustee can act promptly. If you would like to learn more about pour-over wills, please visit our previous posts.

Reference: NerdWallet (Sep. 16, 2025) “What Is a Pour-Over Will and How Does It Work?”

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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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Strategies to Avoid Disputes Between Siblings

October 28, 2025

Inheritance disputes are among the most common causes of family conflict following the death of a parent. While parents may assure children during their lifetime that property will be divided evenly, the legally binding estate plan can tell a different story. This gap between promises and plans is at the heart of many sibling battles. There are strategies to avoid estate disputes between siblings.

Why Promises and Plans Diverge

Parents often express intentions informally, believing verbal assurances are enough. Yet without clear documentation, courts follow the written will, trust, or beneficiary designations. This can leave some siblings feeling betrayed when the estate plan doesn’t reflect the verbal promises made.

Confusion also arises when parents alter their estate plans late in life. A parent may gift a home, business, or financial asset to one child, sometimes without consulting the other children or the rest of the family. While these actions may be legally permissible, they can sow resentment among siblings who expected equal treatment.

Common Sources of Estate Disputes

Sibling disputes over inheritances often emerge from several recurring scenarios:

Unequal distribution of assets: One sibling inherits property or financial assets of greater value than others.
Unclear estate documents: Ambiguous or outdated wills can spark conflicting interpretations.
Blended families: Children from multiple marriages often have different expectations about inheritances.
Caregiver favoritism: A child who cares for a parent may be left more than siblings, leading to accusations of undue influence.

When these disputes escalate, they often result in costly litigation. Estate litigation can drain estate assets and deepen rifts between siblings.

The Legal Weight of Written Documents

Courts prioritize written estate documents over verbal statements. Even if a parent promised to divide assets evenly, what matters legally is the signed will or trust. Similarly, beneficiary designations on retirement accounts or insurance policies override the will. This reality often surprises families who believed verbal promises carried legal weight.

For example, a mother may assure both children that they will split her estate evenly. Later, however, she gifts a valuable piece of real estate to one of her children. If the property transfer was executed correctly, the other sibling may have no legal recourse. The sense of unfairness is real, but the law generally enforces the written transfer.

Preventing Sibling Conflicts Through Planning

Parents can take several steps to prevent estate disputes among their children:

Document Intentions Clearly:

Estate plans should leave no ambiguity. Wills and trusts must accurately reflect the parents’ true wishes, and updates should be made after major life events, such as remarriage, the birth of grandchildren, or significant asset purchases.

Communicate With Family:

Conversations about estate planning can be uncomfortable, but they reduce the chances of misunderstandings later. Parents should explain their decisions and the reasoning behind them, especially if one child will inherit differently.

Use Legal Safeguards:

Estate lawyers can help draft documents that withstand challenges. For instance, “no-contest” clauses discourage heirs from disputing the plan. Parents can also record their reasoning in writing to strengthen the validity of their choices.

The Role of an Estate Planning Lawyer

Estate planning lawyers play a key role in bridging the gap between family expectations and legal realities. They ensure estate documents are enforceable, anticipate areas of potential conflict, and advise on tools such as trusts to equalize distributions.

If your family is facing uncertainty or strained sibling relationships over inheritance promises, there are strategies to avoid estate disputes between siblings. Consulting an estate lawyer early can help preserve both financial assets and family bonds. If you would like to learn more about estate disputes, please visit our previous posts.

Reference: MSN (14 September 2025) “My parents promised to split their estate 50/50, but my mother gave my brother real estate. Is that fair?”

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Differences between Estate Administration and Trust Administration

October 20, 2025

When someone passes away, their property must be distributed according to legal procedures. Two of the most common mechanisms are estate administration and trust administration. Though the terms are sometimes used interchangeably, there are important differences between estate administration and trust administration. Understanding how each works helps families prepare for potential costs, delays and responsibilities.

What Is Estate Administration?

Estate administration refers to the court-supervised process of managing a deceased person’s assets, also known as probate. If there is a will, the court validates it and appoints an executor to carry out its instructions. Without a will, state intestacy laws dictate who inherits.

Estate administration typically involves:

Collecting and inventorying assets
Notifying creditors and paying debts
Filing tax returns
Distributing the remaining property to heirs

Because it is court-supervised, probate can be a lengthy and public process. In many states, the process can take anywhere from months to over a year, depending on the complexity of disputes or assets. Probate costs, such as filing fees and attorney expenses, also reduce the value of the estate.

What Is Trust Administration?

Trust administration occurs when a person creates a trust during their lifetime and funds it with assets. Upon the death of the original trustee, the successor trustee takes over to manage and distribute the trust property according to the terms outlined. Unlike probate, trust administration is usually handled privately without court oversight.

Trust administration typically requires the trustee to:

Notify beneficiaries and creditors
Manage trust investments and expenses
File tax returns for the trust
Distribute assets according to the trust’s terms

Because no court process is required, trust administration is often faster and more efficient. However, trustees carry significant fiduciary responsibilities and must act in the best interests of the beneficiaries, sometimes under scrutiny.

Key Differences Between the Two

The primary differences center on privacy, efficiency and costs.

Court Involvement: Estate administration requires probate court supervision; trust administration generally does not.
Timeline: Probate can be lengthy, while trust administration is typically quicker.
Privacy: Probate is public record, whereas trusts are private.
Costs: Probate can involve higher legal and court fees; trusts often reduce those expenses.

That said, trusts are not always cheaper overall. Creating and funding a trust during one’s lifetime has upfront costs, and trustees often hire attorneys or accountants to handle complex tasks.

When Both May Apply

Sometimes, both processes are necessary. If a person creates a trust but fails to transfer all assets into it before death, those leftover assets may still require probate. Likewise, disputes among beneficiaries can push even trust administration into court.

Why Legal Guidance Matters

Both estate and trust administration involve navigating legal duties, deadlines and potential conflicts. Misunderstanding the differences between estate administration and trust administration can be costly. Executors and trustees who mishandle their responsibilities may face liability from beneficiaries or creditors. An estate planning attorney helps families prepare documents that minimize the need for probate, ensure trusts are properly funded and guide administrators through their obligations.

If your family is facing estate or trust administration, consulting an attorney can save time, reduce costs and protect you from legal missteps. If you would like to learn more about estate and trust administration, please visit our previous posts.

Reference: Justia (October 2024) “Trust Administration Law”

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When Your First Choice of Trustee Declines

September 22, 2025

Even the most trusted family member or friend may decline to serve as trustee. The role can be demanding, involving complex legal responsibilities, financial oversight and ongoing reporting obligations. Some individuals may lack confidence in managing investments or navigating government benefits for people with special needs. Others may be concerned about the time commitment or potential conflicts with other beneficiaries. It can be a challenge when your first choice of trustee declines.

Understanding the reasons for a refusal can help you adjust your approach. Sometimes the concern is about specific duties, which may be alleviated by offering professional assistance or co-trustee arrangements. In other cases, it may be a firm decision based on personal capacity or life circumstances.

Alternatives to Your First Choice

If your chosen trustee declines, you have several paths forward. A successor trustee named in the trust document can step in without disrupting the trust’s administration. If no individual successor is available or suitable, a professional trustee, such as a bank trust department, law firm, or nonprofit specializing in special needs trusts, can assume the role.

These professionals bring expertise in managing assets, complying with special needs rules and safeguarding eligibility for government benefits. While they charge fees, the tradeoff is often greater consistency, neutrality and adherence to complex legal requirements.

Preparing a Strong Backup Plan

Naming multiple successor trustees in the trust document reduces uncertainty if someone declines or becomes unable to serve. You can also consider appointing co-trustees, pairing a trusted family member with a professional trustee to combine personal knowledge of the beneficiary’s needs with technical expertise.

Another strategy is creating a detailed letter of intent to guide any trustee who assumes the role. This document should outline the beneficiary’s preferences, daily routines, medical needs and long-term goals. While not legally binding, it helps preserve your vision for the trust even if the trustee changes.

Experienced Third-Party Trustees

If you’re setting up or revising a special needs trust, an elder lawyer with experience in this area can help. They can work with you to identify suitable trustee candidates, draft backup provisions, or their firm can even manage the trust. Consult closely with your estate planning attorney to ensure you a have a plan in place when your first choice of trustee declines. If you would like to learn more about the role of the trustee, please visit our previous posts.

Reference: The Washington Post (Nov. 29, 2024) “Asking Eric: Friend doesn’t want to manage my disabled son’s finances when I’m gone”

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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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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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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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Category: Trust Administration