Category: Uncategorized

Trusts are widely used in estate planning to protect and transfer a person’s assets (money, accounts, property, etc.), sometimes in a tax-advantaged manner. Some trusts are highly complex, with multiple parties, intricate structures, specialized legal terms, and references to arcane tax law that can be difficult for the average person to understand.

Scammers have long taken advantage of this complexity to dupe taxpayers into too-good-to- be-true trust solutions. The Internal Revenue Service (IRS) recently drew attention to a trust tax avoidance scheme involving what are known as § 643(b) trusts.¹ It also warns about another type of trust scam that relies on the so-called pure trust or constitutional trust to make false claims about avoiding taxes and protecting assets.² 

While legitimate trusts can be powerful tools for estate planning, asset protection, and tax efficiency, fraudulent trusts misuse these principles to deceive individuals. The IRS pays close attention to potential trust tax evasion schemes, and taxpayers who fall victim to a trust scam could potentially face civil and even criminal penalties, making it crucial to create a trust only with a qualified, reputable estate planning attorney. 

Trust Scams on the Rise

According to the IRS, in the past few years there has been a “proliferation of abusive trust tax evasion schemes”³ targeting wealthy individuals, small-business owners, and professionals such as doctors and lawyers. These schemes falsely promise benefits such as

• the reduction or elimination of taxes,
• reduction or elimination of income subject to tax,
• depreciation deductions, and
• a step-up in basis for trust assets.⁴

These trust scams commonly use a layered structure to give the appearance that a taxpayer does not control the trust when in fact they do. Transparency of control over trust assets is important in determining, among other things, which party is responsible for paying any corresponding tax liability.

The IRS also notes that abusive trust schemes frequently entail multiple trusts that distribute assets to one another.⁵ Trust funds may flow from one trust to another using rental agreements, fees for services, purchase and sales agreements, and distributions, with the goal of using inflated or nonexistent deductions to “reduce taxable income to nominal amounts,” says the IRS.⁶

Trust scam promoters typically charge $5,000 to $70,000 for a package that comes with trust documents, trustees, and tax return services, adding to the appearance of legitimacy.⁷ However, the IRS cautions that these phony trust arrangements will not produce the promised tax benefits.⁸ 

Types of Trust Scams 

The Pure Trust Scam

One type of trust scheme highlighted by the IRS involves the transfer of a business to a trust it calls a pure trust or constitutional trust.⁹ The pure trust scam makes it look as though the taxpayer has given up control of their business even though they still run its day-to-day activities and control the income stream.¹⁰ 

Promoters of such scams often claim that placing assets in a pure trust can exempt them from taxes.¹¹ They use misleading language and pseudolegal jargon to make it seem like these trusts have special legal status and may claim that they are based on common law or constitutional principles exempting them from state or federal jurisdiction. However, the IRS clarifies that there is no legal basis for these claims.¹²

Actor Wesley Snipes is a notable example of someone misled by a variation of the pure trust scam. Snipes relied on an argument that courts have repeatedly rejected—the “861 argument,” which misinterprets § 861 of the Internal Revenue Code (I.R.C.) to falsely claim that domestic income is not taxable.¹³ 

The IRS alleged that Snipes did not file tax returns for several years and committed fraud.¹⁴ He was convicted of tax evasion charges and served time in federal prison, in addition to owing back taxes, penalties, and interest.¹⁵ 

643(b) Trust Scams

Versions of the pure trust scam date back decades. Despite increased awareness of these scams and the IRS pursuing them in their various iterations, they continue to resurface, often rebranded under different names such as complex trusts and patriot trusts or targeting new demographics.

The IRS details one such rebranding of the pure trust scam in a 2023 memorandum challenging trusts that similarly—and just as falsely—claim to avoid income and capital gains taxes.¹⁶ 

Promoters assert that these trust arrangements receive special tax benefits under I.R.C. § 643(b), hence the name 643(b) trusts. The IRS refers to them in the memorandum as a nongrantor, irrevocable, complex, discretionary, spendthrift trust—a complicated name for a complicated scam that, like the pure trust scam, relies on a misinterpretation of the tax code that takes it out of context.¹⁷ 

Although 643(b) trust scams take various forms, they are essentially a new twist on the old idea that, through manipulation of the trust structure, the taxpayer can use a backdoor method to maintain some control over the trust and avoid taxes.

The basic (but false) premise of the 643(b) scam is that income allocated to the corpus (principal) of the trust is not subject to taxation.

Promoters create a trust structure, often referred to with terms like nongrantor, irrevocable, and complex. The taxpayer transfers assets such as a business, real estate, or other income-producing assets into the trust in exchange for a promissory note. The trust then leases the assets back to the taxpayer, an arrangement that makes it seem like the income generated by the assets is not actually being distributed to the taxpayer, and is thus nontaxable. 

The IRS explicitly rejects the validity of this arrangement in its memorandum, emphasizing that simply allocating income to the trust’s corpus does not exclude it from taxation.¹⁸ 

How to Spot a Trust Scam

The IRS has made it clear that it will challenge § 643(b) trusts in all forms, so taxpayers should look out for this and other trust schemes to avoid getting caught in the government’s compliance crosshairs.

As noted in the IRS memo, illegitimate trusts that misinterpret § 643 often have the guise of legitimacy and may even have legitimate-appearing promoters such as lawyers, accountants, and enrolled agents.¹⁹ Promotional materials may consist of a series of presentations, informational websites, documents, and legal opinions. In the case of a nongrantor, irrevocable, complex, discretionary, spendthrift trust, the trust may be described as “§ 643 compliant” or “in compliance with the I.R.C.”²⁰

More generally, taxpayers should be on the lookout for these common trust scam red flags: 

• Exaggerated claims. Taxes are as unavoidable as death for a reason. No legal trust strategy can entirely eliminate tax obligations. Claims about deferring taxes instead of avoiding them may sound more reasonable but could be part of the scam. 
• “Secret” loopholes. While tax law is complex, it is not a secret. Legitimate strategies are based on established legal principles. Scammers also like to tell potential victims that wealthy individuals use certain trust types to avoid paying taxes. 
• Terms that give an air of legitimacy. Trust schemes may reference and misuse terms such as common law or sovereign to promote trusts as beyond the legal jurisdiction of the federal government. Taxpayers in the 643(b) scam are told that they will serve as “Compliance Overseer.”²¹
• Pressure tactics. In a classic scammer technique, trust scheme promoters may push individuals to “act quickly” to secure the “exclusive opportunity” and create a sense of urgency that pressures them into making a rash decision without fully understanding the consequences. 
• Complicated and confusing structures. Trust, tax, and estate planning law are inherently complicated, but complexity can also serve to hide a scam. Multiple trusts with confusing names and structures can be a way to obfuscate the scheme’s true nature. 
• Lack of transparency. Promoters may be reluctant to provide clear explanations or documentation about how the trust works, relying on anecdotal evidence or testimonials rather than facts and legal analysis. 
• Similarity to known scams. Many trust scams are the taxation equivalent of “old wine in new bottles.” Learning how to spot a scheme and cross-checking a trust strategy against known scams, including those in the IRS Dirty Dozen²² and other public warnings, can reduce vulnerability.

Above all, avoid promotions that sound too good to be true, verify the promoter’s credentials, and always seek a second opinion from an independent estate planning attorney before creating any trust. If you are considering setting up a trust, consult with a qualified estate planning attorney.

1. I.R.S. Chief Couns. Mem. AM 2023-006 (Aug. 18, 2023), https://www.irs.gov/pub/lanoa/am-2023-006-508v.pdf.  ↩︎
2. Abusive trust tax evasion schemes – Facts (Section III), IRS (Mar. 29, 2024), https://www.irs.gov/businesses/small-businesses-self-employed/abusive-trust-tax-evasion-schemes-facts-section-iii.  ↩︎
3. Abusive trust tax evasion schemes – Facts (Section I), IRS (Mar. 29, 2024), https://www.irs.gov/businesses/small-businesses-self-employed/abusive-trust-tax-evasion-schemes-facts-section-i.  ↩︎
4. Id. ↩︎
5. Id. ↩︎
6. Id. ↩︎
7. Id. ↩︎
8. Id. ↩︎
9. Abusive trust tax evasion schemes – Facts (Section III), supra note 2. ↩︎
10. Id. ↩︎
11. Jay Adkisson, The Complex Trust Is Simply The Criminal Tax Evasion Device Known As The Pure Trust Repackaged, Forbes (Aug. 18, 2021), https://www.forbes.com/sites/jayadkisson/2021/08/18/the-complex-trust-is-simply-the-criminal-tax-evasion-device-known-as-the-pure-trust-repackaged.  ↩︎
12. I.R.S., U.S. Dep’t of the Treas., Recognizing Illegal Tax Avoidance Schemes, Pub. No. 3995 (2024), https://www.irs.gov/pub/irs-pdf/p3995.pdf.  ↩︎
13. Rick Cundiff, Trial notebook: Courts don’t buy the ‘861 argument,’ Ocala StarBanner (Jan. 23, 2008), https://www.ocala.com/story/news/2008/01/24/trial-notebook-courts-dont-buy-the-861-argument/31235965007.  ↩︎
14. United States v. Snipes, No. 5:06-cr-22(S1)-Oc-10GRJ, 2007 WL 2572198 (M.D. Fla. 2007), https://abcnews.go.com/images/WNT/061017_Indictment_Snipes.pdf.  ↩︎
15. Siobhan Morrissey, Wesley Snipes Sentenced to Three Years in Jail, People (Apr. 24, 2008), https://people.com/crime/wesley-snipes-sentenced-to-three-years-in-jail.  ↩︎
16. I.R.S. Chief Couns. Mem. AM 2023-006, supra note 1. ↩︎
17. Id. ↩︎
18. Id. ↩︎
19. Id. ↩︎
20. Id. ↩︎
21. Id. ↩︎
22. Dirty Dozen, IRS (June 12, 2024), https://www.irs.gov/newsroom/dirty-dozen.  ↩︎

Fitness icon Richard Simmons, known for his flamboyant personality, high energy, and trademark attire, passed away in July 2024 following a fall at his Los Angeles home.

Because of a legal dispute between his longtime housekeeper, Teresa Reveles Muro, and his brother, Leonard (Lenny) Simmons, the estate of the Sweatin’ to the Oldies star is now sweating out a legal dispute over control of Richard’s trust. 

Teresa, who worked for and lived with Richard starting in the late 1980s, claims she was pressured to resign as co-trustee of Richard’s living trust.¹ Lenny has voiced concerns about assets belonging to the estate being misappropriated.² 

The case highlights the sometimes overlooked role of attorney representation for key decision-makers, such as trustees or executors, in an estate plan. It also demonstrates how legal conflicts can unexpectedly arise following a loved one’s death and why the choice of a neutral third-party trustee can help avoid similar disputes. 

Background to the Simmons Estate Legal Battle

Richard Simmons believed fitness is for everyone, a message he delivered with positivity, usually while wearing sparkling tank tops and short shorts—an outfit that he was buried in under regular clothes.³ He is best known for his Sweatin’ to the Oldies series of workout videos, which sold over 20 million copies.⁴ 

The Richard Simmons estate includes a trust that is at the center of a legal dispute involving Lenny and Teresa.⁵ Richard was close to both and named them as co-trustees of his trust.⁶ 

As recently as July, Lenny had positive things to say about Teresa. He told People magazine that Richard’s live-in companion of 35 years was “extremely loyal and trustworthy” and that “we are blessed to have Teresa in our lives.”⁷ 

However, she alleges that, immediately after an open casket viewing of Richard, Lenny and his wife, Cathy, brought her to a meeting at a law firm to discuss the Simmons estate, where she says she was coerced into signing away her role as co-trustee.⁸ 

According to the TODAY show, her attorneys have asked a judge to reinstate her as co-trustee and requested that Lenny be prevented from selling any of Richard’s personal possessions or licensing or selling Richard’s name and likeness until she has been reinstated as co-trustee.⁹ 

According to In Touch Weekly, Teresa’s lawyers wrote in a motion that Lenny is preparing to dispose of Richard’s personal effects without her input, which is against what Richard envisioned in the trust.¹⁰ Teresa also accuses Lenny of working with Richard’s estranged manager on a documentary that she doesn’t think Richard would approve of.¹¹ 

Lenny contradicts this claim in a recently filed response to her petition, asking that Teresa not be added back as a co-trustee.¹² His response contends that Teresa refused to vacate Richard’s home for months after his death, and when she did leave, she took nearly $1 million worth of jewelry that has not been returned.¹³ He further alleges that Teresa was working on her own movie project about Richard.¹⁴ 

According to Yahoo! News, court documents state that Lenny and his attorneys “need to appraise any property to be sold and may need to sell it to pay taxes. Teresa should not be permitted to interfere with this process absent serious, legitimate concerns about the administration of the estate that do not exist here.”¹⁵ 

Lessons from the Simmons Estate Dispute

Despite not being seen in public for more than a decade prior to his passing, Richard Simmons will be remembered as a fitness trailblazer whose enthusiasm brought joy and healthy habits to millions of fans worldwide. 

Unfortunately, the conflict over his trust also places him in the company of celebrities such as Prince, Aretha Franklin, and Heath Ledger, whose estates have likewise become the subject of headlines for the wrong reasons. 

It does not appear that Richard made any major mistakes in the planning process, such as not having a will or trust. However, his reclusiveness in his later years made it difficult to determine where he stood on the matter of his legacy and those responsible for preserving it. 

Avoiding Conflicts of Interest with a Corporate Trustee

Where Richard may have erred, or at least may not have made the best decision, is naming co-trustees of his trust who were also beneficiaries of his estate. Based on public statements, Lenny and Teresa shared no ill will before Richard passed away. It is possible that Richard did not tell them they would be sharing trustee duties, and they learned of this arrangement only after his death, possibly exacerbating an underlying rift that may have been kept private. We may never know.

What we do know is that having co-beneficiaries serve as co-trustees can be a recipe for disaster. Trustees have a legal duty to act in the best interests of the trust’s beneficiaries. In this case, since the trustees are also beneficiaries, incentives are introduced for each one to maximize their control over the trust. Also, depending on the language used in the trust, having co-trustees may have required that they agree on actions taken on the trust’s behalf. This requirement can slow down the administration process and breed conflict if the two parties are not used to working together. 

Given the circumstances here, it may have been a more prudent move to have a corporate trustee from the start. Lenny’s court filing mentions the possibility of the judge appointing a corporate trustee,¹⁶ and it is not out of the question that the court would do so.

Signing Legal Documents Under Coercion

The Richard Simmons estate legal battle also draws attention to the rights of key decision-makers such as trustees in an estate plan and how they may need to retain legal counsel at different stages of settling an estate. 

Attorneys for Teresa contend that Leonard used false statements and intimidation to coerce her into signing a document declining to serve as co-trustee.¹⁷ If this allegation proves to be true—and Teresa did not make an informed decision to sign the document—the court could void it since signing a contract under duress can make it unenforceable. 

Careful Planning from the Start Can Avoid Conflicts

“Don’t sweat the small stuff” is good advice to avoid wasting energy on things that do not matter. But the smallest details can have the biggest impact in estate planning, which matters greatly for establishing a lasting legacy. 

The Richard Simmons estate case shows that trust documents should give detailed instructions on decision-making authority, asset distribution, and dispute resolution. 

An estate plan cannot stop beneficiaries from fighting over what the deceased really intended in their estate plan. If a beneficiary feels strongly about a loved one’s final wishes and has reason to believe those wishes are not being fulfilled, it is their right to file a claim challenging a trustee’s or executor’s actions. And if they choose to do so, it is their right—and indeed their responsibility—to retain counsel about the best way to mount a legal challenge. 

The trustee or executor also has the right to hire a lawyer to defend them against such claims. They may even be able to pay for an attorney using trust or estate funds. Beneficiaries in trust litigation can, in some cases, recover their legal fees from the trust as well. 

However, mounting a legal challenge ultimately means less money for everyone to inherit, potentially damaging the deceased’s legacy and any relationship between the parties involved. 

Whether you are creating an estate plan or are in charge of carrying out somebody else’s plan, timely advice from an estate planning attorney can help to avoid and mitigate disputes and keep a legacy untarnished by conflict. Schedule a meeting to learn more. 

1. Anna Kaplan, Richard Simmons’ family is fighting with his housekeeper over his estate. What to know, Today (Sept. 24, 2024), https://www.today.com/news/richard-simmons-trust-feud-rcna172983. ↩︎
2. Richard Simmons’ brother accuses late star’s housekeeper of taking $1 million in jewelry, The Express Tribune (Dec. 11, 2024), https://tribune.com.pk/story/2506696/richard-simmons-brother-accuses-late-stars-housekeeper-of-taking-1-million-in-jewelry. ↩︎
3. Mason Leib, Richard Simmons was buried in his iconic “tank top and shorts,” his brother says, ABC News (Oct. 6, 2024), https://abcnews.go.com/GMA/Culture/richard-simmons-buried-iconic-tank-top-shorts-brother/story?id=114547134. ↩︎
4. John Blackstone, Richard Simmons, fitness guru, dies at age 76, CBS News (July 13, 2024), https://www.cbsnews.com/news/richard-simmons-dies-age-76-fitness-guru. ↩︎
5. Id. ↩︎
6. Louise A. Barile, Richard Simmons’ Brother and Housekeeper at War Over His Estate: He’d Be “Heartbroken,” Y!entertainment (Oct. 16, 2024), https://www.yahoo.com/entertainment/richard-simmons-brother-housekeeper-war-120338437.html. ↩︎
7. Jason Sheeler, Richard Simmons’ Housekeeper of 35 Years Breaks Her Silence: “He Died Happy,” People (July 29, 2024), https://people.com/richard-simmons-housekeeper-of-35-years-breaks-her-silence-he-died-happy-8684764. ↩︎
8. Id. ↩︎
9. Id. ↩︎
10. Ryan Naumann, Richard Simmons’ Brother Fighting Late Entertainer’s Housekeeper Over $1 Million in Jewelry, InTouch (Oct. 31, 2024), https://www.intouchweekly.com/posts/richard-simmons-brother-fighting-housekeeper-over-stars-jewelry. ↩︎
11. Richard Simmons’ Family to Sell His $5 Million Mansion Amid Estate Dispute, LawyerMonthly (Nov. 8, 2024), https://www.lawyer-monthly.com/2024/11/richard-simmons-family-to-sell-his-5-million-mansion-amid-estate-dispute. ↩︎
12. Id. ↩︎
13. Ryan Naumann, Richard Simmons’ $5 Million Mansion Where He Died to Be Sold by Family Amid Estate Battle, InTouch (Nov. 8, 2024), https://www.intouchweekly.com/posts/richard-simmons-5-million-home-to-be-sold-amid-estate-battle. ↩︎
14. Id. ↩︎
15. Paula Froelich, Richard Simmons’ housekeeper finally leaves his home, allegedly taking millions with her, Yahoo!News (Nov. 14, 2024), https://www.yahoo.com/news/richard-simmons-housekeeper-finally-leaves-202809623.html. ↩︎
16. Id. ↩︎
17. Id. ↩︎

Warren Buffett, known as the Oracle of Omaha, is one of the most successful investors of all time. His disciplined approach to investing, combined with his understanding of markets and financial foresight, has made him a global icon and model of success in the often-turbulent business world. 

Buffett’s investing can move markets and influence corporate decisions. Investors and business leaders around the world closely follow his every move and hang on his every word about the economy and investing. 

However, Buffett, who eschews a family dynasty and is committed to giving his wealth away, also has lessons to teach about estate planning. His own estate plan, which he updated most recently in 2024, has evolved over the years to accommodate changing circumstances while staying true to his most deeply held beliefs.

Is it time to follow Warren Buffett’s lead and revise your plan?

Deep Pockets and Deeper Humility

Warren Buffett was born in Omaha, Nebraska, in 1930.¹ His father, Howard Buffett, was a stockbroker and congressman ²who provided Warren with early exposure to the world of finance. 

Even as a child, Buffett displayed a knack for business, selling chewing gum, operating pinball machines, and delivering newspapers.³ He bought his first stock at age 11⁴ and filed his first tax return at 14.⁵ 

At Columbia Business School, Buffett studied under Benjamin Graham, a promoter of value investing and coauthor of the book Security Analysis,⁶ which strongly influenced Buffett’s investment strategy of buying undervalued companies with strong potential for growth.⁷ 

Buffett’s investing rules include “Never lose money,” “Focus on the long term,” and “Know what you’re investing in.”⁸ He stresses avoiding speculative investments that could lead to losses.⁹ 

He first applied these principles to Buffett Partnership Ltd., an investment partnership that made him a millionaire by 1962 at the age of 32,¹⁰ and later to Berkshire Hathaway, a struggling textile company that he took control of in 1965 and transformed into a vehicle for his wide-ranging investments.¹¹ 

Today, Berkshire Hathaway has assets worth over $1 trillion.¹² It owns or has stakes in iconic companies such as Coca-Cola, Apple, Bank of America, and Kraft Heinz.¹³ Buffett holds approximately 31 percent of the voting interest in Berkshire Hathaway¹⁴ and has an estimated net worth of $140–$150 billion, placing him among the 10 richest people in the world.¹⁵ 

However, the Buffett story is as much about his humility, generosity, and openness as it is about generating personal riches through the stock market. 

Despite his immense wealth, Buffett leads a modest lifestyle and has long pledged to give 99 percent of his wealth to philanthropic causes.¹⁶ His annual letters to shareholders are a model of transparency, where he openly discusses the company’s successes and failures and shares insights into his decision-making process.¹⁷

Buffett, the man who has taken advantage of a long investment timeline by continually reinvesting Berkshire Hathaway’s profits to compound the interest on them, admits his timeline is nearing an end.

“I feel good but fully realize I am playing in extra innings,” he wrote in a 2023 Thanksgiving letter to shareholders.¹⁸ 

“After my death, the disposition of my assets will be an open book—no ‘imaginative’ trusts or foreign entities to avoid public scrutiny but rather a simple will available for inspection at the Douglas County Courthouse”¹⁹ in Omaha, Nebraska, the city where he was born and still lives, in the same house he bought in 1958, before he made his first million dollars.²⁰ 

Buffett’s Approach to Estate Planning Mirrors His Investing Principles

Buffett is a trend bucker when it comes to his legacy. While many high-net-worth individuals are known for their philanthropy, few have been as vocal as Buffett about an aversion to family dynasties. Buffett has also consistently spoken about his belief in meritocracy and the potential downsides of inherited wealth—a belief that he shares with his children and reiterated in a 2023 Berkshire Hathaway news release.²¹

“My children, along with their father, have a common belief that dynastic wealth, though both legal and common in much of the world including the United States, is not desirable,” he wrote.²² 

He explained in an online pledge summarizing his philanthropic intentions that he considers his incredible wealth to be largely the result of fortunate circumstances and that it should go, not to his own family, who already live comfortable lives, but to improving the health and welfare of those who, unlike him and his children, “received the short straws in life.”²³ 

A large donation was made in June 2024, when Buffett announced that he had given more than $55 billion to five charities, including the Bill & Melinda Gates Foundation and the Susan Thompson Buffett Foundation,²⁴ named for his first wife, who passed away in 2004. 

Initially, Buffett planned to leave the bulk of his wealth to Susan, trusting her to manage their charitable giving.²⁵ After Susan’s death, Buffett had to reevaluate his plan. He began making annual gifts to the Gates Foundation and four family foundations run by his children, marking a shift toward more direct involvement in his philanthropy.²⁶ 

Over the years, Buffett has continued to refine his estate plan and how it will distribute his massive wealth upon his death. In keeping with his management style—a delegative, hands-off approach that empowers his executives to make decisions—he has given more discretion to his children. 

“My three children are the executors of my current will as well as the named trustees of the charitable trust that will receive 99%-plus of my wealth pursuant to the provisions of the will,”²⁷ Buffett wrote in 2023. “They were not fully prepared for this awesome responsibility in 2006, but they are now.”²⁸

However, Buffett also revealed to The Wall Street Journal in 2024 some significant changes to his estate plan. At the time of his death, he will cease donations to the Gates Foundation, and his remaining wealth will be directed to a new charitable trust to be overseen by his children.²⁹ They must unanimously agree on which causes to fund and in what amount.³⁰ Buffett explains that he inserted the unanimous agreement provision to protect his children from being individually approached by friends or other people or institutions and becoming “targets of opportunity” from would-be grant-seekers.³¹ When a unanimous decision is required, the child approached may use the excuse of claiming that one of their siblings would not agree.

“I like to think I can think outside the box, but I’m not sure if I can think outside the box when it’s 6 feet below the surface and do a better job than three people who are on the surface who I trust completely,” Buffett said.³² 

He added that his plan provides flexibility that will enable his children to respond to any future law changes governing taxes and foundations.³³ 

However, the 94-year-old Buffett notes that his children—ages 71, 69, and 66 as of 2024—may not live long enough to fully distribute his wealth. As a result, he announced in a 2024 shareholder letter that he has selected three successor trustees.³⁴ 

“Each is well known to my children and makes sense to all of us. They are also somewhat younger than my children,” he wrote.³⁵ 

Buffett ends the letter with estate planning advice for parents.³⁶ He stresses that communicating with children now when they can understand a parent’s testamentary choices, ask questions, and give suggestions can help avoid jealousies, conflicts, and infighting later on.³⁷

“When your children are mature, have them read your will before you sign it,”he wrote. “Be sure each child understands both the logic for your decisions and the responsibilities they will encounter upon your death.”³⁸

How You Can Follow Warren Buffett’s Lead

We can learn many things from Warren Buffett. Part of his legacy will be how he kept things simple, in both his personal and professional lives, in spite of the complexities that come with managing one of the largest fortunes the world has ever seen. 

For someone of his extraordinary net worth, Buffett’s planning is quite ordinary. Like his investment approach, his approach to estate planning relies on a few basic principles, including flexibility and transparency, to guide his unwavering commitment to philanthropy. 

You may have used or considered using Buffett’s investment advice to generate more wealth for you and your family. You can also use his estate planning strategies to inform your plan for what will happen to that wealth, whether it goes to charity, family, or a mix of the two. 

Your legacy is a work in progress. Your estate plan should be too. Continual refinement of your plan can reflect changes in your life, those of your loved ones, and circumstances that are beyond your control while still tracking your core convictions. 

To review your estate plan and make any necessary adjustments, reach out and schedule a meeting.

1. Thomas Johansen, Buffett, Warren (b. 1930), Encyc. of the Great Plains (2011), http://plainshumanities.unl.edu/encyclopedia/doc/egp.ind.009.  ↩︎
2. About the Warren Buffett Archive, Warren Buffett Archive, https://buffett.cnbc.com/about-buffett (last visited Jan. 29, 2025).  ↩︎
3. Zack Guzman & Mary Stevens, Here’s how Warren Buffett hustled to make $53,000 as a teenager, CNBC Make It (Jan. 31, 2017), https://www.cnbc.com/2017/01/31/heres-how-warren-buffett-hustled-to-make-53000-as-a-teenager.html.  ↩︎
4. About the Warren Buffett Archive, supra note 2. ↩︎
5. Lorna Baldwin, Here is Warren Buffett’s first tax return, filed at age 14, PBS (June 26, 2017), https://www.pbs.org/newshour/economy/warren-buffetts-first-tax-return-filed-age-14.  ↩︎
6. Warren Edward Buffett, Columbia250, https://c250.columbia.edu/c250_celebrates/remarkable_columbians/warren_edward_buffett.html (last visited Jan. 29, 2025).  ↩︎
7. Daniel Shvartsman, Warren Buffett’s Investment Strategy, Investing Rules, and How He Made His Fortune, Investing.com (Oct. 16, 2024), https://www.investing.com/academy/trading/warren-buffett-investment-strategy-rules-fortune.  ↩︎
8. Id. ↩︎
9. Sean Fisher, Warren Buffett: Is the Stock Market Rigged?, MSN, https://www.msn.com/en-us/money/other/these-international-coins-worth-1-million-or-more-could-be-in-your-possession/ar-BB1jzhKT (last visited Jan. 29, 2025).  ↩︎
10. David Nadelle, At What Age Did Warren Buffett Become a Millionaire?, Yahoo!Finance (Apr. 4, 2024), https://finance.yahoo.com/news/age-did-warren-buffett-become-182332572.html.  ↩︎
11. About the Warren Buffett Archive, supra note 2. ↩︎
12. Berkshire Hathaway, CompaniesMarketcap.com (Sept. 2024), https://companiesmarketcap.com/berkshire-hathaway/total-assets.  ↩︎
13. Frank Bass, What Does Berkshire Hathaway Own?, The Motley Fool (Jan. 28, 2025), https://www.fool.com/investing/how-to-invest/stocks/what-does-berkshire-hathaway-own.  ↩︎
14. Ryan Vanzo, Who Owns the Most Berkshire Hathaway Stock Besides Warren Buffett?, The Motley Fool (May 6, 2024), https://www.fool.com/investing/2024/05/06/who-owns-the-most-berkshire-hathaway-stock-besides.  ↩︎
15. Warren Buffett, Forbes, https://www.forbes.com/profile/warren-buffett (last visited Jan. 29, 2025).  ↩︎
16. Warren Buffett, The Giving Pledge, https://givingpledge.org/pledger?pledgerId=177 (last visited Jan. 29, 2025). ↩︎
17. See Shareholder Letters, Berkshire Hathaway, Inc., https://www.berkshirehathaway.com/letters/letters.html (last visited Jan. 29, 2025).  ↩︎
18. News Release, Berkshire Hathaway Inc., Nov. 21, 2023 [hereinafter 2023 News Release], https://www.berkshirehathaway.com/news/nov2123.pdf.  ↩︎
19. Id. ↩︎
20. Joyce Chen, Warren Buffett’s Houses: Inside the Billionaire’s Long-Standing Properties, AD (June 7, 2024), https://www.architecturaldigest.com/story/warren-buffetts-houses-inside-the-billionaires-properties.  ↩︎
21. 2023 News Release, supra note 18. ↩︎
22. Id. ↩︎
23. Warren Buffett, The Giving Pledge, supra note 16. ↩︎
24. Berkshire Hathaway Inc. News Release, BusinessWire (June 28, 2024), https://www.businesswire.com/news/home/20240628425257/en.  ↩︎
25. Warren Buffett’s Evolving Estate Plan, The Rational Walk (June, 28, 2024), https://rationalwalk.com/warren-buffetts-evolving-estate-plan.  ↩︎
26. Letters from Warren E. Buffett Regarding Pledges to Make Gifts of Berkshire Stock, BerkshireHathaway.com, https://www.berkshirehathaway.com/donate/webdonat.html (last visited Jan. 29, 2025).  ↩︎
27. 2023 News Release, supra note 18.  ↩︎
28. Id. ↩︎
29. Lisa Stiffler, Warren Buffett says “no money” going to Gates Foundation after his death, GeekWire (July 1, 2024), https://www.geekwire.com/2024/warren-buffett-says-no-money-going-to-gates-foundation-after-his-death.  ↩︎
30. Marcel Schwantes, Warren Buffett Has Already Announced the Beneficiaries of His Fortune After He Dies—and His Pal Bill Gates Isn’t One of Them, Inc. (Jan. 8, 2025), https://www.inc.com/marcel-schwantes/warren-buffett-has-already-announced-the-beneficiaries-of-his-fortune-after-he-dies-and-his-pal-bill-gates-isnt-one-of-them/91104262.  ↩︎
31. Berkshire Hathaway Inc. News Release, Business Wire (Nov. 25, 2024), https://www.businesswire.com/news/home/20241125323423/en/Berkshire-Hathaway-Inc.-News-Release.  ↩︎
32. Schwantes, supra note 30. ↩︎
33. Austin B. Light & Marvin Blum, Warren Buffett’s Charitable Trust Requires His Kids’ Unanimous Consent, WealthManagement.com (Nov. 6, 2024), https://www.wealthmanagement.com/philanthropy/warren-buffett-s-charitable-trust-requires-his-kids-unanimous-consent.  ↩︎
34. News Release, Berkshire Hathaway Inc., Nov. 25, 2024, https://www.berkshirehathaway.com/news/nov2524.pdf. ↩︎
35. Id. ↩︎
36. Id. ↩︎
37. Id. ↩︎
38. Id. ↩︎

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. ↩︎