Category: The Wealth Counselor

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. ↩︎

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. ↩︎

Insurance Is the First Line of Defense

The United States insurance market, worth an estimated $1.7 trillion,underwrites risks that could otherwise devastate individuals, homes, and businesses.¹ Yet clients sometimes view insurance only as a cost instead of an investment that protects their wealth and legacy. 

Recent shifts in the insurance market have led to many clients paying more and getting less from their policies, providing advisors with opportunities to reframe the insurance discussion and explore reviewing or supplementing coverages. 

Homeowner’s Insurance: The Fortress of Financial Freedom

According to a recent report from Policygenius, homeowner insurance premiums increased by more than 20 percent between May 2022 and May 2023 due to escalating claim costs from severe weather events.² Some insurers are also opting either to not renew policies in high-risk areas or to significantly increase deductibles.³ Although these statistics may sound discouraging to many homeowners, it is still important that they maintain appropriate coverage. According to the Insurance Information Institute, each year, approximately one in 425 insured homes has a property claim related to fire and lightning and one in 700 for property damage due to theft.⁴ Although this percentage may seem small, we never know when we could be a claimant. Having insurance is one way to be prepared.

• Who needs it: All homeowners, from first-time buyers to investment property owners and those with mortgages requiring coverage, need homeowner’s insurance.
• How it protects: Depending on the policy terms, it covers repairs or rebuilding after fires, storms, or theft, plus liability for on-property injuries. 
• Estate planning tie-in: A home is often a client’s largest asset. Homeowner’s insurance preserves its value, but clients may be tempted to reduce coverage as premiums rise. However, coverage should align with current replacement costs in light of increasing climate risks and property values.
• Sales opportunity: Clients may be shopping for deals. However, they should also understand the long-term implications of homeowner’s insurance for their estate and heirs. With higher tort lawsuit awards and rebuilding costs, robust policies are critical. Discuss scenarios where a property is damaged before transfer and how insurance proceeds can facilitate repairs or provide funds to beneficiaries. Such scenarios also tie into discussions about who will manage and maintain the property after the client passes away and before a new owner takes possession, as well as the importance of continued coverage.

Renter’s Insurance: Underutilized Asset Armor

Renting is increasingly more affordable than buying a home. Nationally, the average mortgage payment costs 38 percent more per month than the average rent.⁵ Many people, including a growing share of wealthy Americans, are choosing to rent rather than buy in the current market. ⁶Another perk of renting is that renter’s insurance is highly affordable, costing around $15 to $25 monthly. However, only approximately 37 percent of renters have it.⁷ 

• Who needs it: Renters of apartments, condos, or houses, especially millennials or Gen Zers building wealth, need renter’s insurance.
• How it protects: Renter’s insurance replaces personal property such as electronics or furniture after theft or fire and covers liability for injuries on the rented premises. It also funds temporary housing if the space becomes uninhabitable.
• Estate planning tie-in: For clients who rent, their personal property, from heirlooms to technology, can be a major component of their net wealth. Emphasize that, even without home ownership, their possessions have value (both financial and sentimental) and are susceptible to loss. 
• Sales opportunity: Younger individuals are more likely to rent than older individuals. Consider targeting young clients who may not have significant liquid assets. Renters may be unaware that their landlord’s policy does not cover them. The average claim for loss due to theft and burglary is approximately $3,000⁸—about 20 times higher than the average annual premium.⁹ Some landlords may require insurance even if state or local laws do not. You can also add value for your clients by informing them that, if they run an at-home business, standard renter’s insurance policies may have limitations or exclusions regarding business-related activities, which may necessitate a separate business insurance policy.

Car Insurance: High-Octane Wealth Defender

Car insurance is nonnegotiable, but these days, clients may wish that the costs were. Premiums jumped 7.5 percent in 2025, in addition to a 16.5 percent increase in 2024.¹⁰ Higher rates mean that more drivers are choosing to drive uninsured, leading to higher risks and premiums for everyone.¹¹ 

• Who needs it: Vehicle owners or lessees need car insurance.
• How it protects: Car insurance covers repairs, medical bills, and legal fees from accidents, plus nonaccident damage, such as from vandalism or flooding. 
• Estate planning tie-in: Whether gifted or sold, vehicles can be valuable estate assets. Some are worth even more than real estate. Adequate car insurance protects the estate from liability claims arising from accidents that occur before settlement. Describe the potential for lawsuits to deplete estate assets intended for beneficiaries and discuss how uninsured or underinsured motorist coverage could provide a financial lifeline to the estate or surviving family members in the event of a fatal accident caused by an uninsured or underinsured driver. Recommend that personal representatives, executors, and successor trustees confirm coverage after the decedent’s death, and discuss how to maintain protection during estate administration.
• Sales opportunity: Forty-two percent of auto insurance customers are shopping for better rates. ¹²Pitch usage-based policies for low-mileage or safe drivers, bundled policies, or specialized coverage for electric or classic cars. 

Umbrella Policy: The Million-Dollar Safety Net

An umbrella policy can offer added protection of around $1 million for about $200 annually.¹³ In an increasingly litigious society, the risk of facing a substantial lawsuit should not be underestimated. Verdicts in personal injury lawsuits can easily exceed standard homeowner’s or auto insurance limits. An umbrella policy is a low-cost hedge against a potentially large liability claim. 

• Who needs it: An umbrella policy can protect clients with significant assets or multiple properties, landlords of rental properties, or people with high-risk lifestyles (e.g., pet owners or event hosts), as well as professionals, such as doctors, who face litigation risks.
• How it protects: An umbrella policy extends liability coverage beyond standard policies, covering lawsuits from accidents, defamation, or property damage, up to one, five, or even 10 million dollars. 
• Estate planning tie-in: An umbrella policy protects the value of an estate by covering unforeseen legal liabilities. Shielding assets from large liability claims can ensure that more of the wealth accumulated over a lifetime is preserved for future generations.
• Sales opportunity: With rising liability risks, suggest umbrella policies to affluent clients, landlords, and individuals in high-liability-risk professions. Research suggests that high-net-worth clients may be lawsuit targets, or at least they perceive themselves that way in an uncertain economy, but they often lack the proper types and amounts of liability insurance.¹⁴ 

Business Insurance: The Empire-Building Enforcer

Small businesses are the backbone of the US economy, but many are not covering their backs with the right types and amounts of insurance coverage. Research shows that 75 percent of small businesses are underinsured,¹⁵ leaving them vulnerable to losses resulting from property damage, lawsuits, and cybercrime. Commercial clients also face higher premiums and tougher underwriting across general liability, property, and cyber policies—often with new exclusions and longer claim processing times.

• Who needs it: Business owners, freelancers, and entrepreneurs from startups to corporations need business insurance.
• How it protects: Business insurance covers property damage, lawsuits, employee injuries, and business interruptions. General liability policies handle customer injuries, and professional liability policies shield against negligence claims.
• Estate planning tie-in: A small business owner’s company may be their largest estate asset, destined for succession or sale. Business insurance preserves its value by covering losses that could force liquidation. The right business insurance not only protects the business during the owner’s lifetime but also facilitates its smooth and full-value transition to the next generation.
• Sales opportunity: Explore tailored policies for small businesses or freelancers using relevant statistics (e.g., cyberattacks are rising and frequently target small businesses). Note the wave of retiring small business owners and the need for succession planning, which can involve key person insurance for estate liquidity and buy-sell agreements funded by life insurance. 

Stronger Together: We Can Partner for Client Protection

Insurance can be overlooked until it is needed most. However, more clients may be paying attention to their policies now in a world of rising premiums, denied claims, and evolving risks. 

As they rethink their first line of defense against losses that could force them to dip into savings, sell investments, or liquidate business assets at great cost to themselves and their families, we can help shift the conversation in ways that benefit them and create cross-selling opportunities for us in the multitrillion-dollar insurance industry. Call us to discuss ways we can partner to ensure that our mutual clients are protecting themselves and their legacies for the next generation.

1. Marcus Lu, Visualizing America’s $1.7 Trillion Insurance Industry, Visual Capitalist (Jan. 13, 2025), https://www.visualcapitalist.com/visualizing-americas-1-7-trillion-insurance-industry. ↩︎
2. Pat Howard, Home insurance prices up 21% as homeowners are left to deal with climate change, turbulent market, Policygenius, (Sept. 12, 2023), https://www.policygenius.com/homeowners-insurance/home-insurance-pricing-report-2023. ↩︎
3. Lisa L. Gill, Worried Your Home Insurance Company Might Cancel Your Policy? Dealing With Skyrocketing Premiums? Here’s What to Do Next, Consumer Reps. (Nov. 1, 2024) https://www.consumerreports.org/money/homeowners-insurance/home-insurance-canceled-or-skyrocketing-premium-what-to-do-a2430720664. ↩︎
4. Facts + Statistics: Homeowners and renters insurance, Ins. Info. Inst., https://www.iii.org/fact-statistic/facts-statistics-homeowners-and-renters-insurance. ↩︎
5. Alex Gailey, Study: Renting is increasingly more affordable than buying in most large U.S. metros, Bankrate (Apr. 23, 2025), https://www.bankrate.com/real-estate/rent-vs-buy-affordability-study. ↩︎
6. Lisa Riley Roche, Is renting rather than buying housing becoming more attractive to the wealthy? What a new analysis says, Deseret News (Mar. 11, 2025), https://www.deseret.com/utah/2025/03/11/are-more-wealthy-american-renting-rather-than-buying-a-home-what-a-new-analysis-found. ↩︎
7. Renting Statistics, The Zebra (Nov. 18, 2024), https://www.thezebra.com/resources/research/renting-statistics. ↩︎
8. Jessica Humeck, Renters Insurance Claims, Trusted Choice (Mar. 2, 2020), https://www.trustedchoice.com/renters-insurance/coverage-claims. ↩︎
9. Sarah Schlichter, The Average Renters Insurance Cost, Nerdwallet (Jan. 2, 2024), https://www.nerdwallet.com/article/insurance/how-much-is-renters-insurance. ↩︎
10. 2025 State of Auto Insurance: Rate Increases Are Slowing Down in 2025, PRNewswire (Jan. 7, 2025), https://www.prnewswire.com/news-releases/2025-state-of-auto-insurance-rate-increases-are-slowing-down-in-2025-302344613.html. ↩︎
11. Lonalyn Cueto, Rising number of uninsured drivers increases auto insurance costs, report warns, InsuranceBusiness (Mar. 28, 2025), https://www.insurancebusinessmag.com/us/news/auto-motor/rising-number-of-uninsured-drivers-increases-auto-insurance-costs-report-warns-530170.aspx. ↩︎
12. Scott Horsley, Soaring insurance rates send more people shopping for deals, NPR (June 15, 2024), https://www.npr.org/2024/06/11/nx-s1-4987948/insurance-rates-quotes-shopping. ↩︎
13. Sarah Schlichter, What Is Umbrella Insurance, and How Does It Work?, Nerdwallet (Jan. 2, 2025), https://www.nerdwallet.com/article/insurance/umbrella-insurance. ↩︎
14. Wealthy Americans Fear Lawsuits But Lack Sufficient Coverage, Ins. J. (Mar. 19, 2012), https://www.insurancejournal.com/magazines/mag-features/2012/03/19/239788.htm. ↩︎
15. 75% of Small Businesses Are Underinsured, Says Hiscox Survey, Ins. J. (Oct. 11, 2023), https://www.insurancejournal.com/news/national/2023/10/11/743586.htm. ↩︎

No matter the time of year, taxes are always a hot topic. While we usually think about taxes in terms of how they affect us today, it can be equally important to understand the history of tax laws that impact estate planning.

The Estate and Gift Tax  

Taxation of property transfers at death dates as far back as 700 BCE in ancient Egypt. It was also used in Rome and feudal Europe. 

The United States estate tax was introduced in 1916.¹ It was advocated by progressive reformers during a time of great wealth concentration and inequality (think Gilded Age figures like Carnegie and Rockerfeller).² An initial exemption, or exclusion amount, of $50,000 was allowed.³ 

In the decades since the estate tax’s inception, Congress has made important additions and revisions to its structure that reflect wider cultural debates about wealth distribution, economic stimulus, and government revenue. 

The first of these was a tax on so-called inter vivos, or lifetime, gifts, which became part of the transfer tax system in 1932 to prevent wealthy taxpayers from circumventing the estate tax by gifting assets during their lifetime.⁴ The marital deduction, introduced in 1948, allows tax-free transfers to qualifying surviving spouses.⁵ And in 1976, the Tax Reform Act created a unified estate and gift tax exemption.⁶ 

Over the years, the estate tax exclusion has increased from $50,000 in 1916 to $2 million in 2006⁷ to $5.49 million in 2017—the year before the Tax Cuts and Jobs Act (TCJA) went into effect.⁸ The annual gift tax exclusion has increased as well, from $3,000 per individual in 1976 to $12,000 in 2006⁹ to $14,000 in 2017.¹⁰ 

Today, thanks to the TCJA, the estate and gift tax unified exemption is at an all-time high. The lifetime exclusion is currently $13.99 million for individuals and $27.98 million for married couples,¹¹ while the annual gift tax exclusion is $19,000 per person and $38,000 for married couples.¹² Taxes on generation-skipping transfers match the estate tax exemption. 

However, these allowances are set to revert to much lower pre-TCJA levels in 2026 unless Congress acts to extend or modify them. 

The Income Tax 

Estate and gift taxes affect individual estate planning, but their contribution to the overall federal budget is relatively small, typically accounting for approximately 1 percent of total federal revenue.¹³ In 2023, it was estimated that only around 0.14 percent of estates were taxable.¹⁴

Federal income tax is a different story. Although not as inevitable as the famous Benjamin Franklin “death and taxes” quote would have us believe—tens of millions of Americans owe little or no federal income tax each year¹⁵—income taxes account for roughly half of all federal revenue and are the largest source of government funding.¹⁶ 

The US did not have a permanent federal income tax until 1913.¹⁷ That was the year the Sixteenth Amendment was passed, giving Congress the authority to levy taxes on corporate and individual income. 

Like the estate tax, the income tax has its roots in war efforts and a Progressive Era push for wealthy individuals to pay the taxes and tariffs.¹⁸ Rates started at 1–7 percent on incomes above $3,000.¹⁹ Top rates soared during World War I and World War II and peaked at 94 percent for top taxpayers in 1944²⁰—the same year Congress created the standard deduction.²¹

Other key changes to the federal income tax over the years include the earned income tax credit in 1975; ²²the 1986 Tax Reform Act that simplified and restructured the tax code and dropped the top rate to 28 percent;²³ the American Taxpayer Relief Act of 2012, which set the top rate at 39.6 percent post-recession;²⁴ and the TCJA of 2017. 

The TCJA temporarily lowered tax rates across seven brackets and permanently dropped the corporate tax rate. It also significantly increased the standard deduction and child tax credit, capped state and local tax deductions, added deductions for pass-through income and business deductions, and as noted, nearly doubled the estate tax exemption.²⁵ 

The Future Impact of Taxes on Estate Plans

A US Chamber of Commerce survey shows that voters favor permanently extending the TCJA by a nearly three-to-one margin.²⁶ President Trump and Republicans in Congress are also pushing for TCJA extensions. 

Historically, major tax bills in a new administration’s first year (e.g., the TCJA in December 2017) take months, often landing in the fall, or lame-duck, session. President Trump did not sign the TCJA into law until three days before Christmas 2017. 

If the past is prologue, Congress—if it acts at all—may put off TCJA extensions, either short-term or long-term, until the last few weeks or even days or hours of the year. 

As we keep our eyes on the latest tax developments from Washington, DC, advisors can work together at the nexus of financial and estate planning to develop contingency plans for clients that account for different scenarios, including the estate tax exemption and individual tax rates remaining at current levels or reverting to pre-TCJA levels. 

To discuss how we can address gaps in our clients’ financial and estate plans, please reach out to us. 

1. Darien B. Jacobson et al., The Estate Tax: Ninety Years and Counting, 27 Stats. of Income Bull., no. 1, Summer 2007, at 118, https://www.irs.gov/pub/irs-soi/ninetyestate.pdf. ↩︎
2. Chuck Collins, Long Live the Estate Tax, U.S.News & World Rep. (Sept. 8, 2016), https://www.usnews.com/opinion/articles/2016-09-08/americas-second-best-idea-the-estate-tax.  ↩︎
3. Jacobson et al., supra note 16, at 120. ↩︎
4. Id. at 122. ↩︎
5. Id. ↩︎
6. Id. ↩︎
7. Federal Estate and Gift Tax Rates, Exemptions, and Exclusions, 1916–2014, Tax Found. (Feb. 4, 2014), https://taxfoundation.org/data/all/federal/federal-estate-and-gift-tax-rates-exemptions-and-exclusions-1916-2014.  ↩︎
8. Estate Tax, IRS (Oct. 29, 2024), https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax.  ↩︎
9. Federal Estate and Gift Tax Rates, Exemptions, and Exclusions, 1916–2014, supra note 22. ↩︎
10. Frequently Asked Questions on Gift Taxes, IRS (Oct. 29, 2024), https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes.  ↩︎
11. IRS Releases Tax Inflation Adjustments for Tax Year 2025, IRS (Oct. 22, 2024), https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2025.  ↩︎
12. Id. ↩︎
13. U.S. Dep’t of the Treasury, Bureau of the Fiscal Serv., How Much Revenue Has the U.S. Government Collected This Year?, Fiscal Data, https://fiscaldata.treasury.gov/americas-finance-guide/government-revenue (last visited Apr. 21, 2025). ↩︎
14. How Many People Pay the Estate Tax?, Tax Pol’y Ctr. (Jan. 2024), https://taxpolicycenter.org/briefing-book/how-many-people-pay-estate-tax.  ↩︎
15. Drew Desilver, Who Pays, and Doesn’t Pay, Federal Income Taxes in the U.S.?, Pew Rsch. Ctr. (Apr. 18, 2023), https://www.pewresearch.org/short-reads/2023/04/18/who-pays-and-doesnt-pay-federal-income-taxes-in-the-us. ↩︎
16. U.S. Dep’t of the Treasury, Bureau of the Fiscal Serv., supra note 28. ↩︎
17. Historical Highlights of the IRS, IRS (Sept. 13, 2024), https://www.irs.gov/newsroom/historical-highlights-of-the-irs.  ↩︎
18. Constitutional Amendments — Amendment 16 — “Income Taxes,” Ronald Reagan Presidential Libr. & Museum, https://www.reaganlibrary.gov/constitutional-amendments-amendment-16-income-taxes (last visited Apr. 21, 2025).  ↩︎
19. Historical Highlights of the IRS, supra note 32.  ↩︎
20. Mark Luscombe, Historical Income Tax Rates, Wolters Kluwer (Dec. 30, 2022), https://www.wolterskluwer.com/en/expert-insights/whole-ball-of-tax-historical-income-tax-rates.  ↩︎
21. Historical Highlights of the IRS, supra note 32. ↩︎
22. Margot L. Crandall-Hollick, The Earned Income Tax Credit (EITC): Legislative History, Congress.gov (Apr. 28, 2022), https://www.congress.gov/crs-product/R44825.  ↩︎
23. Julia Kagan, Tax Reform Act of 1986: Overview and History, Investopedia (Nov. 3, 2024), https://www.investopedia.com/terms/t/taxreformact1986.asp.  ↩︎
24. Pub. L. 112–240, 126 Stat. 2313 (codified in scattered sections in 26 U.S.C.), https://www.congress.gov/bill/112th-congress/house-bill/8.  ↩︎
25. David Floyd, What Is the Tax Cuts and Jobs Act (TCJA)?, Investopedia (Jan. 31, 2025), https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained.  ↩︎
26. Ashlee Rich Stephenson, American Voters Will Support Lawmakers Who Back Permanent Tax Relief, U.S. Chamber of Com. (Mar. 4, 2025), https://www.uschamber.com/taxes/american-voters-will-support-lawmakers-who-back-permanent-tax-relief.  ↩︎

May marks the halfway point between the spring equinox and the summer solstice. Each day, the sun inches higher in the sky, bringing warmer temperatures, blooming flowers, and a hopeful mindset as thoughts turn to the promise of long days and warm nights ahead. 

The next 100 days, which blend spring’s fresh start and summer’s slower, more relaxed pace, are an opportune time to connect with clients, get them thinking about their plans for the rest of the year, and ensure that their personal and professional goals align with their broader financial and estate plans. 

Gentle reminders now can help them feel more prepared and confident as summer enters full swing and demonstrate that we are always keeping their best interests top of mind. 

Housecleaning—Physically, Metaphorically, and Financially

The natural rhythm of the seasons and the rituals surrounding it offer a chance to engage your clients on a deeper, more human level while reinforcing financial and estate planning fundamentals. 

Spring cleaning has roots in cultures and religious traditions that date back centuries, including the Jewish practice of cleaning homes to remove chametz (leavened bread) for Passover, commemorating the Israelites’ quick departure from Egypt, and the Iranian tradition of khaneh tekani (“shaking the house”) before the Persian New Year, Nowruz, symbolizing purification and renewal. 

Some Christian traditions, such as cleaning the church altar before Good Friday or cleaning for Lent, also have elements of spring tidying. In China, a thorough cleaning of the house before the Lunar New Year is a tradition that incorporates religious practices and symbolizes sweeping away ill fortune to make room for positive energy in the coming year. 

In nineteenth-century America, the custom of spring cleaning took hold as pioneers swept out the soot and grime from winter’s coal once warmer days allowed open windows.

Today, 80 percent of Americans engage in the annual spring-cleaning routine, according to the American Cleaning Institute.¹ The top areas people target in their homes are those that tend to get overlooked in daily and weekly cleaning, including floors and baseboards, storage spaces, windows, and areas behind furniture.² 

This collective desire for renewal and order can serve as a powerful metaphor for client matters. Like those places in the home that are often neglected in daily and weekly cleaning routines, some aspects of financial and estate plans can be overlooked—such as a recently opened investment account a client has not yet added to their personal asset inventory or a change to a life insurance beneficiary designation—and need to be cleaned up and organized. 

Spring cleaning’s essence—clearing away the old to make way for the new—can reflect planning goals. Extending this metaphor, you can be the advisor who helps clients polish up their legacy by discussing the need to do things such as clear out the cobwebs from outdated wills, beneficiary designations, guardians, powers of attorney, or incomplete asset lists. 

With tax season behind us, now is also a perfect time to declutter and dust off financial strategies for the year ahead, including reviewing deductions, contributions, and estimated tax payments; organizing financial documents for the first half of the year; preparing for midyear adjustments; going over any changes to tax laws from the past few months; assessing asset allocations; and reminding those who filed an extension of the October 15 deadline. 

Summer Vacation—Relaxation Meets Preparation

Memorial Day marks the unofficial start of summer, the time for a different type of tradition: summer vacation. 

Travel is a top priority for Americans in 2025. More than 90 percent say they plan to travel this year.³ The primary reasons for travel are relaxation, adventure, and visiting loved ones.⁴ Most plan to travel with family.⁵ 

However, if this summer is anything like last summer, many Americans may forgo a summer vacation due to affordability concerns. Of those who do plan to travel, more than one-third say they are willing to go into debt to pay for their trip.⁶ Around 60 percent say they prioritize travel when managing their finances, and 79 percent are budgeting for travel this year.⁷ 

Statistics like these suggest that summer travel plans can be a bridge to finance and budget-related topics. There is still time for clients to build up a summer vacation fund, for example, rather than taking on debt, especially when credit card balances and rates are at record highs.⁸ 

Since many families book travel well in advance, the conversation can shift to pretravel financial logistics, such as ensuring that bills are paid and informing their bank and credit card companies about travel plans to avoid account freezes or card blocks. 

In addition to reminding clients to get their financial houses in order prior to summer travel, advisors can also stress preparedness measures such as securing travel documents (e.g., passports and insurance cards), compiling emergency contact information, having up-to-date powers of attorney in case someone needs to manage their affairs while they are away or someone needs to make a medical decision on the client’s behalf, and checking local laws at their destination to avoid legal, cultural, and safety and security snafus. 

Estate Planning—A Plan for All Seasons

Helping clients sweep their financial floors clean this spring can clear the way for a stress-free and enjoyable summer. The transition into summer also provides a seasonal backdrop for reinforcing the importance of estate planning. 

Seasons change, lives change, and estate plans should change as we hit certain natural milestones and key life events, such as birth or adoption; a beneficiary reaching adulthood; illness, death, or disability in the family; starting a job or closing a business; or a significant change in asset values or net worth. 

Seasonal checkpoints and 100-day intervals can be valuable for assessing planning goals and action plans, but it is important to always reiterate to clients the longer time horizon of financial and estate planning and that it takes a year-round and lifelong effort—with the help of a group of advisors working as a team—to craft a legacy that lasts well beyond their own lifetime. 

To discuss how we can work together over the next 100 days and beyond on financial and estate planning matters for our clients, reach out to schedule a time to talk. 

1. Are You Ready to Clean Behind the Couch? Americans List Their Spring Cleaning Targets, Am. Cleaning Inst. (Mar. 4, 2025), https://www.cleaninginstitute.org/newsroom/2025/are-you-ready-clean-behind-couch-americans-list-their-spring-cleaning-targets.  ↩︎
2. Id. ↩︎
3. Survey Finds Americans’ 2025 Travel Budgets Up from 2024, Averaging $10,000, IPX1031, https://www.ipx1031.com/americans-travel-report-2025 (last visited Apr. 21, 2025).  ↩︎
4. Id. ↩︎
5. Id. ↩︎
6. Katie Kelton, Survey: More Than 1 in 3 American Travelers Plan to Go into Debt for Their Summer Vacations This Year, Bankrate (Apr. 22, 2024), https://www.bankrate.com/credit-cards/news/survey-summer-vacation.  ↩︎
7. Survey Finds Americans’ 2025 Travel Budgets Up from 2024, Averaging $10,000, supra note 10. ↩︎
8. Elizabeth Schulze, Americans’ Credit Card Debt Reaches New Record High: New York Federal Reserve, ABC News (Feb. 13, 2025), https://abcnews.go.com/Business/americans-credit-card-debt-reaches-new-record-high/story?id=118788620.  ↩︎

Since Franklin Roosevelt, who moved with unprecedented speed to address the nation’s Depression-era problems, the first 100 days of a president’s administration have been viewed as a benchmark of their top legislative aspirations and early success. 

President Trump, as promised, hit the ground running in his second term. In a show of executive force arguably not seen since Roosevelt, Trump signed a flurry of executive orders and introduced measures in the first 100 days of his second term, such as increasing tariffs and slashing the federal workforce, that have drawn mixed reactions, prompted legal challenges, and injected uncertainty into markets. 

His honeymoon period may be over, but the dust is still far from settling on the early returns of the second Trump administration. Amid these uncertain times, when much remains up in the air politically and economically, advisors can focus on hedging against potential outcomes and shoring up fundamentals as we keep a watchful eye on Trump 2.0 developments. 

Estate, Tax, and Wealth Planning Implications of Trump’s Actions

The second Trump administration has prioritized several tax policy initiatives that could impact clients’ finances and related planning. 

Trump and Republicans want to extend many provisions from the expiring Tax Cuts and Jobs Act (TCJA) that the president signed into law in his first term.¹ There could also be new tax cuts, such as Trump’s proposal to eliminate taxes on tips, overtime pay, and Social Security benefits.² 

Here are some of Trump’s and the GOP’s reported tax priorities for their economic package: 

• Estate and gift tax. The TCJA doubled the estate and gift tax exemption to historically high levels that are set to expire in 2026. Senate majority leader John Thune introduced a bill in February to repeal the estate tax, sometimes referred to as the death tax.³ Further, a full repeal of the estate tax is reportedly part of the tax bill negotiations.⁴ 
• Individual and business tax cuts. The TCJA also included several provisions that benefit businesses and individual taxpayers, including pass-through income deduction, business expense deductions, changes to income tax brackets, mortgage interest and charitable donation deductions, an increased standard deduction, and additional tax relief via the Child Tax Credit. Extending the TCJA would likely keep these tax benefits in place.
• State and local tax (SALT) deductions. The administration is considering removing or increasing the current $10,000 cap on SALT deductions imposed by the TCJA. ⁵This change would help taxpayers in states with high property and income taxes, allowing for greater federal tax deductions.
• Closing the carried interest loophole. Trump has stated his intention to close the carried interest loophole that allows investment managers of private equity and hedge funds to benefit from reduced capital gains tax rates on carried interest, provided a three-year holding period is met.⁶
• Capital gains taxes. The TCJA separated tax-rate income brackets for capital gains and dividend income from the tax brackets for ordinary income. If the TCJA expires and this provision is not addressed legislatively, some taxpayers could face higher capital gains taxes in 2026.⁷ 

Estate and financial plans should be flexible enough to respond to changing market conditions and new legislation. Advisors can encourage clients to incorporate plan provisions that allow adjustments to asset distributions, with an emphasis on adaptability, diversification, and long-term planning. We can also focus on planning fundamentals, such as updating wills and trusts, creating an incapacity plan, updating beneficiary designations, and locking in current exemption levels. 

Working together, we can turn uncertainty into opportunity and deepen client relationships at a time when many may be looking for a steady hand to guide them through the transformations of a new presidency. We welcome your call to discuss how we can help you and your clients prepare for whatever comes next. 

1. Preparing for the Expiration of the TCJA in 2025, Bloomberg Tax (Mar. 28, 2025), https://pro.bloombergtax.com/insights/federal-tax/what-is-the-future-of-the-tcja/#will-the-tcja-be-extended.  ↩︎
2. Alex Isenstadt, Scoop: Trump Lays Out Tax Priorities to House GOP, Axios (Feb. 6, 2025), https://www.axios.com/2025/02/06/trump-no-tax-on-tips-social-security-overtime.  ↩︎
3. Press Release, John Thune, Thune Leads Effort to Permanently Repeal the Death Tax (Feb. 13, 2025), https://www.thune.senate.gov/public/index.cfm/2025/2/thune-leads-effort-to-permanently-repeal-the-death-tax.  ↩︎
4. Kevin Frekin et al., Senate GOP Approves Framework for Trump’s Tax Breaks and Spending Cuts After Late-Night Session, AP (Apr. 5, 2025), https://apnews.com/article/senate-budget-tax-cuts-trump-485845a9c0b7dfc5d2194d4c1e4723ae.  ↩︎
5. Trump Tax Priorities Total $5 to $11 Trillion, Comm. for a Responsible Fed. Budget (Feb. 6, 2025), https://www.crfb.org/blogs/trump-tax-priorities-total-5-11-trillion.  ↩︎
6. Aimee Picchi, Trump Wants to Close the Carried Interest Tax Loophole, a Longtime Target of Democrats, CBS News (Feb. 7, 2025), https://www.cbsnews.com/news/trump-tax-taxes-carried-interest-loophole-hedge-funds ↩︎
7. How Did the Tax Cuts and Jobs Act Change Personal Taxes?, Tax Pol’y Ctr. (Jan. 2024), https://taxpolicycenter.org/briefing-book/how-did-tax-cuts-and-jobs-act-change-personal-taxes.  ↩︎

Evidence suggests that many people are establishing trusts as part of an estate plan. Some motivations for creating a trust include avoiding probate, preserving privacy, planning for incapacity, protecting a beneficiary’s inheritance from creditors, minimizing estate taxes, and charitable giving.

Financial advisors are intimately familiar with a client’s financial situation and goals. You may have clients whose needs or goals align with the advantages of a trust. You may want to open a dialogue with these clients about implementing a trust. While you may not be able to offer detailed guidance, you can introduce them to various available trust types and how a trust might fit into their financial and estate plans. 

Because of several converging trends—an aging population, rising asset values, a wave of wealth transfers, and pending tax law changes—clients may be interested now more than ever in a trust that can benefit them and create mutually beneficial arrangements between financial advisors and attorneys. 

How to Spot Trust Opportunities

A client may not directly bring up the subject, but trusts have been a hot topic of late in the estate planning world, and there are signs that demand for them will continue to heat up in the coming years. The National Association of Tax Professionals’ director of tax content and government relations said that more baby boomers are utilizing trusts because of concerns about the next generation mismanaging their inheritance. In addition, such concerns are “causing them to create trusts to pass assets efficiently, but with some control being exercised from the grave.”¹

A guest post at Kitces.com says that advisors can start the conversation about estate planning by first identifying whether a client has an estate plan.² Many clients likely do not; as of 2025, the number of Americans with a will is 24 percent and on the decline.³ 

Some of the leading reasons why Americans created an estate plan—or would consider making one—include the death of a loved one, family expansion, travel, the purchase of a home or significant asset, health concerns, retirement or other age-related milestones, and national or world events.⁴ 

Starting the Trust Conversation

With only around one-fourth of Americans having completed even a basic will,⁵ the idea of a trust may seem like putting the cart before the horse. Whether a client should establish a will instead of or prior to a trust depends on their circumstances, but both options can and should be considered. 

Reasons that clients may want to consider a trust include the following:

• Having alarge estate (specifically a net worth exceeding the federal estate tax exemption or state-level exemptions for estate and inheritance taxes). If so, they could consider the following:
  • A grantor retained annuity trust allows the client to transfer assets to beneficiaries while retaining an income stream. 
  • A charitable remainder trust provides an income stream to beneficiaries, with the remainder going to a designated charity. 
  • A dynasty trust passes wealth down through multiple generations.
• Desiring complex distribution instructions, commonly sparked by having blended families, beneficiaries with special needs, or beneficiaries who are prone to financial mismanagement or vulnerable to creditors. These scenarios could lend themselves to the following:
  • A spendthrift trust protects assets from creditors and prevents beneficiaries from squandering their inheritance. 
  • A supplemental needs trust enables a disabled beneficiary to receive financial support from the trust without affecting their eligibility for means-tested government benefits.
  • An incentive trust makes distributions to a beneficiary upon their meeting certain conditions, such as graduating, obtaining employment, getting sober, or volunteering for charitable organizations. 
  • A qualified terminable interest property trust provides for a surviving spouse while ensuring that the deceased spouse’s assets ultimately pass to their chosen beneficiaries when the surviving spouse dies. 
• Being exposed to unique tax liabilities, such as having extensive real estate investments or owning a business. Possible trust solutions could include the following:
  • A qualified personal residence trust allows for the transfer of the client’s primary residence or, in some circumstances, vacation home, to a trust while retaining the right to live in it for a set period.
  • An irrevocable life insurance trust holds a life insurance policy that uses the death benefit proceeds to cover estate taxes or provide liquidity to the business after the client’s death.

This list barely scratches the surface of the diverse estate planning scenarios that trusts can address, from beneficiaries with specific or special needs to estates with complex assets or challenging family dynamics. 

While trusts offer various benefits, not all are the same. Bear in mind that the same trust type can also be used for different planning purposes or to simultaneously achieve multiple planning goals. A revocable living trust, for example, not only avoids probate but can also be used for incapacity planning and estate tax mitigation.

In addition, trusts can hold various types of assets, allowing clients to get creative by, say, transferring business interests into a trust for stronger asset protection and succession planning purposes. Clients can also name a trust on a beneficiary designation or transfer-on-death designation form to hold and manage the assets for their beneficiaries after the clients pass away. 

For a more comprehensive rundown on trust types, ways they can be utilized, and how they may fit into a client’s estate plan, schedule a time to talk. 

1. Ronda Lee, More Americans are dealing with tax filings for trusts as older boomers pass away, Yahoo! finance (Apr. 5, 2023), https://finance.yahoo.com/news/more-americans-are-dealing-with-tax-filings-for-trusts-as-older-boomers-pass-away-211151632.html. ↩︎
2. David Haughton, JD, CPWA, How Advisors Can Work With Attorneys To Drive Better Estate Planning Outcomes For Clients, Kitces (Apr. 29, 2024), https://www.kitces.com/blog/financial-advisor-estate-planning-attorney-planning-cooperation-roles-client-referrals. ↩︎
3. Victoria Lurie, 2025 Wills and Estate Planning Study, Caring (Feb. 18, 2025), https://www.caring.com/caregivers/estate-planning/wills-survey. ↩︎
4. Id. ↩︎
5. Id. ↩︎

Advisors often focus on big-picture and long-term planning. However, the devil is in the details, and even seemingly straightforward aspects of a plan—such as beneficiary designations—can have profound implications for our clients’ financial objectives and legacy goals. 

Beneficiary, transfer-on-death (TOD), and payable-on-death (POD) designations promise a smooth, probate-free handoff of assets that can save time and money. These tools take precedence over conflicting instructions in a will, but they are only as good as the care behind them. They need to be periodically reviewed to avoid being incomplete or out-of-date, which could potentially lead to unintended and detrimental consequences for the client and their loved ones.

Clients may be unaware of when they should consider changing their beneficiary designations and the steps they must take to make these changes. Client education can be extremely valuable in this area and strengthen the client-advisor relationship. 

What Can Go Wrong with an Incomplete or Outdated Beneficiary Form

A report from the ERISA Advisory Council looked at best practices for retirement and life insurance planning and ensuring that plan participant intent is carried out. It found that beneficiary designations that do not accurately reflect a participant’s intentions can trigger disputes about who is entitled to the plan benefits following their death. Common disputes described in the report include: 

• Participants do not update beneficiary designations prior to their death to reflect significant life events, such as marriage, divorce, death of a loved one, or birth of a child;  such an oversight can initiate conflicts among the participant’s loved ones.
• Participants and designated beneficiaries die simultaneously, raising issues about how survivorship rules affect the distribution of benefits and how state law comes into play.
• Changes in service providers, administrators, or other factors could lead to lost or outdated beneficiary designations, resulting in plan benefits not being distributed to the intended beneficiary or requiring a probate administration.
• The plan does not allow the chosen beneficiary designation, creating doubt about who should receive the benefit (e.g., some plans may not allow minors, certain trusts, businesses, or charities to be named as beneficiaries).¹ 

In addition to the unintended distribution of assets and disputes, an invalid, missing, or outdated beneficiary designation can result in the need for the accounts and property to go through probate, possibly causing payout delays and raising estate administration costs.

Assets that go through probate may also be subject to claims from creditors, reducing the final amount distributed to beneficiaries. Failure to properly identify or locate beneficiaries can cause further delays in the distribution process. 

According to the ERISA report, a unique challenge of maintaining beneficiary designation forms is that they can remain on file for a very long time, sometimes for decades, without review, increasing the likelihood that the original designation is “stale.”² This long shelf life can also lead to the designation form being lost, especially when there are changes in plan administrators or service providers and the transfer process is not complete or thorough.

An Advisor’s Role in Maintaining Accurate Beneficiary Designation Forms

Routine tasks such as checking beneficiary designations may not always be the top priority in client relations. Yet it is in the details that we can sometimes make the biggest difference. 

Advisors can make it a best practice to review the designations on our clients’ accounts under our management and any life insurance or other products sold to them, including beneficiary forms. Incorporate the following steps into your review process: 

• Be proactive. Make it a standard part of your regular client meetings instead of waiting for clients to initiate the beneficiary review. 
• Dig into the details. Asking “Is everything up-to-date?” is a conversation starter, not the end of the discussion. Scrutinize the forms and ask specific questions such as the following:
  • Are these beneficiaries still the people you want to receive your accounts? 
  • Are the beneficiaries still living? 
  • Are they capable of managing the inheritance? 
  • Are you fine with them receiving an outright distribution, or do you want greater control over how the inheritance passes to them? 
  • In cases where more than one beneficiary is named, how hard is it to divide the money, and what is the potential for conflict?
• Stress the “why.” Clients need to understand that beneficiary designations are more than routine paperwork. They ensure that the client’s hard-earned money goes where they intend, without undue delays, conflicts, or costs. Describe what can go wrong with an incomplete or outdated beneficiary form, and remind them that these forms take precedence over their last will and testament. 
• Explain a trust as an option. For those clients who want more control over how their money is distributed to their loved ones, explain how a trust can provide added protections and flexibility (staggered payouts, for example), particularly when dealing with complex beneficiary situations such as a minor child, a loved one with special needs, or a beneficiary with creditor issues. 
• Have them inform beneficiaries. It is not enough to have beneficiary forms filled out correctly. Clients should consider telling their beneficiaries that they are designated to receive certain accounts. Open communication can not only avoid confusion, minimize family disputes, and make for a smoother administration, but uninformed beneficiaries might not know to claim their inheritance, might have their unclaimed inheritance turned over to the state, and could miss Internal Revenue Service deadlines (e.g., 10-year individual retirement account withdrawal rules), triggering penalties or forced distributions. 

In terms of tangible advisor benefits, managing beneficiary designations can appear to be a relatively thankless task that does not generate immediate revenue. However, this is an area where you can provide significant value to your clients. 

Catching an oversight can solidify your reputation as a diligent, detail-oriented advisor and boost your relationships—and prospects—in the long term. You may also suggest a beneficiary review of their other accounts and products, such as their estate plan.

Call us to discuss additional ways you can provide value to your clients and safeguard their futures.

1. Advisory Council on Employee Welfare and Pension Benefit Plans (ERISA Advisory Council), Current Challenges and Best Practices Concerning Beneficiary Designations in Retirement and Life Insurance Plans, at 3 (Dec. 2012), https://www.dol.gov/sites/dolgov/files/ebsa/pdf_files/2012-current-challenges-and-best-practices-concerning-beneficiary-designations-in-retirement-and-life-insurance-plans.pdf. ↩︎
2. Id. ↩︎

Is Outright Distribution the Right Choice for Your Clients?

An inheritance can be life-changing. Many younger Americans, stuck in a cycle of debt and rising costs, are anticipating their cut of the $84 trillion “Great Wealth Transfer”—a term financial experts use to describe the massive shift of wealth from older generations to younger ones that is expected to occur over the next two decades.¹ Most of these potential inheritors say that the inheritance they expect is more than just a cushion—they are counting on it to achieve their long-term financial goals.² 

When handing down wealth, your clients have two main options: leaving it outright to their beneficiaries or placing it in a trust so it can be distributed to the beneficiaries over time. An outright distribution is by far the simpler option, but it comes with risks for the unprepared. For example, many inheritors-to-be may not be ready to handle a direct inheritance. 

Great Wealth Transfer Hope versus Hype

According to a USA Today survey, about two-thirds of younger Americans expect to receive an average inheritance of around $320,000.³ More than three-quarters say they plan to save or invest that money, and 40 percent say they will use it to pay off debt.⁴ 

There can also be an assumption that inheritors will use the money as your clients intend (i.e., responsibly), when experience, data, and the recipients themselves tell a different story. 

A national study indicates that adults who receive an inheritance save only about half and either spend, donate, or lose the rest, and more than one-third of all inheritors saw a decline or no change in their wealth after getting an inheritance.⁵ 

Citizens Bank polled Americans about inheriting wealth and found that 72 percent say they are not prepared to manage an inheritance.⁶ Parents may not be ready to leave an inheritance, either. Only about a quarter of adults feel prepared for and confident in the wealth transfer process, Edward Jones research finds. ⁷

Six in 10 parents told Northwestern Mutual that their children do not value financial responsibility the same way they do, with more than half expressing concerns that this difference in values could negatively impact the family’s assets when they pass from one generation to the next.⁸ 

Pros and Cons of an Outright Inheritance

No matter how much a client plans on leaving to a beneficiary, knowing they are making a difference in a loved one’s life can be a source of pride and fulfillment. However, they may also feel pressure to make a lump-sum bequest, especially if their child or another beneficiary is struggling financially.

An outright distribution is quick, requires no oversight after it has been handed over, and usually has no fees associated with it. There are also no strings attached. The recipient can use the money any way they want. 

However, an outright inheritance may not be in the beneficiaries’ best interests and could fail to solve their financial problems in the way the client might expect. For those beneficiaries who are unprepared to handle it, an inheritance could do the opposite by worsening financial problems or creating new ones. 

Despite their best intentions to budget, invest, and responsibly spend an inheritance, beneficiaries could just as easily squander it on impulse purchases, risky investments, or financial scams. More than a quarter of respondents admitted to USA Today that they plan to use their inheritance for travel or luxury spending.⁹ In addition, if an inheritance is distributed outright to a beneficiary who has outstanding debt, creditors could claim the money before the beneficiary can use it. 

These downsides assume that the beneficiaries can legally accept their inheritance, which may not be true. If the recipient is a minor child, for example, or is incapacitated and does not have an agent under a financial power of attorney, a court-appointed conservator may be necessary. 

Your Role as an Advisor

None of this means that an outright inheritance is inherently bad. Advisors think in terms of costs versus benefits, not in absolutes. We also understand that there is often a gap between a client’s expectations and economic realities. Part of our job is to offer advice that helps clients balance what is desirable with what is achievable. We do that by presenting information and options. 

Here is where advisors come in: Fifty-seven percent of Americans believe professional guidance around wealth transfer and inheritance would make planning and reaching a family consensus easier.¹⁰ Sixty-one percent said they would turn to a financial advisor for guidance if they received a windfall,¹¹ while three in four parents say they would feel comfortable including their teenage or young adult children in their financial advisor meetings.¹²

Findings like these show how advisors can work with clients and their loved ones—and with each other—to help families transfer and protect their wealth. The advisor-client relationship should include a conversation about estate planning. An increase in assets, such as an inheritance, is a major reason to revisit or begin creating an estate plan.

The Great Wealth Transfer may be hype to some extent, but the opportunities it presents for advising and collaboration cannot be understated. To discuss inheritance and estate planning strategies, please reach out.

1. Julie Sherrier et al., Study: Gen Z and millennials plan to use inheritances to invest, pay off debt, USA Today (June 6, 2024), https://www.usatoday.com/money/blueprint/credit-cards/study-great-wealth-transfer-plans. ↩︎
2. As $90 Trillion “Great Wealth Transfer” Approaches, Just 1 in 4 American Expect to Leave an Inheritance, Northwestern Mutual (Aug. 6, 2024), https://news.northwesternmutual.com/2024-08-06-As-90-Trillion-Great-Wealth-Transfer-Approaches,-Just-1-in-4-Americans-Expect-to-Leave-an-Inheritance. ↩︎
3. Julie Sherrier et al., Study: Gen Z and millennials plan to use inheritances to invest, pay off debt, USA Today (June 6, 2024), https://www.usatoday.com/money/blueprint/credit-cards/study-great-wealth-transfer-plans. ↩︎
4. Id. ↩︎
5. Most Americans Save Only About Half Of Their Inheritances, Study Finds, Ohio State News, OSU.EDU (Mar. 4, 2012), https://news.osu.edu/most-americans-save-only-about-half-of-their-inheritances-study-finds—ohio-state-research-and-innovation-communications. ↩︎
6. Most Americans aren’t ready for the ‘Great Wealth Transfer,’ Citizens, https://www.citizensbank.com/learning/great-wealth-transfer-survey.aspx (last visited Mar. 21, 2025). ↩︎
7. The Great Wealth Transfer Starts with the Great Wealth Talk, Edward Jones Research Finds, Edward Jones (Feb. 27, 2024), https://www.edwardjones.com/us-en/why-edward-jones/news-media/press-releases/great-wealth-transfer-research. ↩︎
8. Northwestern Mutual, supra n. 2, https://news.northwesternmutual.com/2024-08-06-As-90-Trillion-Great-Wealth-Transfer-Approaches,-Just-1-in-4-Americans-Expect-to-Leave-an-Inheritance. ↩︎
9. Julie Sherrier et al., Study: Gen Z and millennials plan to use inheritances to invest, pay off debt, USA Today (June 6, 2024), https://www.usatoday.com/money/blueprint/credit-cards/study-great-wealth-transfer-plans. ↩︎
10. The Great Wealth Transfer Starts with the Great Wealth Talk, Edward Jones Research Finds, Edward Jones (Feb. 27, 2024), https://www.edwardjones.com/us-en/why-edward-jones/news-media/press-releases/great-wealth-transfer-research.  ↩︎
11. Most Americans aren’t ready for the ‘Great Wealth Transfer,’ Citizens, https://www.citizensbank.com/learning/great-wealth-transfer-survey.aspx (last visited Mar. 21, 2025).  ↩︎
12. Northwestern Mutual, supra n. 2, https://news.northwesternmutual.com/2024-08-06-As-90-Trillion-Great-Wealth-Transfer-Approaches,-Just-1-in-4-Americans-Expect-to-Leave-an-Inheritance ↩︎

Americans are increasingly focused on their health and wellness, spending billions of dollars per year on products and services such as gym memberships, fitness trackers, healthy foods, supplements, and alternative medicine.¹ Mindfulness and meditation practices are also becoming mainstream² as Americans pay more attention to their mental health, while telehealth lets us connect with healthcare providers whenever and wherever we need them. 

This greater emphasis on our physical and mental well-being, however, stands in stark contrast to our lack of advance healthcare planning. While some Americans are diligently counting their steps, watching what they eat, and trying to live longer, healthier lives, many have failed to plan adequately for their future healthcare and what could happen in a medical emergency. One simple list can help address this shortcoming.

The Healthcare Planning Gap

The COVID-19 pandemic accelerated the trend of Americans taking a more proactive role in their health.³ It also prompted more Americans to create estate plans as we contemplated our mortality.⁴ However, the percentage of Americans with a will has since fallen back to prepandemic levels of around one-fourth.⁵ 

The number of people who have created a healthcare power of attorney is slightly higher than those who have created a will, but not by much. According to a study by Penn Medicine, the systematic review of approximately 795,000 people in 150 studies found that only 29.3 percent had completed an advance directive, including just 33.4 percent who had designated a healthcare power of attorney.⁶ 

The lead researcher in this study said that this lack of surrogate decision-makers and end-of-life care instructions means that the treatments most Americans would choose near the end of their lives are often different from the treatments they receive—a disconnect that can lead to “unnecessary and prolonged suffering.”⁷ 

Ensure That Clients Get the Care They Need—and Want

Clients who do not plan for medical contingencies, from sudden illnesses or injuries to gradual declines in cognitive abilities, could be forfeiting the ability to express their treatment preferences. 

They might not realize that, absent medical directives such as a healthcare power of attorney, doctors may be forced to make critical decisions without a clear understanding of their wishes. This can lead to delayed care, unwanted treatments, family disagreements over the best course of action, and court intervention in some situations. 

Even if a client has a power of attorney for healthcare, this document alone may not be enough to ensure that the treatments they receive are the ones they need—or would choose themselves. It may be necessary to have an advance directive or living will to help elaborate on the client’s wishes.If your state does not recognize advance directives or living wills as legally valid, your client can still leave a letter of instruction to their healthcare power of attorney to share their thoughts and desires.

While your clients may have authorized a trusted person to make medical decisions on their behalf when health problems prevent them from making or communicating those decisions themselves, their healthcare proxy (their agent) needs additional context to make the appropriate choices. This should be organized in a document that lists the following information: 

• Doctor’s name and specialty. In a stressful situation, seemingly obvious details like these can be easily forgotten. 
• Doctor’s contact information. Include the office phone number, after-hours contact number (if available), and the provider’s office address. 
• Current health conditions. List any chronic illnesses or ongoing medical concerns the doctor is managing. 
• Medication list. Provide a complete and up-to-date list of all medications, including dosages, frequencies, and the reasons they are being taken. 
• Healthcare power of attorney. Confirm that a healthcare power of attorney is on file with the doctor’s office. 
• Insurance information: Knowing the details of their insurance information and coverage can facilitate timely access to care and billing.

In addition to the provider’s office, it is a good idea to store a healthcare power of attorney in several other strategic locations, such as the agent’s home, with trusted family and friends, and at an attorney’s office. The client might hold on to the original, but copies and digital files can ensure access in an emergency. 

You can also make yourself available to support the client and their agent in the event of a health crisis. For example, depending on your areas of expertise, you can help them navigate medical expenses, health insurance coverage, claims filing, Medicaid eligibility, financial planning, and related concerns.

By having a conversation with your client about advance directives and how they fit into their long-term planning goals, you can strengthen your position as an advocate for the client, their agent, and their family. 

For younger, healthier clients, you can mention the disconnect between the growing emphasis on wellness and the relatively low rates of advance care planning. They may be focused on optimizing their health today, but what about their future healthcare? Older clients, especially those with a chronic illness, can also be (gently) reminded that they are at higher risk for critical illness and death and need documents addressing these concerns. 

The wellness market offers significant business opportunities. Gaps in clients’ healthcare planning open up potential areas where advisors can collaborate for our mutual benefit and the benefit of our clients. Contact us to discuss advance directives and how we can work together on client plans that address all aspects of their well-being, now and tomorrow.

1. Shaun Callaghan et al., Still Feeling Good: The US Wellness Market Continues to Boom, McKinsey & Co. (Sept. 19, 2022), https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/still-feeling-good-the-us-wellness-market-continues-to-boom.  ↩︎
2. Nat’l Ctr. for Complementary & Integrative Health, Meditation and Mindfulness: Effectiveness and Safety, NIH (June 2022), https://www.nccih.nih.gov/health/meditation-and-mindfulness-effectiveness-and-safety.  ↩︎
3. New CVS Health Study Finds People Are Taking Greater Control of Their Health As a Result of the Pandemic, CVSHealth (July 8, 2021), https://www.cvshealth.com/news/community/new-cvs-health-study-finds-people-are-taking-greater-control-of.html.  ↩︎
4. Daniel de Visé, Facing Mortality, More Americans Wrote Wills During the Pandemic. Now, They’re Opting Out, USA Today (Apr. 3, 2024), https://www.usatoday.com/story/money/2024/04/03/fewer-americans-writing-a-will/73170465007.  ↩︎
5. Victoria Lurie, 2025 Wills and Estate Planning Study, Caring (Feb. 18, 2025), https://www.caring.com/caregivers/estate-planning/wills-survey.  ↩︎
6. Two Out of Three U.S. Adults Have Not Completed an Advance Directive, Penn Med. (July 5, 2017), https://www.pennmedicine.org/news/news-releases/2017/july/two-out-of-three-us-adults-have-not-completed-an-advance-directive.  ↩︎
7. Id. ↩︎