Author: Suzanne Candela

When beginning any type of planning, you usually start with some preliminary questions. Estate planning is no different. When you begin the process, your estate planning attorney will likely ask about your family members, the accounts and property you own, and whom you want to include in your estate plan. As you dive deeper into the process, you will need to think about how you envision things unfolding after you have passed away. Aside from your money and property, are there other things you want to leave your loved ones? Any inspiring words or values that you hope they heed? The following questions can help you think about what matters most to you and what you want your loved ones to receive through your estate plan in addition to money and property.

1. What has been your greatest success? What has been your greatest regret?

When reflecting on all that has happened in your life, look at your greatest accomplishments. It is natural for people to want to share their successes with their loved ones. Life’s accomplishments can come in many forms, from personal growth and meaningful relationships to professional and financial achievements. Sharing your triumphs can inspire future generations and guide them toward their own paths of achievement.

At the same time, recalling things that did not go according to plan can provide guidance that is as valuable to your loved ones as your successes. By showing the less-than-glamorous parts of your life, you may be able to help your loved ones avoid the same scenarios. Such information can be separately conveyed to your loved ones in a letter or a video recording.

2. What is the greatest lesson you have ever learned?

While you are reflecting on your life, it can be helpful to consider what you have learned from your many experiences. Passing this knowledge on can provide your loved ones with valuable lessons as they head into their next chapters, even though you may not be there with them. Such information can also give them a head start on their peers who may not have the same insights. As with your successes and disappointments, you can include this information in a separate writing or in video format. Sharing photos from your past can add details to a particular life lesson and help your loved ones feel like they were there with you.

3. How do you want your loved ones to remember you?

We are all writing the story of our lives. After we pass away, all our loved ones will have of us are the memories we leave behind. Keeping this question top of mind ensures that you have the interactions and make the types of memories with your loved ones that they will cherish and remember fondly. This could include being home for dinner and present with your family at the end of each day, going on an annual family vacation, or hosting family reunions each year with your extended relatives. Ensure that activities or rituals that are important to you are a part of your life so your loved ones can also experience and remember them.

4. What kind of future do you want for your loved ones?

Although part of estate planning is about you and protecting what you have worked hard to accumulate, it is also about protecting and providing for the loved ones who will be involved in your estate plan. A comprehensive estate plan includes details regarding the inheritance your loved ones will receive along with instructions you provide for those who will step in to manage things on your behalf.

When it comes to an inheritance, the money and property you leave behind can have a dramatic impact on your loved ones’ futures. If you want your loved ones to have a good education, you can earmark money to send them to postsecondary schools. If you want them to travel and experience other cultures, consider designating money so they can visit other countries. If you hope to encourage charitable giving, you can instruct your loved ones to choose a charity that will receive a certain amount of money at your death.

You can also influence your loved ones in other ways by detailing your wishes in your estate plan. If you need someone to step in and take care of your medical and financial affairs, you can help reduce their stress by having the right tools in place and explaining how you want things handled. Your living trust and financial power of attorney can provide guidance on how your money is to be managed. Your medical power of attorney and advance directive can provide instructions about your healthcare. Together, these tools can help you rest assured that you will be cared for in the manner you desire, even though you may not be able to otherwise communicate your wishes. Having a properly executed estate plan that lays out all of your wishes during life and at your death can also help reduce interpersonal conflicts and ensure that your loved ones can process their grief without additional stress.

Estate planning is a process. We want to ensure that your plan includes all facets of your life, not just the money and property you have accumulated. To start or update your estate plan, call us.

A home is often one of the most important assets that people own. Therefore, most people want to stay in their home until they die and then have a loved one receive it. One common way to pass a home to loved ones is through a will. However, transferring property with a will requires probate, which is generally considered a lengthy, costly, and public court process that many actively seek to avoid.

There are several ways an estate plan can transfer property without a will or probate court involvement when the owner passes away. In addition to a lifetime transfer of the property (by sale or gift), certain types of deeds can be used that take effect only upon the property owner’s death and do not subject the property to probate. However, using these deeds for probate avoidance can potentially introduce new issues. A trust-based estate plan may be a better option if the goal is simply to avoid probate.

Home Ownership and Inheritance 

We are living through one of the largest intergenerational wealth transfers in history. Roughly one in six Americans expect to receive an inheritance in the next 10 years, and among those, nearly half anticipate inheriting property such as a house.¹ 

According to Pew Research, in 2021, nearly two-thirds of US households lived in a home they owned as their primary residence.² Homeowners have, on average, around $174,000 in equity in their homes—more than double the value of their next most valuable asset, retirement accounts, which have an average value of $76,000.³ 

Real Property, Legal Rights, and Trusts

A key concept in estate planning is honoring people’s wishes by helping them control, as much as possible, what they own and what happens to it after their death.

An estate plan enables a homeowner to decide what happens to their property after they pass away, ensuring that it goes to the person (or people) they choose in a manner of their choosing, whether that means keeping it in the family and setting limits on its use or transferring the property to a beneficiary without restrictions.

Options for Transferring Real Property at Your Death

Estate planning is highly flexible, offering multiple ways to satisfy someone’s wishes for what happens to their money and property when they die, each with a mix of benefits and downsides.

To avoid probate, there are many ways to transfer real property, both during the owner’s lifetime and at their death. Some solutions can cost less than a trust, but as the examples below show, they can also have significant downsides and risks. 

Deed-Based Transfers

A deed is a legal document that transfers real estate ownership from the current owner (the grantor) to another individual or entity (the grantee). Several types of deeds can be used to gift real property at the grantor’s death. They include the following: 

• Life estate deed. A life estate, created through a life estate deed, gives a person the right to live in and use a property for their lifetime. The life estate’s owner is called the life tenant, and the person who receives the property after the life tenant’s death is called the remainderman. Some people may consider using a life estate deed to retain the ability to live in their own home while they are alive, allowing them to name the remainderman who will receive the property at the life tenant’s death. While a life estate avoids probate, the creation of the life estate can be undone only if the remainderman agrees. Because the goals, legal rights, and responsibilities of the life tenant and the remainderman may differ, disagreements may arise between them over, among other things, property use, improvements, or maintenance. In addition, a life tenant cannot liquidate or sell the property without the remainderman’s agreement. 
• Enhanced life estate deed. Also known as a ladybird deed, an enhanced life estate deed allows the grantor (who becomes the life tenant) to retain the ability to live in their home and the right to use, mortgage, sell, gift, and otherwise convey the property during their lifetime without the signature or blessing of the remainderman. When the life tenant dies, if they still own the property at their death, the remainderman will receive it. This provides flexibility for a property owner wanting to name who will receive the property at their death while retaining control over it throughout their lifetime. However, this type of deed is not available in all states. 
• Beneficiary deed. Also known as a transfer-on-death (TOD) deed, a beneficiary deed automatically transfers the deeded property to a named beneficiary at the time of the property owner’s death. The transfer avoids probate, and the deed can be revoked anytime during the owner’s lifetime. However, not all states allow beneficiary deeds. 

Again, not all of these types of deeds are legally valid in all states. An experienced estate planning attorney can explain what tools are available to you and discuss the benefits and potential risks.

Downsides to Using a Deed to Transfer Property at Your Death

There is no creditor protection for your beneficiaries. When a deed transfers property to a beneficiary, that property goes to the beneficiary outright. There are no strings attached and no protections. For instance, if the beneficiary were to receive the property during a bankruptcy proceeding, it might be used to satisfy the creditors because it is now considered the beneficiary’s property.

There is no protection if the beneficiary is disabled or unable to manage their affairs. As previously mentioned, when the beneficiary receives the property, it is theirs. However, if they receive the property when they cannot manage their affairs, its management falls to another person. It may be handled by a court-appointed guardian or conservator or an agent under a financial power of attorney, who can do whatever they want with it (as long as it is in the incapacitated beneficiary’s best interest). Also, if the beneficiary receives any means-based assistance, the sudden inheritance could jeopardize those benefits by placing the beneficiary above any applicable asset threshold.

There are no protections for you if you cannot manage your affairs. These deeds are a sufficient way to transfer property after you are deceased. However, if you cannot manage your affairs during your lifetime, the named beneficiary or remainderman has no access to or interest in the property to help you manage it until you pass away. You will have to rely on an agent under a financial power of attorney (if you have one) or a court-appointed guardian or conservator to manage the property on your behalf.

Your beneficiary is free to do what they want.As already discussed, if you use a deed to transfer ownership at your death, your beneficiary will receive the property outright. You cannot add any conditions or requirements regarding the property or its use. The beneficiary can sell, mortgage, or use it as a rental property (subject to applicable zoning restrictions). It is their property to do with as they please. Their intended use of the property may not align with your wishes.

Using a Trust to Transfer Real Property

While you may view your home as a place to live and not as an investment or financial vehicle, that perception can change when you pass away and the home passes to a loved one, particularly if that loved one already has a primary residence. 

A beneficiary who inherits a home may decide to sell the property; turn it into a rental; renovate the property to use it as a farm or business; sell off individual structures on the property (such as a barn or historic structure); cash in on its natural resources (e.g., allow timber to be harvested); or even tear down the original home and build a new one in its place. When more than one beneficiary inherits the property, disagreements about how to best use it could arise.

You might not care what happens to your home when you are gone. However, if you want to set restrictions on its use for any reason—whether those reasons are sentimental or have the practical intent of reducing conflicts among multiple beneficiaries—you must use the right estate planning tool. 

Consider placing your home in a living trust that legally owns the property, with you serving as a trustee and being the current beneficiary during your lifetime. This allows you to stay in your home—and maintain control over it—while you are alive. When you pass away, the home does not go through probate because you do not technically own it. Instead, a successor trustee assumes legal responsibility for the property and manages it or gives it away in accordance with your trust’s terms. 

The trust terms can be highly detailed, and limitations can be set on how the property can be used. You can stipulate, for example, that the property must be shared as a family vacation home and cannot be used for business purposes. You can require that the house be held in the trust until your minor children reach a certain age so they can remain in the home after your passing. While the trust owns the property, your terms will govern its use. As soon as the property is distributed from the trust, you lose all control over it.

The Best Way to Transfer Property for Every Situation

Estate planning is a highly personal process that must consider many factors, each of which can have multiple solutions that present a unique set of benefits and drawbacks.

Avoiding probate is usually just one estate planning consideration among many, and it may not be desirable in every situation. 

Determining the best way to pass down real property at death depends on your preferences and family circumstances. An estate planning attorney can explain each available option and help you decide what is best for your situation. 

1. The “Great Wealth Transfer” is underway but nearly half expecting an inheritance are not ready to manage it, finds New York Life Wealth Watch Survey, New York Life, July 19, 2023, https://www.newyorklife.com/newsroom/2023/new-york-life-wealth-watch-great-wealth-transfer. ↩︎
2. Rakesh Kochhar and Mohamad Moslimani, 4. The assets households own and the debts they carry, Pew Research Center, Dec. 4, 2023, https://www.pewresearch.org/2023/12/04/the-assets-households-own-and-the-debts-they-carry. ↩︎
3. Id. ↩︎

How to Pass Your Stories and Values to Future Generations

Money and property may be the most discussed types of wealth that a person owns, but the riches of their experience and wisdom can mean even more to loved ones down the line. Reinforcement of family traditions can be built into your estate plan alongside your wishes regarding the distribution of your money, property, and belongings. After all, what really makes a family is its values and traditions—not the finances that are left behind. 

An excellent way to share your values with your loved ones is to hold a family meeting to discuss what matters most to you. In addition to sharing your wisdom, you may make it more likely that your loved ones will handle their inheritance responsibly, especially if they understand the reasons behind the choices you have made in your estate plan. This is one of the many reasons for having a family discussion about your legacy and estate plan. 

How to Tell Your Story Through Your Estate Plan

It can be delightful to hear your elders’ stories of their fondest memories and wildest adventures, as well as the struggles they overcame to get the family where it is today. Such wisdom provides meaning for a financial legacy that otherwise might be viewed as just a lucky windfall. As part of your estate and legacy planning, you may decide to record your own personal history of triumphs and tribulations through one or more of the following methods:

• Audio files. With the prevalence of smartphones, most people are carrying around the easiest device for recording their thoughts. Through a variety of apps, you can record stories or lessons as they occur or as you remember them.
• Video files. The same goes for home movies and other video recordings. Older film formats can be easily digitized and organized along with the videos from your phone. Today’s technology also makes it easier than ever to add narration and context to a video, making the story all the richer.
• Photo albums. Many families have prized photo collections that catalog generations. It is a tragedy when something like this is lost in a fire or an extreme weather event or misplaced during a move. Creating a digital database is a favor to your family in more ways than one. Not only will they have access to these memories at any time, but they can also feel secure knowing that these family treasures will not be lost and that multiple copies can be made for the different branches of the family. In addition, most of us are capturing our favorite moments by using our phones to take pictures that can be stored on the phone or in the cloud or saved to a separate device to be protected.
• Letters and other writings. In your legacy plan, you can provide handwritten or typed letters or stories to your family members, to be received and read at a time of your choosing. You may also choose to include past correspondence, mementos, and postcards that have been tucked away somewhere. Reliving your memories of the past through your old letters and postcards can be a great way for younger generations to get to know and sincerely appreciate your life journey and legacy.

Passing Your Values to the Next Generation

Some estate planning strategies blend your finances and personal values. Whether you feel most passionate about the need for your beneficiaries to travel and gain worldly experience, continue a unique family tradition such as sailing or astronomy, or support meaningful charitable or spiritual work, we can draft trusts that hold and distribute funds for these endeavors. 

• Educational trusts. If you value education, you may want to set up a trust to fund trade school, undergraduate and graduate degrees, study-abroad programs, or even community classes for your family’s future generations. Because of sharp increases in educational costs in the United States, your grandchildren will likely benefit immensely from an educational trust. Depending on the generation, you may also be able to use a special type of educational trust as a tax strategy.
• Incentive trusts. Similar to the way educational trusts set aside money for funding a beneficiary’s schooling, incentive trusts can also help steer the course of your loved ones’ lives by encouraging some paths while discouraging others. For example, an incentive trust could contain instructions for disbursements to be released when the beneficiary is working a part- or full-time job. If family vacations were an important part of your upbringing, you could set aside funds specifically for your grandchildren to experience the same wonderful traditions you enjoyed.
• Charitable trusts or foundations. Charitable trusts or foundations establish a family legacy of supporting a particular cause, but they may also have the added financial benefit of reducing income and estate taxes. They are an excellent way to benefit a charitable organization central to your core values and associate your name with that philanthropic effort for generations to come. 

Are you curious about exploring a few of these options in your estate and legacy plan? Call us today, and we can schedule an appointment to review options for showcasing your memories and values in a long-lasting way that truly benefits your loved ones. 

5 Things to Talk About with Your Family 

You intend to pass along your hard-earned money and property through your estate plan, but what about your wisdom? Ensuring that you successfully pass all of this along may call for a family meeting to discuss your finances, your legacy, and your core principles. 

Most families lead busy lives, with many relatives seeing one another face-to-face only at a handful of major holidays throughout the year. The estate planning process is a perfect opportunity to bring everyone together outside of those scheduled occasions—even if a child or grandchild has to attend via video chat. 

Working with your estate planning attorney in collaboration with any other advisors you have in your corner can make this legacy-enriching process seamless and even enjoyable. However, bringing your family into the conversation is better yet, as they will get to learn new things about you and share stories and memories of their own. Here are a few topics you may want to address during your family meeting:

1. Your Rich Life Story

You may think it has all been said before, but have you considered recording your personal life narrative? These recordings will be treasured by your loved ones while you are still here and long after you have passed away. To customize these recordings, have your family members ask you about your fondest memories and greatest challenges. You will be creating a sort of time capsule that contains the uniqueness of your personality and the experiences that shaped you into the person you are today. Perhaps most importantly, you will be able to share the valuable lessons you have learned. Your family will be better for it. 

2. How You Would Like Your Wishes Honored

Estate planning involves weighty decisions regarding your long-term care and who will be responsible for managing your financial and medical affairs in the event you cannot manage them for yourself, along with how your money and property should be passed on after your death. Although these are not the sunniest topics, letting your family know why you made your particular choices is important. It will allow your loved ones to understand firsthand the instructions included in your estate plan when the need to use it arises. 

3. Your Family Tree

Your loved ones may be curious about more than your life story. Take time to go over your family tree and answer questions the younger members of your family may have about your shared heritage. A who’s who on paper or in a digital format is an excellent gift to your loved ones that they will be able to reference and build upon in the years to come. 

4. Significant Heirlooms

Almost every family has heirlooms, each of which tells a story. It is common for estate plans to contain physical objects that matter dearly to their owners, such as antique furniture, garments, jewelry, hobby collections, and memorabilia. Keeping the story of an object alive and memorializing it in writing or through video may be more important than transferring its monetary value to the next generation. 

5. Your Core Values

Your estate plan can be customized to include specific language that incorporates your values while leaving room for your beneficiaries to grow and explore life on their own terms. Educational, incentive, and charitable trusts are a few tools you may use to express your values through your estate plan.

You are much more than the wealth you have accumulated in your life. Likewise, your estate plan is about more than your financial worth. After all, wisdom and life experiences passed down from generation to generation can amount to something far greater than numbers on paper.

We would love to help you build your estate plan to include a balanced representation of who you are and what you believe. We are here to coach you through the process of going over these topics with your family and weaving them into your estate planning tools. Call us today to set up a time, and we will get started right away.

If you are reading this, you need an estate plan. Why? The short answer is that everyone age 18 and older needs an estate plan. It does not matter whether you are old or young, have built up considerable wealth or are just entering adulthood—you need a written plan to control what happens to the things you own and to protect yourself and those you love.  

The Key Takeaways

• Every adult, regardless of their age or the amount of wealth they have accumulated, needs both a lifetime incapacity plan (a plan for if they are alive but are unable to manage their own affairs) and an after-death estate plan.
• Planning for incapacity keeps you in control of who will make decisions for you if you are unable to and allows your trusted loved ones to care for you without court interference—and without the potential loss of control over important decisions or expenditures for your benefit and the added expense of a guardianship or conservatorship proceeding.
• Every adult needs up-to-date healthcare directives to communicate their end-of-life wishes if they are unable to communicate them themselves.
• You need to leave written instructions to ensure that you maintain control over who is in charge of when and how your assets will be distributed.
• Every adult needs the counseling and assistance of an experienced estate planning attorney to ensure that they are implementing a legally enforceable and comprehensive plan for the future.

What Is an Estate Plan?

Planning for Death

Your estate consists of everything you own—including your car, home, bank accounts, investments, life insurance, furniture, and personal belongings. No matter the size of your estate, you cannot take it with you when you die, and you probably want certain people to receive certain things you own. 

To ensure that your wishes are carried out, you need to provide written instructions stating who will receive your assets and belongings, what you want them to receive, and when they are to receive it—that is the essence of an estate plan. If you have young children, you also need to name someone to raise them in your place and manage their inheritance in the event that both parents are unable to do so.

Lifetime Incapacity Planning

A properly prepared estate plan will also contain instructions regarding your care (and the management of your assets) if you become unable to manage your affairs (sometimes referred to as being incapacitated) even for a short time due to illness or injury. Without the proper tools in place, your family will have to ask the court to appoint someone to manage your finances and medical care and for permission to use your assets to care for you. When relying on the court to make these determinations, the process is outside of your and your loved ones’ control, takes time, and can incur significant legal fees and costs, making an already stressful situation even more difficult for your loved ones. Depending on your family dynamic, this process can also be contentious if your family disagrees about who should manage your affairs or what the proper course of action for your care should be. Not only does this infighting threaten family harmony, it may also become a matter of public record, as most documents related to these types of proceedings will be available to anyone who requests them and pays a fee.

It might surprise you, but having a plan in place can often have a more significant impact on and benefit for families with modest means because they may be unable to afford the court costs and legal fees associated with the court process known as probate. Here is an example:

Sam and Meg had two young children together. Sam died in a car accident. Because he had no estate plan, the laws in his state divided his estate into thirds: one-third to Meg and one-third to each of their children. His estate included his one-half interest in their home, an inheritance he received from his grandfather (he was using this money to help support the family while looking for a higher-paying job), and a life insurance policy (but he failed to complete the beneficiary designation). Meg, a stay-at-home mom, was forced to go back to work after Sam’s death. The court set up conservatorships (in some states called a guardianship or guardianship of the estate) for each child to manage their inheritances, which required ongoing court costs, including accounting, guardianship, and attorney’s fees. When the children turned 18, they each received what was left of their inheritances in one lump sum, and there was not enough to cover their first year of college tuition. 

What You Need to Know

Do not try to create an estate plan without the assistance of a professional. An experienced estate planning attorney who is familiar with the laws in your state can guide you in making difficult decisions such as who will raise your children and manage your affairs if you cannot. An experienced attorney will also know how to craft the appropriate estate planning tools so that your wishes are carried out.

We Are Here to Help

If you are ready to take control of your life and the legacy you leave behind for your loved ones, call or email our office now to schedule an estate planning consultation appointment. We make tough topics manageable to discuss. We can also craft a plan that addresses what you value most and protects you and those you care about.

Many believe that once they set up and fund a revocable living trust, property held in the trust will completely avoid federal estate taxes after they die. In reality, a living trust does not provide any unique estate tax avoidance strategies. 

The primary mechanisms for reducing estate taxes—the unlimited marital deduction and the charitable deduction—apply whether money or property (sometimes referred to generally as assets) are held in a trust or held directly by an individual. The unlimited marital deduction allows the transfer of assets to a US citizen surviving spouse free from estate tax, while the charitable deduction permits tax-free transfers to qualifying charitable organizations. These deductions are not exclusive to living trusts but can be incorporated into a trust-based estate plan to ensure that assets are distributed tax-efficiently.

Before delving into estate tax planning, it is important to understand that estate taxes come into play only when someone gifts assets during their lifetime and at their death that combine to exceed a certain threshold value. This threshold is called the federal lifetime exclusion amount and is currently $13.99 million for 2025. Unless the trustmaker and the trustmaker’s revocable living trust have combined assets exceeding this amount, there will likely be no federal estate tax due at a trustmaker’s death. However, for purposes of this article, we will assume that the trustmaker’s assets owned individually and in the revocable trust are valued at more than the lifetime exclusion amount.

Caution: If you live in a state with a state estate tax, you need to work with an experienced estate planning attorney to ensure that these concerns are addressed appropriately, as state estate tax thresholds are often lower than the federal threshold and may require additional planning.

Single Trustmakers and Estate Taxes

Of the two planning strategies mentioned above—the unlimited marital deduction and the charitable deduction—only the charitable deduction tool is available to single individuals. With this tool, all assets in a person’s trust left to qualifying charitable organizations will be removed from the trustmaker’s taxable estate. On the other hand, the assets left to noncharitable beneficiaries will likely be exposed to federal estate tax liability if the remaining assets exceed the current federal exemption amount. In other words, if your beneficiaries are your children, your brothers and sisters, your nieces and nephews, your best friend, another trust, or even a for-profit business, then the property they inherit through the trust could be subject to federal estate tax depending on the size of your remaining estate. Otherwise, any property distributed to qualifying charitable organizations through the trust passes free from federal estate tax.

Married Trustmakers and Estate Taxes

Married couples have both the charitable and unlimited marital deductions available to them. The charitable deduction functions the same way as described above for the single individual. With the unlimited marital deduction, all qualifying transfers of assets held in your trust that pass to your US citizen spouse after your death will likely not be subject to estate taxes due to the unlimited marital deduction. However, to be deemed a qualifying transfer, the assets must either pass to the spouse outright or be held and administered in a special type of trust for your spouse’s benefit.

On the other hand, if you are married and you create and fund a revocable living trust and name both your spouse and your children as current beneficiaries after you die, the portion of the trust passing to your spouse (utilizing the unlimited marital deduction) will likely not be subject to federal estate tax, and the portion passing to your children may be subject to estate tax (depending on the value of the assets and the federal lifetime exclusion amount available to you when you pass). If you include one or more qualifying charitable organizations as beneficiaries, the portion passing to the charities will likely not be subject to estate tax.

Do You Need a Revocable Living Trust?

If a revocable living trust does nothing to reduce your federal estate tax bill that cannot be done by holding the assets in your own name, why should you consider setting one up? There are at least three good reasons:

1. To avoid probate. Assets held in your revocable living trust at the time of your death will avoid the court proceeding known as probate. Depending on your state of residence at the time of your death, this could save a great deal of time and thousands of dollars in legal fees and court costs.
2. To plan for mental incapacity. If you become unable to manage your affairs while you are still alive, the successor trustee you name in your revocable living trust will be able to manage trust assets for your benefit without the need for court involvement. Like the benefit of avoiding probate discussed above, removing the need for a court-supervised guardianship or conservatorship could save time and thousands of dollars in legal fees and court costs, depending on your state of residence.
3. To keep your final wishes private. A revocable living trust is a private agreement that remains private after you die. In most cases, the only people who will need to know the terms of the trust and what will occur during administration are the trustee and your named beneficiaries. Usually, this document is not required to be filed with the court, which will prevent strangers from knowing what you own and how you want what you own to be distributed and managed.

Final Thoughts on Revocable Living Trusts and Estate Taxes

For many people, a revocable living trust is the ideal way to organize their final affairs. While the estate tax avoidance tools used by a living trust are not exclusive to such trusts, they can be incorporated into a trust-based estate plan to capture the general benefits that living trusts offer and provide equally important additional benefits unrelated to tax savings.

If you are interested in learning more about a revocable living trust and its benefits for you and your loved ones, call us.

Americans often prefer to stay busy. When we are not working, many of us turn to hobbies to keep us engaged and productive. We spend hours each day on our hobbies and leisure activities. Over the course of a lifetime, this time adds up to a significant investment. 

Our hobbies, passion projects, and pursuits may also represent large investments of money, resources, and emotions. Therefore, they should often be included in an estate plan. 

Whether you are a collector of classic cars or comic books, an artist or craftsperson with a studio full of valuable equipment, a musician who owns prized instruments, or someone who never outgrew their vintage toys and board games, estate planning helps to preserve your cherished items and make them part of your legacy. 

Hobbies Growing in Importance to Americans

We define ourselves largely by how we spend our time. For many Americans, wasted time amounts to wasted potential. 

According to the US Bureau of Labor Statistics 2023 Time Use Survey, Americans spend about five hours a day on leisure activities and hobbies.¹ Another survey of Americans taken during the COVID-19 pandemic found that 6 in 10 had adopted a new hobby as they were left with more spare time and nowhere to go.² Common new hobbies ranged from baking or cooking to reading, arts and crafts, and photography. 

While some of our pandemic pastimes have already fallen by the wayside, others are likely to persist because there is an inherent payoff when we gain new knowledge or learn a new skill and continue to improve at it.

That payoff may be more than just the personal satisfaction of mastering a skill. Nearly half of those who took up a new pandemic hobby turned it into a side hustle that earned them extra money.³ And an additional one-quarter of those with new hobbies said they hoped to turn their new hobby into a form of income in the future.⁴ 

When Passion Turns Profitable 

Happiness may be priceless, but many of the things that make us happy have a price tag attached to them. 

Maybe you did not start a hobby or collection to make money. Tales abound about boyhood baseball card collections and antiquing finds that turned out to be worth millions of dollars. Coins, comic books, stamps, books, toys, action figures, records, cars, dolls, furniture, and even vintage bakeware have commanded impressive prices that, in some cases, belie their appearance and original purpose. 

Other hobbyists and collectors approach their passion with pecuniary interests squarely in mind. Collecting sports memorabilia, for example, has exploded into a billion-dollar industry akin to the fine-art market. In 2023, the collectibles market as a whole, driven by online marketplaces and digital auctions, was estimated at nearly $500 billion and growing.⁵ 

For others, a private passion can turn into a life’s work, like it did for Jim Irsay, the NFL’s Indianapolis Colts owner, or Joel Platt, a renowned sports memorabilia collector. These men have gone to great lengths to preserve their collections for posterity. Irsay takes his diverse collections of historic artifacts, featuring items from sports, pop culture, literature, and American history, on the road and shows them off for free.⁶ Platt’s collection is currently housed in a showcase museum in Boca Raton, Florida.⁷ 

Like collectors, many of the most famous artists started out pursuing a passion they never expected to get rich from, only to have their works later sold for a small fortune. 

While he was alive, Vincent van Gogh sold a single painting in 1890 for a meager 400 francs,⁸ or about $2,670 in today’s US dollars. In 1990, one of his paintings sold for $83 million at auction.⁹ 

Then there’s fashion icon Coco Chanel, whose inspiration to design clothes for women out of practical necessity launched one of the world’s best-known clothing brands. Her first fashion success came from a dress she made from an old jersey.¹⁰ Today, the Chanel brand is valued at around $20 billion.¹¹ 

Protecting and Preserving Your Passion

Most of us may not reach the heights of Van Gogh, Irsay, Platt, or Chanel in our hobbyist or artistic pursuits. However, that does not mean our passions are without value and that we should not take steps to ensure our sweat equity is an investment in our legacy. 

Estate planning is essential not only for financial and family considerations but also for those with serious, lifelong projects. The things that define you in life can continue to define you in death when you plan ahead properly. Here are some steps you can take now so that your loved ones know exactly what to do with the things that matter most to you. 

• Inventory and document. Start by creating a detailed inventory of the items in your collection or related to your hobby. The inventory should include descriptions, photographs, certificates of authenticity, provenance (ownership history), conditions, insurance information, care instructions, and other documentation that can help an estate executor or trustee manage and distribute them. Have physical and digital copies of your inventory and related documents stored in safe locations (e.g., a safe deposit box or encrypted cloud storage) that you have ensured key loved ones can access after your passing. Review and update your inventory regularly. A good time to do so is when you update your estate plan every few years or when significant changes occur in your or your family’s life, or to your financial situation or your collection. 
• Get a professional appraisal. Obtain professional appraisals to find out the current market value of what you own, including the final product and the equipment and raw materials used to make it. For example, if you have a shop where you make furniture, get the furniture and the woodworking machinery appraised. Hobbyists might have vintage or rare supplies and materials, such as reclaimed wood, which can also be valuable. 
• Talk to your family. A common estate planning mistake is to put everything in writing but never discuss your plans with the people who will be affected by them. For example, your loved ones might be aware that you wrote in your spare time or have a large book collection, but do they appreciate how much these works mean to you? Do they know what inspired your love of the written word, your personal journey with it, and how it helped to define you? Unless you share these details with others, the things that were the most personally meaningful to you might be regarded by your loved ones as just more stuff they must go through when you die. 
• Decide how to distribute. Do you want to give what you have in its entirety to a single person, divide it among multiple loved ones, donate it to charity, or sell it, or do you prefer some combination of these options? Your decision will be based on the items themselves and whether there is anybody who might want them. A family member or friend with the same interests might be a good fit. A loved one who does not want them might end up selling them anyway, so you can sell them now, make plans for your estate or a dealer to sell them and distribute the proceeds following your death, or make a lifetime gift (or series of gifts). 
• Put your wishes in an estate plan. All your conversations, preparations, and evaluations could be for naught if you do not clearly and legally describe your wishes in an estate plan. Suppose that you have your treasured comic book collection professionally appraised and documented. You have this information stored in a locked box, and you regularly update it. There is only one problem: you never formally documented your plan for your collection in a will or trust. You may have casually discussed your plans with family, but absent a formal estate plan, there is no guarantee it will come to fruition. 

Remember that you can get creative with your estate plan. Although you may never get to display your artwork at a museum, for instance, you could arrange to have a private viewing of your art or collectibles for friends and family in addition to, or instead of, a traditional funeral or celebration of life arrangement. 

Celebrate your life’s work however you want—just make sure to plan ahead and get everything in writing.

A Serious Passion Deserves Serious Planning

The things we create and collect form a core part of our identity. They mark our existence long after we are gone. You cannot take it with you. However, you can make it a part of your legacy with an estate plan. 

Only a written estate plan makes your wishes legally binding. Do not be the person whose family finds a valuable collection in a dusty corner of the attic and does not know what to do with it, fights over who should receive what, or overlooks its importance and throws it away or donates it. 

You put serious time into your hobby or collection. Keep the passion alive and inspire the next generation with an estate plan that gives your life’s work the treatment it deserves. Talk to one of our estate planning attorneys today. 

1. American Time Use Survey News Release, U.S. Bureau of Labor Statistics (June 27, 2024), https://www.bls.gov/news.release/atus.htm#:~:text=Leisure%20and%20Sports%20Activities%20in,%2C%20compared%20with%204.8%20hours. ↩︎
2. Matt Schulz, 53% Who Took on a Pandemic Hobby Went Into Credit Card Debt as a Result, LendingTree (April 6, 2021), https://www.lendingtree.com/credit-cards/study/quarantine-hobbies-credit-card-debt. ↩︎
3. Id. ↩︎
4. Id. ↩︎
5. Collectibles Market in 2024 was estimated at $492.6 Billion, Annual Growth 9.2%: Research by Market Decipher, Yahoo!Finance (May 9, 2024), https://finance.yahoo.com/news/collectibles-market-2024-estimated-492-103200953.html. ↩︎
6. Stephen Holder, Why Colts owner Jim Irsay refused over $1B for his collection, ESPN (July 14, 2023), https://www.espn.com/nfl/story/_/id/37969744/why-colts-owner-jim-irsay-refused-1b-collection. ↩︎
7. Ana Veciana-Suarez, Joel Platt and his Dream Collection, Intelligent Collector, https://intelligentcollector.com/joel-platt-and-his-dream-collection (last visited Dec. 18, 2024). ↩︎
8. Brian Boucher, Art Bites: The Only Known Painting Van Gogh Sold During His Lifetime, Artnet (Feb. 13, 2024), https://news.artnet.com/art-world/story-only-known-painting-van-gogh-sold-2432275#:~:text=Belgian%20painter%20Anna%20Boch%2C%20a,either%20350%20or%20400%20francs. ↩︎
9. Martin Bailey, The ten most expensive Vincent van Gogh paintings, The Art Newspaper (April 29, 2022), https://www.theartnewspaper.com/2022/04/29/the-ten-most-expensive-van-gogh-paintings. ↩︎
10. Coco Chanel, Biography (Dec. 10, 2021), https://www.biography.com/history-culture/coco-chanel. ↩︎
11. Tugba Sabanoglu, Brand value of Chanel worldwide from 2017 to 2023 (in million U.S. dollars), Statista (Feb. 22, 2024), https://www.statista.com/statistics/1010860/chanel-brand-value-worldwide/#:~:text=In%202023%2C%20Chanel’s%20worldwide%20brand,the%20most%20recently%20reported%20period. ↩︎

Americans are, quite literally, getting buried in debt, with nearly half expecting to pass away with outstanding debts.¹ 

As a general rule, a person’s debts do not go away when they die. Some types of debt, such as federal student loans, are typically forgiven upon the debtor’s death, but private loans and cosigned accounts may still be owed after the debtor has passed away. State laws also play a factor in the postdeath debt settlement process. 

While nearly half of Americans think they will pass on their debts when they die, you can take proactive steps now to protect your loved ones from inheriting or becoming responsible for your debts. If you are an estate’s executor/personal representative or have been contacted by a debt collector about a deceased family member’s debt, you should understand your rights and obligations. 

One Nation, Under Debt

Debt is as old as civilization itself. Lending at interest can be traced back to ancient Mesopotamia and the use of promissory notes to facilitate trade. The United States has carried debt since its inception, borrowing money from domestic investors and the French government to fund the Revolutionary War.² 

Total consumer debt eclipsed $17 trillion in 2023, up from $15 trillion in 2021, according to credit reporting agency Experian.³ The largest and most common debts include 

• mortgages ($11.5 trillion in 2023),
• auto loans ($1.51 trillion),
• student loans ($1.47 trillion),
• credit cards ($1.07 trillion), and
• personal loans ($571 billion).⁴

The total average individual debt balance in 2023 was $104,215, up from $101,915 in 2022 and $96,371 in 2021.⁵ 

According to Debt.org, 73 percent of Americans die owing money.⁶ The average amount of debt they die with is nearly $62,000.⁷ 

What Happens to Your Debt when You Die

You are probably familiar with the expression “buried in debt.” It might hit close to home if you are like most Americans struggling to pay off existing loan balances. However, do you know what happens to your debt when you die? 

The answer depends on factors that include the type of debt and the state where you live. In most cases and most states, your loved ones are not stuck with your unpaid bills because creditors are paid only from the assets (e.g., a home, car, bank accounts, investment accounts) that are (i) part of your probate estate and go through a probate court or (ii) in your revocable living trust. 

If you do not leave behind enough assets in your probate estate and living trust to fully cover the debts owed, creditors may have to settle for what is available. There are some exceptions to the idea that surviving family members and other heirs are not on the hook for the debt, including 

• a person who cosigns on a loan;
• the spouse of a deceased person who lives in a state with community property laws (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin); and
• the spouse of a deceased person who lives in a state that requires a surviving spouse to pay certain healthcare expenses and other kinds of debt.

The rules governing when a surviving spouse is responsible for paying unpaid medical bills are complex and vary by state. It is important to work with an experienced estate or trust administration attorney to ensure that your affairs are wound up correctly.

Surviving spouses and adult children are frequently contacted by debt collectors attempting to collect on bills for the medical care of their deceased loved one, according to the Consumer Financial Protection Bureau. However, unless the survivor also agrees to the medical debt or is responsible under state law, they are generally not liable for the debt. 

Not All Debts Go Away at Death

Debts not inherited by a specific individual under the exceptions described above do not just disappear, except for debts that are dischargeable by death. 

For example, federal student loans, including Direct Subsidized Loans, Direct Unsubsidized Loans, Direct Consolidation Loans, Federal Family Education Loans, and Federal Perkins Loans, are usually discharged when the borrower dies, as long as the loan servicer receives proof of death.⁸ 

Private student loans are a different story. Some lenders of private (i.e., nonfederal) student loans offer a death discharge, although it is not the norm. They may come after the loan’s cosigner (if there is one) or the estate for repayment of the outstanding balance on the loan. 

Secured versus Unsecured Debt

Determining how and when to pay a debt after the debtor has passed away and who or what may owe the debt can depend on whether the debt is secured or unsecured. 

• Secured debt is backed by collateral (a tangible asset the lender can repossess or sell if the borrower does not pay back the debt). Common examples of secured debt are mortgages (secured by the real property) and car loans (secured by the vehicle). Secured debts are typically paid off before unsecured debts when a probate estate is settled during the probate process. If estate assets are insufficient to cover the secured debt, the lender can seize the collateral to recoup their losses. 

In rare cases and under select jurisdictions, legal protections may be available for surviving spouses who wish to remain in a primary residence subject to a creditor’s claim. These protections may delay or prevent foreclosure if the spouse cannot pay off the mortgage in full.

• Unsecured debt is not backed by collateral (that is, there is no specific asset backing the debt). Unsecured debt includes credit card debt and personal loans. 

Unsecured creditors have lower priority than secured creditors in probate. If the probate estate has enough funds, unsecured debts are paid off before any inheritance is distributed. However, if the estate lacks sufficient funds to satisfy all its debts, unsecured creditors are typically last in line for repayment and may not receive the full amount they are owed.

Funeral expenses also take priority over some creditor claims. Any state and federal taxes that the decedent owes, as well as probate estate administration expenses incurred during probate (e.g., legal and accounting fees), may also supersede creditors. 

Knowing which debts have priority over others in probate is the responsibility of the estate’s executor/personal representative. If the individual assigned this role in an estate plan does not follow state probate laws, they could be personally responsible for debts that should have been paid but were not because the executor did not pay creditors in the correct order.

How to Plan for Debt and Leave More Money for Your Loved Ones

“You can’t take it with you” applies to what you owe every bit as much as what you own. 

Your outstanding debt could create potential complications for loved ones. Your family may not personally get stuck with your unpaid bills; however, if you do not pay off your debts before you pass away, they may be forced to deal with debt collectors harassing or contacting them. Worse still, there may not be any money or property left to distribute to your loved ones in probate court or through the trust after everything has been liquidated to pay creditors. Here are some protections that your loved ones are afforded:

• State and federal law limits whom debt collectors are authorized to contact—and how they can contact them—to discuss outstanding debts. Spouses and other survivors should not automatically assume that they have to pay and should delay any conversation regarding payments of outstanding debts until they have discussed the specific circumstances with a lawyer. Collectors who go too far or provide misleading information can face potential consequences.
• When a beneficiary inherits a home, they also take possession of the home subject to any outstanding mortgage and are ultimately responsible for that debt. Anyone inheriting a home or other significant asset, such as a vehicle, with an outstanding loan balance must know their obligations to the lender. They may have to sell the house to pay off the mortgage or apply to transfer the mortgage to their name. In addition, individuals have the right to refuse a gift from an estate if they do not want or cannot afford it. In some cases, federal law will allow a decedent’s heirs to assume the mortgage on a property without triggering a due-on-sale clause, ensuring that the loan remains in place after the owner’s death.
• Every state has different laws and procedures surrounding debt repayment. Things can quickly get complicated, so it is best to work with a local estate or trust administration lawyer if there are any concerns about how unresolved debts could affect the surviving family.

Estate planning is about the legacy that you leave behind. If that legacy includes debt, an estate planning attorney can offer advice for getting it under control during your lifetime or help your family deal with the consequences of your debts after death. Call us if you need assistance planning for your debt or winding up a loved one’s affairs.

1. Myles Ma, SPFC, 46% of Americans expect to pass on debt to their loved ones when they die, Policygenius (Jan. 9, 2024), https://www.policygenius.com/life-insurance/2024-financial-planning-survey-passing-on-debt-after-death. ↩︎
2. FiscalData, https://fiscaldata.treasury.gov/americas-finance-guide/national-debt. ↩︎
3. Chris Horymski, Experian Study: Average U.S. Consumer Debt and Statistics, Experian (Feb. 14, 2024), https://www.experian.com/blogs/ask-experian/research/consumer-debt-study/#s3. ↩︎
4. Id. ↩︎
5. Id. ↩︎
6. Bill Fay, What Happens When People Die with Debt: Who Pays? (May 16, 2023), https://www.debt.org/family/people-are-dying-in-debt. ↩︎
7. Id. ↩︎
8. FederalStudentAid, https://studentaid.gov/manage-loans/forgiveness-cancellation/death. ↩︎

If you recently married or have been married for a while and have acquired additional money or property (or plan to), you have options regarding how your assets can be owned. Although joint ownership seems easy and convenient, it may not always work as well as you think it should, depending on the circumstances.

What Is Joint Ownership?

After getting married, some couples may choose to add each other to their existing bank accounts, brokerage accounts, and real estate (collectively called assets) as joint tenants with rights of survivorship (JTWROS). An asset owned as JTWROS is owned by at least two people, with each person having an equal right to the account or property. When one owner dies, the remaining owners automatically receive the deceased owner’s share. Going to probate court is not required for this transfer; it happens after a death certificate has been furnished to the appropriate party or recorded. For example, if a married couple owns a bank account as JTWROS and one spouse dies, the surviving spouse automatically becomes the sole owner of the account once the appropriate documentation has been provided. Although this scenario may seem like an easy solution to owning your assets and avoiding probate, there can be some pitfalls. 

Issues with Joint Ownership

When two people jointly own an asset, problems can arise, especially when a relationship is unstable, because neither person can unilaterally sell, lease, gift, or encumber (which includes refinancing a loan, among other things) the property without the other person’s consent or, possibly, without judicial intervention. Depending on state law, there may also be additional concerns when dealing with bank accounts; since both people usually have unrestricted access to the account, either person could potentially go to the bank and drain the account without the other’s consent. 

There are also issues with attempting to use JTWROS to avoid probate. When one spouse passes, the surviving spouse assumes sole control over the asset and can use or gift the asset during their life or gift it upon their death in any way they desire and may choose not to follow the deceased spouse’s wishes. This result is particularly risky when it comes to inherited or separate (nonmarital) property, such as a farm or ranch, that has been passed down through generations in the deceased’s spouse’s family. The deceased spouse may want the asset to be gifted to their own descendants after the survivor passes away, but the survivor can and may redirect the asset to someone else.

In a blended family, JTWROS may lead to the unintended consequence of a client disinheriting their children from a prior relationship. If everything is owned jointly by the couple, then when the first spouse dies, their children from a prior relationship will have no right to the jointly owned accounts and property because ownership automatically goes to the surviving spouse under the survivorship rights. 

A comprehensive estate plan that uses a trust to hold your assets can better control and protect such items. Whether due to creditor issues, incapacity, or death, the right estate plan will ensure that you and your spouse will be able to continue enjoying your assets as intended while minimizing potential taxes and court costs. 

Bottom Line

For all these reasons, it is important to consult with an estate planning professional to understand your options regarding the best approach to owning your assets. If you recently got married or are acquiring additional assets with your spouse, contact us right away to learn about your options.

Your wedding day was absolutely perfect. You and your spouse went on your honeymoon and had the time of your lives. Now you are back and can breathe a sigh of relief as the years ahead unfold before your eyes. Well, not so fast. With your honeymoon over, there are several things you should be mindful of to ensure that the legal and financial parts of your life properly reflect your newly married status.

What to Do After the Honeymoon

As you start living happily ever after, make sure to take care of these post-honeymoon to-dos during the first few weeks (or even days) after your wedding. This will help give you peace of mind so you can enjoy the memories of your wedding and honeymoon for years to come. The following checklist can serve as a reminder of some of the tasks to which you should give your immediate attention:

• Meet with a knowledgeable estate planning attorney to discuss creating a will or trust or updating your current one from before you got married.
• Read over and update your existing financial power of attorney or have one drafted.
• Review and update your medical directive documents (medical power of attorney, advance directive or living will, and HIPAA authorization form) and provide copies to the necessary doctors’ offices.
• Check and update beneficiary designations on any life insurance policies, 401(k)s, individual retirement accounts (IRAs), annuities, and other investment accounts.
• Seek advice from your tax preparer about whether you should adjust your withholdings to reflect your new marital status.
• If you do not already have coverage, obtain life insurance and designate a beneficiary and a contingent beneficiary.
• If you have moved or are planning to, update your address with your auto insurer, banks, employer, and anyone else who needs it.
• If desired, add your spouse to your group health and dental insurance policy.
• If you so choose, change ownership of real estate to reflect your marital status or add your new spouse as a joint owner.

In addition to the above, if you decide to legally change your name, notify the following institutions:

• schools
• employers
• department of motor vehicles or secretary of state
• creditors (including credit card companies) and debtors
• Social Security Administration
• passport office
• insurance agencies
• state taxing authorities
• telephone and utility companies
• banks and financial institutions
• government benefits offices

Contact an Experienced Estate Planning Attorney

We are here to guide you through the estate planning process and ensure that the financial and legal aspects of your life align with your new marital status. Contact us today to learn about how we can help you enjoy your wedded bliss with financial and legal security.