Author: Suzanne Candela

When a Trustee Becomes a Burden: Knowing When to Fire Them

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The title of trustee implies that this position should be held by someone you find trustworthy, and for good reason. Serving as a trustee of a trust carries significant responsibility and duty not just to you as the trust’s creator but also to the beneficiaries who depend on accurate, faithful administration. 

While being named a trustee reflects a high level of trust and confidence, it is voluntary. No one can be forced to accept it. However, they can be forced out. 

The authority to remove a trustee may be determined by you and laid out in the terms of your trust or, in some cases, by the default rules of state law. Depending on the circumstances, this authority may rest with the beneficiaries, other people affected by the trustee’s actions, or the court. Permissible reasons for removing a trustee can range from mismanagement to conflicts of interest to incompatibility. 

Because replacing a trustee can disrupt trust administration and impose additional costs, it is crucial that you select the right trustee at the outset and name backups in case the original trustee can no longer hold that position.

What Is the Role of a Trustee in a Trust?

The word trust entered the English language around the year 1200, likely derived from the Old Norse word traust.1 It originally meant faith or confidence, later expanding to include believing or relying on someone or something.2 The word “trustee” emerged in the 1640s to describe someone entrusted with the responsibility of managing property or affairs for the benefit of others.3

In modern legal terms, a trustee is the person or organization appointed to hold legal title to property and administer it according to a trust’s terms. A trustee’s responsibilities vary based on the type of trust and the instructions in the trust agreement and state law, but they often include: 

  • Managing and investing the trust’s accounts and property (assets) to maintain and grow their value
  • Paying bills, taxes, and other expenses related to the trust or its assets
  • Making distributions to beneficiaries as outlined in the trust document
  • Maintaining accurate records and preparing reports for beneficiaries
  • Filing necessary tax returns on behalf of the trust
  • Communicating regularly with beneficiaries and responding to their requests for information
  • Acting impartially when there are multiple beneficiaries with competing interests
  • Protecting trust property from loss or damage, including insuring and maintaining real estate

Although trustees may have some discretion about how to fulfill these responsibilities, they must adhere to the trust’s terms as closely as possible. 

In addition, a trustee has a legal obligation, known as a fiduciary duty, to act with the highest standard of care and ethical conduct the law imposes, putting the beneficiaries’ interests ahead of their own. Any conduct that could be considered self-dealing or neglecting beneficiary interests may constitute a breach of this duty and may be grounds for removing the trustee. 

But who, exactly, can remove the trustee—and under what circumstances? 

Who Can Remove a Trustee?

Once lost, trust and confidence are difficult to recover in both personal and professional relationships. However, just as cutting somebody out of your life who has betrayed your confidence is not always easy, neither is removing a trustee from their position. 

Even if someone believes the trustee has failed in any of their responsibilities, they must have legal standing to contest the trustee and initiate the legal process for removing them. For a person to have legal standing, the trustee’s actions must directly affect them. 

As the trust’s creator, you are typically the one affected while you are still alive. After your death, the person affected is usually a trust beneficiary. 

Generally, a trustee may be removed by any of the following:

  • Grantor. As the trust’s creator, you may remove a trustee while you are alive, the trust is revocable, and you are not serving as the trustee.
  • Beneficiaries. In the case of irrevocable trusts or after your death with a revocable trust, beneficiaries may remove a trustee, usually with court approval and for good cause, unless the trust document specifies different requirements.
  • Co-trustees. Sometimes, a co-trustee may remove a fellow co-trustee, though this action may require court involvement.
  • Courts. When no other party has authority to act or disputes arise that require judicial intervention, the court can order a trustee’s removal.

Each scenario has its own rules and challenges. Here is how trustee removal typically works:

Revocable Trusts (While the Grantor Is Alive)

When a trust is revocable, you retain full control during your lifetime, including the ability to

  • remove and replace a trustee at any time,
  • amend or restate the trust’s terms, and
  • revoke the trust entirely.

No court involvement is needed. As long as you are legally competent (i.e., of sound mind), you can change the trust’s terms whenever and for whatever reason. 

Note: While in most cases the grantor of a revocable trust serves as trustee while they are alive and well, they are free to step down whenever they want. If they remain of sound mind, they can still replace a trustee even if they have stepped down.

Revocable Trusts (After the Grantor’s Death)

The situation changes once a revocable trust becomes irrevocable—usually upon the grantor’s death. Now the beneficiaries may be watching and questioning the trustee’s performance.

However, being a trust beneficiary does not automatically result in a right toremove a trustee; the trust document or state law must specifically grant that power. Sometimes, the trust document will dictate the process or requirements for removing a trustee. In other cases, the beneficiary must

  • petition a court, and
  • show “good cause” (such as mismanagement, breach of fiduciary duty, or conflicts of interest).

Some modern trusts appoint a trust protector, a third party named in the trust who is empowered to oversee the trustee. Depending on the trust’s terms, the trust protector may remove and replace trustees without court approval, helping ensure that the trust is carried out according to the grantor’s intent. The trust protector is sometimes described as “watching the watcher” or acting as the grantor’s voice after death.

Co-Trustees 

Sometimes, a trust may name more than one trustee to serve together in the role. Appointing co-trustees can provide checks and balances, continuity in management, and shared responsibility. Some scenarios that involve co-trustees include

  • a family member trustee paired with a professional trustee (to balance personal insight and financial expertise), or
  • two or more siblings named as co-trustees to share duties equally and ease the heavy burden of trust administration.

However, co-trustees do not always agree. When serious disagreements arise, especially if one believes another is breaching their fiduciary duties, the former may seek to have the latter removed. Unless the trust document gives co-trustees explicit authority to remove a fellow co-trustee, court intervention is usually required.

When one co-trustee is removed or resigns, the trust’s terms may appoint a successor trustee to take their place with the remaining co-trustee(s), or the terms of the trust may specify that the remaining trustee can act alone.

Reasons to Remove a Trustee

When a trustee accepts their role, they are legally bound to follow the grantor’s wishes as outlined in the trust document and in accordance with state law. This obligation stems from the trustee’s fiduciary duty to the beneficiaries; when a trustee is removed, it is typically because they have breached this duty.

Some common reasons why beneficiaries may seek a trustee’s removal are as follows: 

  • Failing to perform their duties. A trustee who neglects their responsibilities, whether due to inexperience, poor management skills, or outright refusal, can jeopardize the trust’s administration. 

Example: The trustee has not filed the required tax returns for two years and ignores beneficiary requests for updates, exposing the trust to penalties and interest.

  • Poor decision-making or mismanagement. Unless the trust says otherwise, a trustee does not have to act with bad intent to breach their fiduciary duty. Even if they are “trying their best,” a trustee who makes poor investment choices or mismanages assets might be considered to have breached their fiduciary duty. 

Example: The trustee invests nearly all the trust’s assets in a single risky stock and suffers major losses.

  • Conflicts of interest or self-dealing. A trustee must prioritize all the beneficiaries’ interests above their own, even if the trustee is also one of the beneficiaries. Actions that benefit the trustee personally may be grounds for removal.

Example: The trustee sells trust property to a company they own at below market value.

  • Hostility or deadlock. When a trustee has a strained relationship with beneficiaries or co-trustees, it can paralyze the trust’s administration and necessitate a new trustee. 

Example: Two sibling co-trustees refuse to communicate and cannot agree on distributions, leaving beneficiaries in limbo.

  • Inconvenience or unavailability. Life changes can make it impractical for a trustee to serve effectively.

Example: The trustee takes on a demanding new job or is dealing with personal challenges, leaving little time or focus for managing the trust. Deadlines are missed, and beneficiary concerns go unanswered.

  • Excessive fees. While trustees are often permitted to charge fees, excessive or disproportionate charges can drain the trust’s assets.

Example: A trustee’s annual or monthly fees exceed what is considered reasonable in that locality or are more than permitted under state law, steadily eroding the trust’s value.

  • Incapacity or illness. A trustee may become unable to fulfill their role due to health issues.

Example: The trustee develops dementia and can no longer handle complex financial tasks.

If the trustee feels overwhelmed by their responsibilities or recognizes that they cannot fulfill them, they might resign voluntarily. If they do not, the beneficiaries can address the situation directly and request the trustee’sresignation. Sometimes, the matter can be resolved amicably without formal removal proceedings. However, if a trustee does not voluntarily resign, the next step may be to file a petition for their removal with the court. 

For beneficiaries, removing a trustee typically involves filing a petition in probate court and presenting evidence of the trustee’s misconduct or unfitness. If the court agrees, it can order the trustee’s removal and appoint a successor—or look to the backup successor you appointed in the trust document—to take over the trust’s administration. 

The Cost of Removal

Unfortunately, removing a trustee is not as straightforward as firing them, and it is not free, either. 

Once formal legal action has been initiated and the court gets involved, there can be significant legal fees. If the trust agreement permits, trust property may be used to cover these costs, but in some cases, the trustee or petitioning party may also have to pay legal fees out of pocket. 

Successor Trustees and Keeping a Plan Up to Date

To simplify trustee removal—if it becomes necessary—you should outline a process in the trust document for appointing a replacement trustee. That individual might be

  • a co-trustee currently serving, who will now serve alone;
  • a successor trustee named in the document; 
  • a trust protector who is granted authority in the trust to fill a vacancy in the trustee position; or
  • in their absence, someone appointed by the court.

With no clear succession plan, the following could happen: 

  • The court could name a trustee whom you do not know, who would not necessarily want to serve in that position, or who may not fully understand your intentions.
  • If a beneficiary must petition the court to appoint a new trustee, the process can be time-consuming and costly, resulting in trust management pausing until a successor steps in.
  • The time gap between removing a trustee and appointing a new one may disrupt trust administration, leading to delays in distributions that may cause financial hardship for beneficiaries, missed filing deadlines with potential penalties, lapses in bill payments for trust-owned property, and other issues. 

As part of your ongoing estate plan review, you should review the individuals you have appointed as key decision-makers in your estate plan—including trustees and successor trustees—every few years or whenever circumstances change. Relationships evolve, situations shift, and sometimes people come in and out of your life. If a rift develops between you and an appointed person or between your chosen trustee and a named beneficiary, you may need to add or replace your selections to keep your plan effective.

Choosing the right—or wrong—trustee can make or break your estate plan. Trust our estate planning attorneys to answer your trust and trustee-related questions. 

  1. Origin and history of trust, Etymonline, https://www.etymonline.com/word/trust (last visited Aug. 22, 2025). ↩︎
  2. Id. ↩︎
  3. Origin and history of trustee, Etymonline, https://www.etymonline.com/word/trustee (last visited Aug. 22, 2025). ↩︎

How a Directed Trust Can Change Everything

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The idea of one-size-fits-all no longer fits a world where people expect products and services to be tailored to their individual preferences.

The estate planning world, long rooted in tradition, has relied on time-tested tools such as trusts to plan for what happens to a person’s money and property. However, a nontraditional variation known as a directed trust has gained traction in recent years for offering today’s families more of what they want: customization, control, and flexibility. 

Although directed trusts have existed in the United States since the early 1900s, a modern legal framework for this type of trust structure that was adopted in the past decade has helped fuel their increased use. This updated approach divides trust administration duties between trustees and advisors, allowing for more personalized and effective administration.

Trust Versus Directed Trust: What Is the Difference? 

A traditional trust has three key parties: 

  • Grantor: The person who creates the trust and transfers their money and property into it
  • Trustee: The individual or institution responsible for managing the trust’s accounts and property, making distributions, filing taxes, and ensuring that the trust’s terms are carried out
  • Beneficiaries: The people or organizations that receive the accounts and property from the trust

Under this structure, the trustee holds unilateral authority over—and full legal responsibility for—the trust. As the trust’s primary decision-maker, the trustee handles investments, manages day-to-day administration, and distributes funds according to the trust’s instructions. All these tasks must be done while honoring the trustee’s duty to always act in the beneficiaries’ best interests, an obligation that can sometimes present challenging legal and ethical hurdles. 

A directed trust keeps the same basic structure but divides the trustee’s duties among multiple parties. Instead of a single trustee who does it all, the grantor can appoint the following: 

  • An investment advisor to direct how the trust’s accounts and property are invested
  • A distribution advisor to oversee when and how beneficiaries receive funds, according to the trust’s instructions
  • An administrative trustee to handle compliance, taxes, and reporting

The popularity of directed trusts tracks with a broader societal shift toward greater complexity in family structures, diverse types of financial accounts and property, and a growing need for specialized expertise. While trusts have been around for centuries and can be written with provisions that offer some degree of flexibility, the idea of splitting trustee duties is a later innovation that allows for greater specialization and nuance. 

What Are the Benefits of a Directed Trust? 

Choosing a trustee is one of the most important decisions a grantor can make in an estate plan. The trustee is entrusted to safeguard and grow the trust’s assets and ensure that they are ultimately transferred to the people and causes the grantor has named in the trust document.

A key part of this role involves managing the trust’s accounts and property, including overseeing the trust’s investment portfolio, ensuring that it remains adequately diversified, and structuring it to meet the beneficiaries’ financial goals and needs. However, even corporate or professional trustees may not always be the best fit for investment management, particularly when the trust holds highly specialized assets. For example, a grantor might

  • own a family-run manufacturing business in which insider knowledge is essential to good decision-making,
  • hold a concentrated position in biotech stocks or digital assets requiring active management by someone familiar with the sector, or
  • have a portfolio of commercial real estate investments best overseen by an experienced property manager.

Many trustees work with an investment manager who advises them on the trust’s investment strategy. However, families often already have a long-standing relationship with a financial professional who understands their portfolio and has a proven track record of successfully managing it. Turning investment authority over to a new trustee, who may select their own investment manager, can disrupt that relationship and potentially lead to less favorable results.

Directed trusts address this dilemma by separating investment management from administrative responsibilities. This bifurcation is achieved by drafting the trust so that a preferred advisor named in the document has authority to direct the trustee on investment matters.

A directed trust offers the best of both worlds—the legal and operational advantages of a trust paired with the expertise of the grantor’s chosen financial professional(s):

  • Specialized expertise. Appoint advisors who understand unique assets such as a family business or specialized investments.
  • Continuity of management. Keep an existing financial team in place to avoid disruptions to long-standing investment strategies.
  • Flexibility and control. Tailor trust administration to fit the grantor’s needs and preferences.
  • Many possibilities. Structure the various trustee positions and roles in different ways; for example, a directed trust typically includes an investment advisor but can also have multiple advisors in specific areas or a trust protector, who is neither a trustee nor an advisor but is appointed by the grantor to supervise and ensure that the trustee carries out the grantor’s intentions. 

A directed trust also benefits the administrative trustee by removing liability and fiduciary duties related to investment decisions for accounts and property held in the trust portfolio. 

With fewer fiduciary obligations, someone who might decline the full range of responsibilities of serving as trustee in a traditional trust may be more willing to accept a scaled-down role in a directed trust. This flexibility can give the grantor more options when selecting a trustee.

Are There Any Downsides to a Directed Trust? 

All estate planning tools have tradeoffs, and directed trusts are no exception. Despite their flexibility, they have potential drawbacks and may not be suitable for every person’s unique situation. Before setting one up, consider the following: 

  • Added complexity. Dividing trust duties among multiple parties creates more moving parts and risks the classic “too many cooks in the kitchen” scenario. Clearly defining roles in the trust document helps prevent misunderstandings and administrative bottlenecks. Appointing a trust protector offers an extra layer of oversight but also introduces yet another “cook” to what might already be an overcrowded kitchen. 
  • Potential for disputes. Having multiple decision-makers for a single trust can increase the risk of conflicts if communications break down. Disputes that cannot be amicably resolved may require court intervention and impose additional costs on the trust.
  • Geographical challenges. Not every state recognizes directed trusts, and those that do may have differing laws. While neither the grantor nor their appointed trustee team needs to live in a directed trust state (such as Delaware or South Dakota), it is important to remember that the income tax laws of the state where the trustee resides generally control where the trust income will be taxed. If a directed trust has trustees or advisors in different states—such as a corporate administrative trustee in Nevada and an investment advisor in California—multiple states may claim taxing authority over the trust’s income, which can lead to conflicting tax obligations, higher compliance costs, and added complexity, making careful drafting essential to preserve the intended governing state law.
  • Higher costs. Using multiple professionals can increase trust costs. There may be separate fees for the administrative trustee, an investment advisor, and possibly a trust protector.
  • Beneficiary confusion. While directed trusts can shield administrative trustees from liability for investment decisions, this division of responsibilities can leave beneficiaries uncertain about who is responsible if issues arise.

How Is a Directed Trust Different from Having Co-Trustees? 

The division of decision-making power in a directed trust should not be confused with the shared authority of a trust managed by co-trustees. 

  • In a co-trustee arrangement, each trustee shares equal authority and responsibility. They must act together (or by majority, depending on the trust’s instructions) to manage the trust’s accounts and property, make distributions according to the trust’s instructions, and fulfill administrative duties. Crucially, each co-trustee has the same ethical and legal responsibility for all aspects of the trust.
  • In a directed trust, roles and responsibilities are split by design. Each advisor or trustee has a defined scope of authority (for example, one may oversee investments, another may handle administrative tasks, and a third may control distributions). The administrative trustee has little or no say over investment decisions and is not liable for them, while the investment advisor is not burdened with tax filings or compliance. 

The right trust structure—and the right team—can make all the difference for your legacy. Contact our estate planning attorneys to see if a directed trust is the right fit for you.

The True Cost of Inheriting a Home

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The United States is in the midst of the largest generational wealth transfer in history. Over the next few decades, baby boomers are expected to pass down an estimated $84 trillion in money and property,1 around $18–19 trillion of it related to residential real estate.2

For millions of younger Americans, this means inheriting a parent’s or grandparent’s home. But while a house can be a generous gift that might seem like a windfall, the financial and practical realities of owning a home can quickly turn that gift into a burden for heirs who are not fully prepared. 

A mortgage does not automatically disappear when a home changes hands. Ongoing costs—such as property taxes, insurance premiums, utility bills, and deferred maintenance—can also quickly pile up. And if the home lingers in probate or stays in a trust before transferring to beneficiaries, questions may arise about who is responsible for covering these expenses in the meantime.

If the house needs major repairs or is in a high-property-tax area, the costs can be staggering. On top of that, other “hidden” costs, such as cleaning out decades’ worth of accumulated stuff (which may or may not have financial or sentimental value) or replacing major outdated appliances, can surface. 

This is not to say that inheriting a home is a bad thing—far from it. With home prices at record highs and many Americans priced out of the market, inheriting a house can be a life-changing opportunity. However, without proactive estate planning and frank conversations about the true costs of home ownership, it can also bring surprise expenses, family conflicts, and tough decisions. 

The Costs of Home Ownership

There is the home we can afford on paper—and the one we can afford in reality. The gap between the two may be wider than we realize. 

A mortgage alone can cost thousands of dollars per month. If there is still a balance on the home loan when the owner dies, the lender will expect payments to continue. An heir who wants to keep the property may be able to assume the existing mortgage, but this outcome is not guaranteed and depends on the lender and loan type. In some cases, the heir may instead be required to pay off the remaining balance or refinance the loan.

The expense of a mortgage is just the start. Hidden costs can quickly upend budgets and turn an inherited sanctuary into a money pit, especially for first-time homeowners unprepared for the realities of home ownership. Common ownership costs that heirs may overlook when they inherit a home are:

  • Property taxes. Mortgages eventually end, but property taxes do not. In some states, the home may be reassessed at its current market value after the owner’s death, potentially triggering a steep tax increase.
  • Utilities. Services such as water, gas, electricity, and trash pickup should remain active even after the owner passes away. Cutting them off completely can lead to problems such as frozen pipes or mold and may result in costly reconnection fees or permanent damage in extreme cases. Once the heir takes over ownership, they will be responsible for these utilities, along with other monthly expenses such as internet and cable.
  • Maintenance and repairs. Routine upkeep such as lawn care or snow removal may be legally required under local ordinances. Major repairs (e.g., roof repairs, HVAC replacements) can cost tens of thousands of dollars, and they become almost inevitable as the home ages.
  • Homeowner’s insurance. Homeowner’s insurance policies will need to be updated after the owner’s death to reflect the new ownership. Premiums may increase, and if the property will be unoccupied for an extended period, the insurer may require a vacant home policy. 

A Bankrate study pegs these hidden ownership costs—maintenance, utilities, property taxes, home insurance, and internet and cable—at an average of around $21,000 per year in 2025, depending on location.3 These costs are in addition to the mortgage, which, the study authors caution, is just the beginning. 

Before the beneficiary can even address these routine costs, there may also be cleanup expenses, moving costs, and potentially the cost of new appliances or emergency repairs from disasters or plumbing failures while the home was vacant. Pretty soon, what seemed like a gift can quickly become anything but.

Paying for Home Costs During (and After) Transition

A home is the single largest expense most people will ever undertake, whether they buy it themselves or inherit it from someone else. 

Understanding the true cost of homeownership and whether a beneficiary is ready to handle it is an important first step. But before ever reaching that point, there is a transition period that occurs after the original owner dies and before the keys are handed over to the new owner. 

Bills and expenses are not suspended during this period. They must be paid on time and in full while the property is in probate or held in trust, sometimes for months or years. 

Who is responsible for paying such bills and expenses? It depends on how the estate is structured and how quickly ownership transfers.

  • Probate. If the deceased person owned the home in their individual name, the property must likely go through probate before title can be transferred to the beneficiary. Probate is the court-supervised process in which a deceased person’s final affairs are settled and their accounts and property are distributed to the entitled recipients. Until the probate process is complete, ongoing expenses generally fall to the estate itself. The executor (known as a personal representative in some jurisdictions) uses estate funds (the deceased owner’s money) to cover the mortgage, taxes, insurance, and upkeep. If there is not enough cash, the executor may need to sell or liquidate other accounts and property.
  • Trust. For a home held in a trust, the trustee manages associated expenses using trust funds. However, as with a home in probate, if the trust lacks liquidity, the trustee might need to liquidate other trust accounts or assets to continue making payments on time.
  • No immediate transfer. When there is no clear plan—or when disputes arise among the deceased’s loved ones over who is entitled to the property—the home may sit idle, leading to mounting expenses, potential tax complications, and a decline in property value if upkeep and payments are not consistently maintained.
  • Post-transfer (beneficiary ownership). Once home ownership legally transfers to the beneficiary, the financial responsibility shifts entirely from the estate or trust to the new owner. 

Estate plans can include a cash reserve to cover transitional and post-transfer costs. Holding these funds in a trust—regardless of whether the home is also held in the trust—can spare loved ones financial strain and give them time to decide whether to keep, sell, or rent the property.

Leaving the home to a loved one through a trust rather than transferring it outright allows the original owner to specify plans for the home. The trust can state who gets the home (and when) and what they can (and cannot) do with it. For example, the trust may stipulate that the home can be used only as a personal residence and not as a rental property. 

A trust structure for an inherited home can bring clarity, and a cash infusion to fund upkeep, which can prevent the home from falling into disrepair. However, a trust that is too restrictive or does not have enough money to cover expenses could cause problems down the road. A beneficiary may not have the authority to sell the property or the funds to maintain it while the home is owned by the trust.

Such dilemmas and the question of who is responsible for what costs and when could be addressed with proactive estate planning and the use of planning tools, such as the following:

  • Property held in trust with a right of occupancy. This arrangement grants someone (often a spouse or partner) the right to live in the home for life or a specified period without transferring actual ownership of the home out of the trust. When the occupancy period ends, ownership of the property passes to other named beneficiaries. The terms of the right of occupancy will clearly define which expenses are the occupant’s responsibility and which will be paid by the trust, leaving no room for uncertainty. If the trust is covering any costs, it may set aside a lump sum to ensure those obligations are met.
  • Transfer-on-death (TOD) deed. This type of deed (though not legally recognized in all states) allows a home to transfer automatically to a named beneficiary upon the owner’s death, avoiding probate court involvement. With no probate or trust administration required, responsibility for the home’s expenses and costs is always clearly defined.  
  • Joint ownership with rights of survivorship. While types of property ownership vary widely by state, creating a joint ownership with survivorship rights in a home generally means that, when one owner passes away, that owner’s share of the property automatically transfers to the surviving co-owner without the need for probate or trust administration. While this option provides clear guidance as to who the owner of the property is when someone passes away and, therefore, who is responsible for paying its associated costs, it carries significant risks. Adding someone as a joint owner of your home is legally considered a gift, which could trigger gift taxes and require filing a gift return, depending on the home’s value. The property may also be exposed to the new co-owner’s creditors, divorcing spouses, or legal judgments, meaning you could lose your home because of their debts. Also, the new co-owner would have to sign off on any future transactions, such as selling the property, obtaining a mortgage, or refinancing the home.

There is no single right way to pass down a home. The best approach depends on factors such as family dynamics, property value, and whether funds will be available to support the home during any in-between phase.

Hidden Estate Plan Considerations for Handing Down a Home

Passing down a home can create more than just financial burdens for beneficiaries; the emotional and practical challenges can be just as significant. Disagreements may surface if multiple beneficiaries want the property or cannot agree on how it should be used, and tensions may arise when one person struggles to budget for ongoing costs such as taxes, insurance, and maintenance. Such challenges can strain relationships and delay important decisions. Planning ahead and setting clear expectations now can help prevent future conflicts and ensure a smoother transition for everyone involved.

If you are considering passing down a home, keep these points in mind:

  • Be clear about who will receive the home. Specify in your estate plan exactly who will inherit the property to avoid confusion, disputes, or competing claims among loved ones.
  • Define rights and responsibilities for multiple owners. If the property will be shared—such as a family cottage given to several children—outline in writing how it will be used, who is responsible for maintenance, how expenses will be split, and what happens if one owner wants to sell their share.
  • Prepare a young beneficiary for the costs of homeownership. If you plan to leave the home to someone who has never owned property before, walk them through the housing budget while you are alive, or leave a detailed list of ongoing expenses so they understand the financial commitment before accepting ownership.
  • Declutter and prepare the home. Clearing out the house now spares beneficiaries and loved ones the emotional and logistical burden of sorting through decades’ worth of belongings later. Movements such as minimalism and “Swedish death cleaning” 4encourage paring down possessions, which can also make the home more market-ready if a future sale is likely.

Leave a Home, not a Headache

Despite all the complex legal mechanisms available to transfer home ownership, perhaps the simplest—and often overlooked—part of the process is having a straightforward discussion with your loved ones to prepare them for home ownership before you pass. Talking about the fate of a family home inevitably involves some uncomfortable discussions, but they can help nip later financial discomfort and family discord in the bud. 

However, talk alone—no matter how honest—is not enough if it is not backed by a solid plan that is ready to implement.

Your home may be the most valuable part of your legacy and estate plan. To help your loved ones get as much value from it as you have, talk to our estate planning attorneys. 

  1. James Royal, Ph.D., An $84 trillion wealth shift is underway, and you may soon inherit a piece of it. Here’s what to expect, Bankrate (June 25, 2025), https://www.bankrate.com/investing/the-great-wealth-transfer. ↩︎
  2. Anthony Smith, Boomers Are Sitting on Nearly $19 Trillion in Real Estate—Here’s Where They Hold the Most Housing Wealth, Realtor.com (July 21, 2025), https://www.realtor.com/news/trends/baby-boomers-home-equity-wealth. ↩︎
  3. Linda Bell, Study: Owning a home costs over $21,000 a year in hidden expenses, Bankrate (June 9, 2025), https://www.bankrate.com/home-equity/hidden-costs-of-homeownership-study. ↩︎
  4. John P. Weiss, This Is What Swedish Death Cleaning Taught Me About Life, becomingminimalist, https://www.becomingminimalist.com/death-cleaning (last visited Aug. 22, 2025). ↩︎

How to Make Your Inheritance Last

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Receiving an inheritance, whether large or small, often comes with a wide range of emotions, from the grief of losing a loved one to the hope and excitement about the possibilities the inheritance may create. According to Northwestern Mutual’s 2025 Planning & Progress study, over half (57 percent) of Americans who expect to receive an inheritance view it as critical to their long-term financial security. Despite this high reliance, many people lack adequate preparation or guidance to effectively manage inherited funds. If you are about to receive an inheritance, there are several steps you can take to ensure that your funds will last longer than a few years.

1. Avoid Making Hasty Decisions

The initial mix of excitement and grief when receiving an inheritance can lead to impulsive financial decisions. One of the most important steps you can take is to resist the urge to immediately make significant decisions. Instead, follow these best practices: 

  • Secure your inheritance first. Before anything else, transfer the inheritance to a secure account such as a high-yield savings account, a money market account, or a short-term certificate of deposit (CD) until you have had enough time to put together a long-term financial plan. 
  • Build your emergency fund. If you do not already have one, consider establishing an emergency fund that will cover at least six months (or whatever amount of time feels right to you) of essential living expenses. If you already have an emergency fund, consider adding to it to cover a full year.
  • If married, decide whether to keep the inheritance in your sole name. If you are married, you will need to decide early on whether you want to keep the inheritance in your separate name or place the funds in an account that you jointly own with your spouse. This decision has significant legal and financial implications, particularly in the event of divorce or if one spouse has outstanding debts. Consulting with an attorney on this point is highly recommended.
  • Understand gifting implications. If you are considering giving a portion of your inheritance to your children, other loved ones, or a charity, get professional advice before you proceed. Certain gifts above the annual exclusion amount may lead to gift tax liability or reporting requirements.

2. Invest in Your Future: Prioritize Retirement and Debt 

For many, an inheritance presents an opportunity to significantly boost long-term financial security.

  • Maximize your retirement savings. If you are still working, consider increasing your contributions to your retirement account, especially if you are not currently contributing enough to receive your employer’s match. If your employer does not offer a retirement plan, or even if they do, opening and fully funding an individual retirement account (IRA) each year can be a smart move due to its tax advantages and compounding growth potential.  
  • Strategically manage your inherited retirement account. If you have inherited a traditional IRA or 401(k), understanding the rules is critical to minimizing taxes. Under current law, most nonspouse beneficiaries are subject to the 10-year rule, which requires that the entire amount in the account be withdrawn within 10 years following the original owner’s death—potentially leading to significant income tax consequences. However, spouses often have more flexible options, including rolling the inherited IRA into their own IRA (called a spousal rollover). Professional guidance is essential to navigating these complex rules and optimizing your inheritance.
  • Eliminate high-interest debt. Before making new investments, consider using a portion of your inheritance to pay off high-interest consumer debts such as credit card balances or personal loans. Eliminating these high-interest payments can often provide a bigger benefit than potential investment gains.

3. Hire a Team of Professional Advisors 

Navigating a significant inheritance can be complex, and trying to do it alone can easily lead to missteps. Building a team of professional advisors is crucial for developing a comprehensive, long-term strategy that protects and grows your newfound wealth. These professionals can work collaboratively to ensure that all aspects of your financial picture are addressed.

  • Financial advisor. Your financial advisor will be your go-to for managing your finances, assisting you with
    • analyzing your current financial situation and establishing a solid financial foundation;
    • developing an investment strategy tailored to your risk tolerance and goals;
    • managing your credit and debt;
    • planning for specific goals such as saving for college, buying a home, or planning for retirement; and
    • looking into charitable giving options.
  • Insurance agent. Your insurance agent will play a crucial role in ensuring that you, your loved ones, and your property are properly insured. They can review your existing coverage and advise you on essential insurance needs (life, long-term care, and liability) to help safeguard your financial future. 
  • Accountant or tax professional. A knowledgeable tax professional will help you
    • understand the tax implications of your inheritance (e.g., stepped-up basis rules for capital gains);
    • optimize cash flow and minimize income taxes wherever possible; and
    • navigate the tax consequences of any gifting you plan to do.
  • Estate planning attorney. An estate planning attorney will help you ensure that your own legacy is secure by
    • creating or updating your own estate plan (everyone needs a will or revocable trust, medical power of attorney, advance directive, and durable financial power of attorney);
    • developing strategies to decrease or eliminate potential federal or state estate taxes based on what you currently own;
    • structuring gifting strategies to achieve your charitable goals and pass on your values to the next generation; and 
    • implementing strategies to protect your inheritance (as well as your other accounts and property) from potential creditors, predators, and future lawsuits.  

Secure Your Legacy

An inheritance, regardless of its size, presents a significant opportunity. With careful planning and the right professional support, it has the potential to provide lasting financial security for you and future generations. Do not leave this important financial event to chance. We are dedicated to helping individuals like you navigate the complexities of receiving, growing, donating, protecting, and ultimately passing your inheritance on to your loved ones. Contact us today for a consultation to discuss how we can help you make the most of your inheritance.    

What to Do After a Loved One Dies

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If you have been named the person responsible for settling a deceased loved one’s affairs, commonly called an executor or personal representative (if your loved one had no estate plan or had a will) or a successor trustee (if they had a trust), you may find yourself overwhelmed by grief and a growing list of responsibilities. As the person in charge of winding up your loved one’s affairs, you may find yourself juggling many tasks: planning the funeral, coordinating with relatives arriving from out of town, and meeting with an attorney to start the legal process of paying for final expenses and any outstanding debts so the money and property can be distributed to the appropriate recipients. First and foremost, be sure to take care of yourself during this emotional time. 

To help you manage the responsibilities now on your plate, here is a quick checklist of important steps that will make it easier when you meet with us to discuss handling your loved one’s legal affairs. Some of these tasks have important deadlines, so be sure to reach out sooner rather than later.

  • Secure the deceased person’s belongings. Make sure their vehicle, home, important documents, and other valuable items are safe. This action not only protects items intended for distribution but also ensures that critical estate planning documents and information about assets are preserved and accessible as you begin settling the estate.
  • Notify the post office and consider forwarding your loved one’s mail to your address. This action will help ensure that you receive the important bills, account statements, and other correspondence necessary to wind up their affairs.
  • If your loved one wrote an ethical will (sometimes called a legacy statement or family letter)—a written document meant to share personal values, life lessons, hopes, and messages for future generations—consider sharing that with the appropriate people in a thoughtful way. You may even want to print and distribute copies to close family members or others who would find meaning in the words.
  • Obtain several copies of the official death certificate, both short and long forms. You will need them for a variety of tasks, including working with banks, insurance companies, government agencies, and other institutions that require proof of your loved one’s death. Having multiple copies on hand will help prevent delays as you begin settling their affairs.
  • Notify the Social Security Administration of your loved one’s death. Prompt notification helps prevent overpayments and ensures that any eligible survivor benefits can be processed without delay.
  • Take care of any Medicare paperwork needed to report your loved one’s death. This helps ensure that future charges are stopped and the account is properly closed.
  • Contact your loved one’s employer to ask about any work-related benefits (such as a final paycheck, unused vacation or sick time, or employer-provided life insurance). They can guide you on how and when these benefits will be paid.
  • Notify all relevant insurance companies, starting with your loved one’s health insurance provider. Be sure to also contact insurers for life, auto, homeowner’s or renter’s, and other important policies. While some coverage may no longer be needed and can eventually be canceled, you may need to wait until you are formally appointed executor or personal representative by the probate court to take official action. That said, you can often begin gathering the necessary paperwork in the meantime to avoid delays later on.
  • Gather all important estate planning documents, including the will, the trust, and any powers of attorney. Ideally, you will be able to locate the original versions (rather than electronic or photocopies), especially the original will, as probating a copy is often much more difficult and may require additional legal steps. 
  • Identify your loved one’s financial accounts (including bank accounts, investment accounts, retirement accounts, and life insurance policies) as well as any real property (such as their primary residence, family cottage, vacant land, or rental properties). Remember to include any business interests they may have had. Eventually, you will need to obtain valuations for each of these items, so locating recent account statements, appraisals, or other documentation now will be especially helpful later.
  • Identify your loved one’s significant digital assets. This includes such things as email accounts, social media profiles, photo cloud storage, and online financial accounts. Try to locate a list of these accounts along with any log-in credentials. Access to this information can be essential for closing accounts, recovering important data, or preserving digital memories.
  • Compile information about any debts, bills, or ongoing expenses your loved one may have had—such as credit cards, loans, or utility payments. It is often easiest to bring the actual statements or credit cards with you to our office, but feel free to use whatever method works best for you.
  • Locate your loved one’s tax returns from the past few years, and check whether this year’s return (Form 1040) has been filed. If they had a tax preparer, consider contacting them for copies and assistance with any final filings.
  • Prepare a list of your loved one’s surviving family members, including contact information when available. Even if certain relatives are not named in the trust or will, we still need to be aware of all close family members. If you know of anyone else named in the will or trust (such as a friend or a charity), please include their contact information.
  • Create a list of the deceased’s professional advisors, including their financial advisor, insurance agent, tax professional, and any other relevant contacts. These individuals may have valuable information and will likely play an important role in making the administration process smoother and more efficient.
  • Notify the appropriate agencies to cancel your loved one’s driver’s license, passport, voter registration, and any club or organization memberships. You should also notify the major credit bureaus (Equifax, Experian, and TransUnion) of their passing. Taking these steps helps prevent identity theft and reduces the risk of receiving unwanted mail in their name.

You may be thinking about handling all the paperwork yourself. It is a tempting thought; why not keep things as simple as possible? However, taking a do-it-yourself approach to estate or trust administration can lead to costly mistakes and serious consequences for you and your loved one’s desired beneficiaries. There are many rules and legal steps involved, and even a small mistake can have big consequences.

We are here to help you steer clear of the common obstacles that may arise when settling a loved one’s affairs, so you can focus on yourself and your family during this difficult time. Contact us for assistance. We can help you manage estate- and trust-related concerns as well as point you toward other useful resources.

Estate Planning Truths: Debunking Common Misconceptions

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Estate planning often feels complex, leading many people to rely on assumptions that can have devastating consequences for their loved ones and their legacy. From who can make decisions for you to whether you need an estate plan, common myths can stand between you and a secure future. Let’s debunk these widespread misconceptions and reveal four essential truths about effective estate planning.

Myth 1: My spouse can make all my healthcare and financial decisions because they are my spouse.

Reality: This is a dangerous misconception that can lead to significant stress and financial hardship for your family. While your spouse has certain rights, they generally do not automatically have the legal authority to make all medical decisions or manage all your financial accounts if you become unable to manage your affairs (i.e., become incapacitated). Without properly executed legal documents, you and your spouse may face obstacles handling the following:

  • Medical decisions. Your spouse may be unable to access your medical information, direct your care, or make critical end-of-life decisions without a medical power of attorney (also known as a durable power of attorney for healthcare) and an advance directive (or living will). Without these documents, a court may need to appoint a guardian or conservator in a public, costly, and time-consuming process.
  • Financial decisions. Similarly, your spouse could be locked out of accounts in your sole name, unable to pay bills or manage investments without a financial power of attorney. This can prevent timely financial management and even payment of day-to-day expenses. As with medical decisions, a court may need to appoint a guardian or conservator before your spouse can access these important accounts.

Proper planning ensures that your spouse or another trusted individual you choose has the immediate legal authority to act on your behalf and honor your wishes without court involvement.

Myth 2: My family knows my wishes. They will divide everything the way I want it divided.

Reality: While your family may genuinely intend to honor your verbal wishes, discussions about your affairs—without proper legal documentation—carry no legal enforceability. After your death, without a legally binding plan, your estate may be distributed according to your state’s intestacy laws, which may not necessarily be what you intended. This could lead to the following outcomes: 

  • Unintended beneficiaries. If you rely on the state’s default distribution plan, your money and property could go to distant relatives rather than close friends, stepchildren, or other nonrelated loved ones.
  • Family disputes. Even well-meaning family members can disagree on what your true wishes were, leading to bitter conflicts and costly litigation that depletes your hard-earned money and property.
  • Loss of control. Without a last will and testament or revocable living trust, you have no say regarding who inherits your money and property and how they receive it, who will raise your minor children, or who will be in charge of winding down your affairs.

A comprehensive estate plan is the only way to legally ensure that your estate is passed on as you intend, protecting your legacy and providing clear guidance for your loved ones.

Myth 3: I signed a will before, so I do not need to do it again.

Reality: Life shifts, laws change, and your goals evolve over time. An outdated estate plan can be just as detrimental as having no plan, so be sure to review your estate plan regularly—ideally, every three to five years. You should also review your estate plan whenever significant life events such as the following occur:

  • Family changes. Such changes include marriage, divorce, remarriage (yours and your children’s), birth or adoption of children or grandchildren, and deaths of beneficiaries or trusted decision-makers (for example, agents under a financial or medical power of attorney, executor or personal representative, or guardian of your minor children).
  • Financial changes. In addition to seeing significant increases or decreases in the value of what you own, you may have purchased or sold real property or businesses, experienced changes in your retirement accounts, or received an inheritance.
  • Location changes. Moving to a different state or country can dramatically impact the validity and effectiveness of your existing estate planning tools, as state and country laws can vary widely.
  • Tax law changes. Estate, gift, and income tax laws constantly evolve at federal and state levels, potentially affecting how your money and property will be distributed, how they will be taxed, and how much a beneficiary may ultimately receive.
  • Changes in goals. Your philanthropic desires, legacy goals, or wishes for specific personal property, accounts, or real property may shift over time. Your estate plan should reflect that.

A comprehensive review of your estate plan every three to five years or after any major life event is crucial for ensuring that your estate planning tools still reflect your wishes, minimize taxes, avoid probate, and align with current legal requirements.

Myth 4: I am not wealthy enough to need an estate plan.

Reality: This myth is perhaps the most dangerous. Almost everyone, regardless of their net worth, can significantly benefit from thoughtful estate planning. While an estate plan certainly addresses your financial accounts, estate planning encompasses far more than just money.

  • Protecting your children. If you have minor children, a will is the primary legal document for nominating a guardian to care for them if something happens to you. Without one, a court will decide who will raise your children—without your input—often through a public and potentially contentious process. 
  • Caring for pets. You can ensure that your beloved pets are cared for after you have passed away or during a time when you cannot care for them.
  • Distributing sentimental items. A personal property memorandum can specify who receives your cherished family heirlooms, artwork, or other nonmonetary items, which can help prevent family squabbles.
  • Planning for your incapacity. A comprehensive estate plan allows you to name trusted individuals to manage your finances, make medical decisions, and carry out your wishes without the delays and expenses of court involvement if you become incapacitated. Such protection is valuable regardless of how much money or property you own.

Estate planning is about taking control, ensuring that your wishes are honored, and providing peace of mind for you and your loved ones, no matter what you own. To learn how estate planning can benefit your specific situation, call us to schedule a consultation.

12 Estate Planning Blunders You Cannot Afford to Make

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Many people believe that a simple will is all they need to accomplish their goals for the future. However, a flawed estate plan can create just as many headaches, heartaches, and expenses for your loved ones as having no plan. Life changes, laws evolve, and even the best intentions can fall short, leaving family members facing court battles, unexpected taxes, or painful disagreements. Here are 12 common mistakes that might be hiding in your estate plan that can jeopardize your hard-earned money and property, diminish your legacy, and place unnecessary burdens on your loved ones. Ask yourself: Is my current plan truly ready for the future, or is it time for a review?

  1. Lack of healthcare planning. Most deaths occur in hospitals or other healthcare facilities, where many patients near the end of their life are unable to make or communicate their decisions. Without a plan, families and providers can be left guessing. Advance directives outline your preferences for end-of-life care; healthcare powers of attorney appoint a trusted person to make decisions on your behalf when you cannot. Together, these documents ensure that your medical wishes are honored and can be paired with financial powers of attorney to protect your property and finances during incapacity.
  2. Failure to appoint financial decision-makers. There may come a time when you need someone to manage your financial and legal affairs, either because you are incapacitated or simply unavailable for a specific transaction. A financial power of attorney allows you to appoint a trusted person to act on your behalf, ensuring that bills are paid and important matters are handled without the need for court intervention.
  3. No will or trust. Without proper planning, your estate may be held up in the often long, public, and costly probate process for months or even years after your death, at a great emotional and financial cost to your family. If you have no will, a judge will apply the state’s statutory default distribution plan to determine who will receive an inheritance from you and how much they will receive. This plan may not match your wishes.
  4. Lack of attention to digital assets. Without a plan for your digital assets (such as digital photos, cryptocurrency, nonfungible tokens, social media profiles, content creation accounts, and accounts associated with e-commerce businesses) your loved ones may lose access to critical documents, photos, memories, and other important family records. They may also be unable to access any bank accounts or money associated with or generated by your digital assets or accounts.
  5. Failure to anticipate your children’s possible future divorces, creditors, or lawsuits. Although it is not fun to consider, if your children divorce, rack up massive debt, or are sued at some point in the future, their inheritance could be lost and end up in the hands of unintended people. A trust can help protect your legacy and your children’s inheritance.
  6. Failure to provide for an intentional transfer of family values. Do you want to pass on more than just money to your loved ones? A comprehensive estate plan can include provisions regarding family meetings, a family mission statement, and custom planning for your loved ones so that your values will continue into the next generation. Your custom plan could include allowing loved ones to choose a charity to receive part of your accounts or property, setting money aside for future family reunions or travel, or building in provisions to incentivize major milestones such as getting married or graduating from college. 
  7. Wasted individual retirement account (IRA) funds. Retirement account beneficiaries generally have the option to receive funds in a lump sum, which could result in a massive income tax bill for them. If this is not your intent, it is crucial to properly plan these accounts to minimize potential tax consequences. A standalone retirement trust, sometimes called an IRA trust, can help safeguard retirement funds from premature or imprudent withdrawals as well as from beneficiaries’ creditors and financial predators while still ensuring that those assets are available to support your beneficiaries.
  8. Chaotic record-keeping. Proper planning ensures that your loved ones do not spend months or years trying to piece together your finances or interpret your wishes. A comprehensive estate plan helps you organize your finances and create a clear system for keeping your important documents, financial information, and instructions about your wishes in one place, readily accessible to your loved ones when they need them most.
  9. Failure to consider a surviving spouse’s remarriage, creditors, and predators. If your surviving spouse remarries, your estate could end up in the hands of people you never intended. Likewise, if your surviving spouse is victimized by financial predators—something increasingly common with an aging population—your family may discover too late that your legacy is gone. A trust can help protect your money after you are gone.
  10. Family feuds over sentimental items. Sometimes fights are not just about money. Feuds and infighting among your loved ones can occur over items that have little monetary value but high sentimental value. You can help avoid such conflict with a personal property memorandum that lists who gets special items such as artwork, family heirlooms, and jewelry. In addition to the financial accounts, your plan should include careful consideration of important family items.
  11. Health Insurance Portability and Accountability Act (HIPAA) privacy lockout. If incapacity leaves you unable to communicate, family members—even your spouse—may be unable to access your medical records or talk to your doctors because of HIPAA privacy rules. Signing a HIPAA authorization form ensures that the people you choose can access your medical information.
  12. Outdated estate plan. Does your estate plan reflect your current circumstances, goals, and needs? Have you, your beneficiaries, or your trusted decision-makers had any major life changes (such as getting married, having a child, passing away, divorcing, receiving an inheritance, or moving to a different state)? A comprehensive review by an estate planner ensures that your estate plan reflects current laws and tax rules and carries out your wishes based on your and your loved ones’ lives today. 

Do not leave your family vulnerable to these common oversights. A strong estate plan provides peace of mind, knowing that your loved ones are protected and your wishes will be honored. If you recognize any of the above mistakes in your own plan, or if it has been years since your last review, now is the time to act. Contact us today for a comprehensive review and to create a plan that truly reflects your life and legacy.

Do I Need a Will or a Trust?

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Yes, everyone needs a will, a trust, or both. These important tools ensure that your legacy will be carried out according to your wishes and allow you to provide for loved ones after your passing. A properly prepared trust can also help avoid probate, which is a lengthy, public, and often expensive court process that becomes necessary when there is no legally valid estate plan in place for distributing your accounts and property after your death. Wills and trusts are not just for the wealthy: People with any level of means can benefit from having a clear plan in place to protect their loved ones, avoid unnecessary legal hurdles, and ensure that their wishes are honored. Even if your savings are modest or your property has mostly sentimental value, these planning tools provide peace of mind and control over what happens after you are gone.

Creating a will or a trust should be a priority for several important reasons, including the following:

Handling Digital Accounts

Almost everyone has at least one account or digital presence online. Think about all your photos stored in the cloud, as well as your emails, social media profiles, online shopping accounts, online payment platforms (e.g., Venmo or PayPal), and online banking accounts. Whom do you want to have access to them? Do you want the accounts deleted or transferred to someone else? What happens if the account holds money? How do your loved ones access that money? An estate plan ensures that your online photos, records, and accounts do not get lost or locked. 

Avoiding State Recovery for Medicaid Benefits

Nursing homes can cost thousands of dollars per month. Medicaid is a cost-sharing government program that supplements the costs of a person’s long-term care so long as they meet certain asset and income requirements. However, the state Medicaid agency might try—and is legally allowed—to recoup the money spent on your care from certain accounts and property you own at the time of your death. A comprehensive estate plan may be able to prevent or limit the state from recovering these costs from your bank accounts or, under certain circumstances and only in some states, forcing your loved ones to sell your family home to pay back your nursing home care costs. 

Reducing Income Tax Concerns with Retirement Accounts

An inherited retirement account is not always tax-free (depending on the type of account). While an estate or inheritance tax may not apply, the beneficiary may have to pay income tax based on the amount they received and their current income tax bracket. Including your retirement accounts in a proactive estate plan can help protect your nest egg and possibly limit your beneficiaries’ income tax burden when they inherit these accounts.

Maintaining Control of Your Legacy and Protecting Beneficiaries

Estate planning can help ensure that your money and property are distributed in accordance with your wishes after your death. For example, if you want to provide not only for your surviving spouse but also for your children from a prior relationship, your estate plan can help you do that. It can also protect your beneficiaries’ inheritances from claims by divorcing spouses or creditors, pending lawsuits, or exposure to financial predators. With a plan, your money and property are also less likely to be lost to your beneficiaries’ mismanagement or frivolous spending—a surprisingly common outcome when no safeguards are in place. In fact, studies show that 70 percent of family wealth is depleted within the two following generations and 90 percent within three generations.1 With thoughtful planning, you can avoid becoming part of that statistic.

An estate plan can also help ensure that your values are passed on to the next generation and that your wishes are legally documented in a way that everyone understands. Discussing your wishes with your loved ones will not make your plan for the future legally enforceable. The only way to ensure that your goals are carried out is to work with an experienced estate planning attorney to create a will or a trust. Do not put off this important step. Taking the time to plan will save your loved ones stress, money, and heartache in the future. It is truly a gift to them.

  1. How real is the third-generation curse, and how can financial advisors tackle it? CFA Institute (Feb. 6, 2025), https://www.cfainstitute.org/insights/articles/third-generation-wealth-curse-advisor-solutions. ↩︎

Are Your Clients Saving Enough for Retirement?

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You have clients who are well on their way to a comfortable retirement, with plenty of savings to last them through their lifetime and enough remaining to leave behind a lasting legacy. Then there are those clients who do not have enough saved—or worry that they may be one major expense away from financial hardship in their retirement. 

Assets earmarked for use during retirement can sometimes be vulnerable to lawsuits, medical bills, and other creditor claims that can drain decades of careful savings in a heartbeat. Rising inflation, skyrocketing healthcare costs, and longer lifespans also mean that even disciplined savers may find that their money does not stretch as far as they had planned. 

Many Americans have little or no retirement savings and are worried about whether they can ever afford to stop working, let alone provide for others after they pass. Advisors can help ease retirement fears by viewing savings, asset protection, and legacy gifting as part of a holistic financial planning strategy. 

How Much Is Needed for Retirement? 

According to a 2025 Northwestern Mutual study, Americans believe they will need $1.26 million to retire comfortably. 1That same study exposes a stark reality, though; this “magic number” is far beyond what many have actually saved for retirement.2 More than half of Americans say that outliving their life savings is a real possibility, and the vast majority are living with financial anxiety.3 

An analysis of eight surveys on how Americans feel about their retirement prospects reveals that their anxiety ranges from a low of 32 percent to a high of 71 percent.4

These fears are well founded. A 2024 AARP report found that 20 percent of adults aged 50 and older have no retirement savings,5 while an Allianz Life 2024 survey found that fewer than half of Americans have a financial plan in place for their retirement.6 

How much someone needs for retirement depends on their lifestyle, location, life expectancy, and the age at which they want to retire. The commonly used 80 percent rule suggests replacing 80 percent of preretirement income annually. Fidelity’s guideline is to save at least 1 times the person’s income by age 30, 3 times by age 40, 6 times by age 50, 8 times by age 60, and 10 times by age 67 (the Social Security Administration’s full retirement age for those born in or after 1960).7

Risks to Retirement Savings and How to Protect Retirement Assets

It is one thing to have enough savings to maintain a high standard of living during post-working years. It is another to preserve—or even build—wealth during those years, ensuring that there is enough left to support your legacy goals, such as providing for children or making charitable gifts. However, if your clients have high exposure to professional liability (doctors, lawyers, business owners, etc.), they may be concerned that everything they have worked for might be taken away.

Advisors can help address clients’ concerns by discussing retirement asset protection strategies. Some protections are automatic. For instance:

  • 401(k)s and other ERISA (Employee Retirement Income Security Act)-qualified plans, such as 403(b)s and defined benefit pensions, are fully protected from creditors in bankruptcy under federal law. Outside of bankruptcy, these plans are generally shielded from creditors as well, although exceptions (such as Internal Revenue Service tax levies, qualified domestic relations orders (QDROs), or criminal penalties) may permit access. After funds have been distributed, they lose ERISA protection unless they are rolled over into another qualified account, such as an individual retirement account (IRA).
  • Many states also offer automatic creditor protection for IRAs and other retirement accounts, but the protected amount and the strength of these protections vary widely by state.
  • While federal bankruptcy law does not protect inherited IRAs, some states do provide creditor protection for inherited retirement accounts, either through state exemption statutes or bankruptcy-specific rules.

Protecting Retirement Savings Now and Beneficiary Inheritance Later

For clients who are thinking beyond their own retirement and who have clear legacy goals in mind, it is important to consider how to protect retirement assets after they pass to beneficiaries. A well-crafted financial plan should incorporate asset protection strategies for inherited retirement accounts, helping to reduce possible financial risk and stress that beneficiaries may face. 

Inherited retirement account protections are significantly weaker than protections for the original account holder, especially after the SECURE Act, which largely eliminated the “stretch IRA” for most nonspouse beneficiaries and mandated withdrawal within five or 10 years, was passed. The Supreme Court case Clark v. Rameker further clarified that inherited IRAs do not receive the same federal bankruptcy protection because they are not considered “retirement funds” in the hands of the beneficiary. Here are some points to remember when discussing inherited IRA creditor risk and protection with clients:

  • 401(k) plans and other ERISA-qualified plans are fully protected from creditors under federal law, but this protection generally ends when the account is inherited, unless the spouse rolls it into their own account (i.e.,elects to make a spousal rollover). 
  • States such as Florida offer strong protection for inherited IRAs while others, such as California, do not. It is important to understand what state law applies and the level of asset protection it provides for inherited IRAs.
  • Naming a trust (specifically one designed as a see-through trust) as the beneficiary of a retirement account can increase protections afforded to inherited accounts from the beneficiary’s creditors, divorce settlements, or mismanagement. A see-through trust allows compliance with SECURE Act withdrawal rules while controlling distributions. 
  • Regularly updating beneficiary designation forms for retirement accounts ensures that assets are transferred to the intended recipients, bypassing probate and aligning with estate plans, while also protecting the assets from unintended creditors or legal disputes arising from outdated or ambiguous designations.

With more Americans than ever before reaching retirement age and retirement fears running high across working demographics, clients may be more open to discussions about achieving long-term financial security, for both themselves and their beneficiaries. If you would like us to be part of the conversation about actionable estate planning strategies and how they fit into the bigger financial picture, schedule a time to talk. 

  1. Americans Believe They Will Need $1.26 Million to Retire Comfortably According to Northwest Mutual 2025 Planning & Progress Study, Northwestern Mut. (Apr. 15, 2025), https://news.northwesternmutual.com/2025-04-14-Americans-Believe-They-Will-Need-1-26-Million-to-Retire-Comfortably-According-to-Northwestern-Mutual-2025-Planning-Progress-Study. ↩︎
  2. Id. ↩︎
  3. Id. ↩︎
  4. Teresa Ghilarducci, Karthik Manickam, How Americans Feel About Their Retirement Prospects: Surveying the Surveys (Jul. 3, 2025), https://www.economicpolicyresearch.org/resource-library/how-americans-feel-about-their-retirement-prospects-surveying-the-surveys. ↩︎
  5. New AARP Survey: 1 in 5 Americans Ages 50+ Have No Retirement Savings and Over Half Worry They Will Not Have Enough to Last in Retirement, AARP (Apr. 24, 2024), https://press.aarp.org/2024-4-24-New-AARP-Survey-1-in-5-Americans-Ages-50-Have-No-Retirement-Savings. ↩︎
  6. Americans Lack Plans for Retirement Income, Allianz (Oct. 29, 2024), https://www.allianzlife.com/about/newsroom/2024-Press-Releases/Americans-Lack-Plans-for-Retirement-Income. ↩︎
  7. How much do I need to retire?, Fidelity (Feb. 14, 2025), https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire. ↩︎

Is a Domestic Asset Protection Trust Right for Your Clients?

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Clients today have more ways than ever to generate wealth. Technology, entrepreneurship, global investing, and digital platforms have created new pathways to financial success that did not even exist a generation ago. The landscape of opportunity has never been broader—or more accessible.

At the same time, the threats to wealth have multiplied. Litigation, economic volatility, cyberattacks, regulatory scrutiny, and a hyperconnected, hyperexposed world where personal missteps and situations can unravel decades of wealth accumulation almost overnight are just some of the risks clients face.

To secure the wealth that clients are working so hard to build, advisors can turn to asset protection solutions such as the domestic asset protection trust (DAPT), a type of irrevocable trust designed to strategically shield wealth within US borders. Used correctly, DAPTs can be one of the strongest lines of defense in a client’s financial and estate plans. However, to be effective and withstand legal scrutiny, DAPTs must be carefully structured with precise attention to detail and timing. 

Origins of the DAPT

DAPTs emerged in the late 1990s as a US-based alternative to offshore trusts traditionally used in jurisdictions such as the Cook Islands to shield assets from creditors. 

States wanted to provide a competitive domestic option for individuals seeking to safeguard their assets from potential creditors. DAPTs gained traction as professional malpractice suits, business disputes, and divorce-driven asset claims surged, providing a more accessible and domestically recognized asset protection strategy. 

Alaska pioneered the first DAPT statute in 1997,1 followed by Nevada, Delaware, and South Dakota. Today, DAPTs are offered in more than 20 states.2 However, state laws regarding DAPTs do not offer equally strong protection. 

How DAPTs Work 

A DAPT is created by transferring assets into a trust governed by a DAPT-friendly state’s laws. The grantor (i.e., creator of the trust) names a trustee, typically somebody who lives in the state where the DAPT is set up, to manage the assets. The trust is structured to shield those assets from future creditors. Depending on the trust’s terms and applicable state law, the grantor can still benefit from the trust by receiving income or discretionary distributions. 

Core principles adopted by US DAPT statutes include the following:

  • Irrevocability. DAPTs are irrevocable; the grantor cannot unilaterally change or terminate the trust once it has been established. 
  • Discretionary distributions. DAPTs grant the trustee broad discretion over distributions to beneficiaries, including the grantor in some circumstances. 
  • Spendthrift provisions. DAPTs incorporate spendthrift clauses that legally restrict beneficiaries from assigning or alienating their interest in the trust to other parties, including their creditors.
  • Statutory protection. Specific state laws provide a statutory framework for protecting trust assets from the grantor’s future creditors after a certain period (the statute of limitations).

Examples

  • Dr. Smith, a California surgeon, faces high malpractice lawsuit risks. He establishes a DAPT in his home state of Nevada, transferring $2 million in investments and real estate to the trust. A Nevada trustee manages the assets, and Dr. Smith is a discretionary beneficiary. Years later, a malpractice lawsuit results in a $1.5 million judgment against him. Because the DAPT was properly established before the claim arose, the trust assets are protected, and the creditor cannot access them to satisfy the judgment.
  • Prior to launching her tech startup and long before her marriage, Emma transfers some of her savings and a software patent into a South Dakota DAPT. Years later, during a contentious divorce, her ex-spouse attempts to claim a share of those assets. Since they are legally owned by the DAPT and Emma no longer personally “owns” them, the trust shields the assets from division. 

Warnings, Caveats, and State Nuances: When a DAPT Might Not Work

While DAPTs offer strong asset protection, they are not foolproof. They can falter for reasons such as the following: 

  • Timing. Assets must be transferred to the DAPT before a creditor’s claim arises. Transfers made after a lawsuit or debt is known may be deemed fraudulent and reversed by a court. 
  • State law variations. Not all states recognize DAPTs, and non-DAPT states may challenge their validity in court, especially if the client resides outside the trust’s state. 
  • Federal claims. DAPTs may not protect against federal claims, such as Internal Revenue Service (IRS) tax liens or bankruptcy proceedings. 
  • Setup and compliance. A poorly structured DAPT, or a DAPT’s noncompliance with state law, can leave assets vulnerable. DAPTs require strict adherence to state-specific rules, such as appointing an independent trustee and avoiding impermissible control by the grantor. 
  • Evolving case law. The legal landscape surrounding DAPTs is still developing as courts continue to interpret their scope and limitations. A lack of extensive precedent, especially around matters involving DAPT and non-DAPT states, can create uncertainty. 

Examples

  • Mr. Jones, a real estate developer, created a Delaware-based DAPT to protect $3 million in assets. However, he transferred the assets after a lender had already initiated foreclosure proceedings on a defaulted loan. The court ruled that the transfer was a fraudulent conveyance because it was intended to hinder the lender’s claim. The DAPT protections were voided, and the trust assets were seized.
  • Ms. Smith, a high-net-worth individual residing in Florida, established a DAPT governed by the DAPT laws in Delaware to shield her assets, including a multimillion-dollar real estate and investment portfolio. After a car accident, the injured party sued her for damages. The Florida court, not recognizing Delaware’s DAPT protections, determined that the assets in Ms. Smith’s trust could be used to pay the debt.

Additional Considerations and Complementary Strategies

DAPTs are tailored for clients with significant assets and high liability exposure. They may be a good fit for high-net-worth individuals; high-profile persons (e.g., influencers, executives, or public figures); business owners; professionals such as doctors, lawyers, and accountants in fields with a high rate of malpractice claims; real estate developers and investors; and clients worried about divorce or any other future unknown liabilities. DAPTs can also help avoid probate and may, in limited cases, contribute to estate tax planning—particularly when designed to remove assets from the grantor’s taxable estate.  

However, DAPTs are not a one-size-fits-all solution, and they can come with significant costs. Plan on potentially thousands of dollars for initial legal and setup fees, plus annual trustee, accounting, attorney, and administration fees. 

Clients who appear to be a good fit for a DAPT should be advised that protection is not guaranteed and the DAPT is subject to legal challenges. They need to be transparent about what they own and the potential liabilities they face when establishing a DAPT. They must also relinquish direct control over trust assets, which can be a drawback for some clients. 

A DAPT is often most powerful when integrated within a broader asset protection framework that might also include strategic titling of assets; utilizing state-specific exemptions for certain types of assets (e.g., retirement accounts or homesteads); optimizing insurance coverages; and business entity structuring. 

To explore how a DAPT, in conjunction with these and other wealth protection strategies, can be strategically integrated into a client’s financial and estate plans, connect with us.

  1. Alexander A. Bove, Jr, ed., Domestic Asset Protection Trusts: A Practice and Resource Manual, ABA, https://www.americanbar.org/products/inv/book/415567501. ↩︎
  2. Brandon Roe, What’s the Best State for a Domestic Asset Protection Trust?, Nestmann (Apr. 28, 2025), https://www.nestmann.com/domestic-asset-protection-trust-states. ↩︎