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Sometimes, pet owners can get a bit creative when providing for their pets’ future care. The following three famous cases involving pet trusts offer some important lessons.

David Harper and Red

David Harper, a wealthy, reclusive bachelor in Ottawa, Canada, was not exactly famous during his life. In his death, however, he made headlines by reportedly leaving his entire $1.1 million estate to his tabby cat, Red. To ensure his wishes were fulfilled, Harper bequeathed the fortune to the United Church of Canada under the stipulation that they care for Red! The ploy worked.

Lesson learned: You can be creative in ensuring your pets receive proper care after you are gone. 

Maria Assunta and Tommaso

In a four-legged, furry version of the classic rags-to-riches story, wealthy Italian widow Maria Assunta rescued a stray cat from the streets of Rome and gave him a proper home and name: Tommaso. As Assunta’s health failed, she tried for several years to find an animal organization to entrust Tommaso with. When no suitable organization was found, Assunta left her estate, valued at $13 million, directly to the cat in her will and named her nurse as caretaker. She passed away in 2011 at age 94, knowing her beloved Tommaso would be well taken care of. 

Lesson learned: Do not assume someone will automatically care for your pet when you pass. The best way to ensure that your pet is cared for is to plan ahead, choose a caretaker you trust, and put your wishes in writing with a proper estate plan. 

Patricia O’Neill and Kalu

Patricia O’Neill, daughter of British nobility and ex-spouse of Olympian Frank O’Neill, had designated a fortune worth $70 million to her chimpanzee, Kalu, and other pets in her will—or so she thought. It was discovered in 2010 that the heiress was, in fact, broke, thanks to the shady dealings of a dishonest financial advisor. This story provides perhaps the most famous example of a pet trust gone dry while the owner was still alive.

Lesson learned: You can only give away what you have. If caring for your pets after your death is important to you, make sure your financial plan aligns with your estate plan and that you have taken appropriate steps to oversee your advisors. 

Establishing a pet trust is the best way to ensure that your beloved pets receive the care they deserve after you pass on. To learn more about your options, give us a call today.

Not long ago, pet trusts were thought of as little more than eccentric things that famous people did for their pets when they had too much money. These days, pet trusts are considered much more mainstream. For example, in 2016, Minnesota became the fiftieth state to legally recognize pet trusts. But, unbeknownst to many pet owners, a pet trust may not reflect their wishes precisely. Let’s look at three famous pet trust cases and consider the lessons you can learn so your furry family members can be protected through your plan.

Leona Helmsley and Trouble

Achieving notoriety in the 1980s as the “Queen of Mean,” famed hotelier and convicted tax evader Leona Helmsley passed away in 2007. True to form, in her will she awarded her Maltese dog, Trouble, a trust fund valued at $12 million and left nothing to her two grandchildren. However, the probate judge did not think much of Helmsley’s logic, knocking Trouble’s portion down to a paltry $2 million, awarding $6 million to her two grandchildren, and giving the remainder of the trust to charity. Trouble was supposed to be buried in the family mausoleum when she died, but was instead cremated when the cemetery refused to accept a dog.

Lessons learned: Leaving an extravagant sum to a pet may not be honored in a lawsuit and can cause family conflict. It is best to leave a reasonable amount to provide for the care and lifestyle that your pet is accustomed to. To determine a reasonable amount, create a monthly or annual budget to see what it would cost to provide for your pet for the rest of its anticipated lifespan. If you want to disinherit one or more family members, talk with your attorney to make the disinheritance as legally solid as possible.

Michael Jackson and Bubbles

Most Michael Jackson fans remember his pet chimpanzee Bubbles, the King of Pop’s constant companion. Jackson reportedly left Bubbles $2 million. As of 2024, Bubbles is alive and well, living out his years in a shelter in Florida. There has been speculation about who has been paying for his care in the sanctuary, with some reporting that Jackson’s estate has been covering the costs and others claiming that his family members have been paying.

Lessons learned: Using a trust as part of your estate plan can help prevent prying eyes from knowing the details of your affairs. 

Karla Liebenstein and Gunther III

Allegedly, German countess Karla Liebenstein left her entire fortune, valued at approximately $65 million, to her German Shepherd, Gunther III. The fortune has increased in value over time—to about $400 million—and has subsequently been passed down to Gunther VI, also a German Shepherd. However, some suspect that the inheritance is a hoax.

Lesson learned: Pet trust benefits can be passed down through generations, so make sure your estate plan reflects your actual wishes and intentions about any subsequent pets.

If you still need to make arrangements for your beloved pet in your estate plan, we are here to help. We would love to discuss setting up a new pet trust for you or adding one to your current plan. Call us today to talk.

Why Every Pet Parent Needs to Consider a Pet Trust Today

Estate planning is about protecting what is important to you. Although much of the traditional estate planning conversation focuses on surviving spouses, children, grandchildren, and charities, many pet parents wonder what could happen to their “furry children” after their death. 

Enter the pet trust. This tool is something that can be easily incorporated into a new or existing estate plan to provide a strategy for your pet’s care. Even if you anticipate outliving your pets, it is always better to be safe than sorry.

How a Pet Trust Works

The majority of pet trusts are incorporated into the foundational document of your overall estate plan (i.e., either in a will or trust). In establishing a pet trust, you must first determine the amount of money you want to leave for your pet’s care. When the pet trust becomes active (upon your death) and while your pet is alive, a trustee will manage the money you have set aside for your pet’s benefit. Second, you must decide on a caretaker who will have custody and responsibility for your pet’s care. Lastly, you will determine who will receive any remaining money in the trust after your pet’s death. 

What a Pet Trust Avoids

Frankly, it can be chaos for your pets if you die without a plan in place. With the shuffle of so many other important tasks, a pet can sometimes be overlooked, abandoned, or even euthanized. A pet trust provides a legal tool to ensure that your beloved dog, cat, or other pet is not left without care merely because you are not here any longer. Proactively including a pet trust in your plan is especially important when you have family members who may be unable or unwilling to care for your beloved pets.

Four Decisions You Will Make

Getting your pet planning in order is a reasonably straightforward process. A pet trust is a trust, so let’s start with a quick review of the cast of characters in trusts. There is a grantor, settlor, or trustmaker (the person who creates the pet trust—that’s you!), the trustee (the person you select to manage the money or property in the trust), and the beneficiaries (the person or charity you choose to receive whatever money and property is left after the pet passes away). 

In the case of a pet trust, there are four decisions you will need to make to ensure that everything works as you intend:

• Select the trust’s remainder beneficiaries. These beneficiaries will receive any money and property remaining in the trust after the pet has passed away. Some people leave the remaining funds to a favorite charity, while others add whatever is left to a children’s or grandchildren’s trust. You can even designate a specific person or group of people to receive the remainder outright. There are many options, and we can tailor the plan to match your goals. 
• Select your pet’s caretaker. Think of this role as similar to the guardian of minor children. This will be the person who cares for your pet if you are no longer able to do so. You can leave detailed instructions or general recommendations for your pet’s care, whichever works best for your pet’s situation. You can even set a certain amount of money aside to compensate the caretaker if you wish.
• Select the trustee. The trustee is the trusted decision-maker you select to ensure that the money you have set aside in the pet trust will be used according to your instructions. The trustee is often authorized to provide money to the caretaker for supplies, vet visits, vaccinations, medications, toys, or whatever else you specify in the agreement. 
• Decide on the amount you want to set aside. Some people estimate the expected cost of caring for their pet over the pet’s expected lifespan and leave that amount, plus a little extra. With this approach, the sole goal is to provide for the pet’s care. Others want to establish the pet trust not only to care for their pet but also because they have an eventual charitable goal (e.g., to leave money to a local animal shelter). Many of these pet parents will allocate a large sum of money with the expectation that money will be left over upon the pet’s passing. Determining how much to set aside is really about the ultimate goal you are trying to achieve through pet trust planning. We can help you calculate the right amount, and you can always update the amount as your and your pet’s circumstances change.

Planning for the Future

You might be thinking that you will outlive your pets, so there is no reason to plan. But what if you do not? The entire purpose of estate planning is to ensure that you have legally memorialized your wishes and fully protected your whole family—including your furry, four-legged children. Give us a call today so we can work with you to protect what is important to you.

Many of us are familiar with the story of Snow White and the seven dwarfs. Central to the story is the relationship between Snow White and her stepmother. After losing his wife, the king decided to marry again to provide a motherly influence for his daughter, Snow White. While things were peaceful for a while, once the king passed away, the Queen’s true colors came to light. Feeling threatened that Snow White was the “fairest of them all,” she arranged to have Snow White killed. However, as most of us know, the huntsman showed mercy on Snow White and allowed her to escape. Eventually, after living with the seven dwarfs and meeting Prince Charming, she marries the prince, and her stepmother dies (how this occurs varies depending on the source). Although this scenario seems somewhat extreme, this fairy tale shows the conflict that can exist when the unifying member of the family dies without an estate plan. Had the king engaged with an estate planning attorney to put his affairs in order, the outcome of this story might have been drastically different.

An Estate Planning Attorney Would Have Put Everything in Writing

While we do not know what the king’s wishes were, if he had written them down in a legally enforceable manner, we would know and they could have been enforced. With tangible proof, everyone would have known what they were entitled to, and it would have been easier for third parties and beneficiaries to enforce what the king wanted. To carry out his wishes, the king had a couple of legal tools he could have utilized.

1. Last Will and Testament

The king could have used a last will and testament, which is a document that names a personal representative (also called an executor) to collect all of the king’s accounts and property, pay his outstanding debts, and distribute his money and property. A will would specify who would receive the king’s accounts and property and name a guardian for Snow White, as she was a minor at the time of his death. Although this document would only be legally enforceable at the king’s death, it could have provided an official way to express his wishes. One downside of relying on a will, however, is that to distribute the king’s money and property, his loved ones would have been required to go through the probate process (the court-supervised procedure to distribute accounts and property to loved ones upon a person’s death).

2. Revocable Living Trust and a Pour-Over Will

Alternatively, the king could have created a revocable living trust during his lifetime. The king would have been able to change the trust document at any time until he became unable to handle his own affairs or passed away. This planning tool would have allowed him to name himself as the current trustee (the person or entity who manages, invests, and distributes the money and property) and to designate a co-trustee or backup trustee if he was unable to act. During the king’s lifetime, he would have had to either change the ownership of his accounts and property (his assets) from himself as an individual to himself as the trustee of the trust or designate the trust as the beneficiary of his assets (with some exceptions). The trust would have allowed him to continue enjoying his assets during his lifetime and designate who would inherit from him upon his death without probate court involvement. This would protect the inheritances of his loved ones and keep prying eyes out of his affairs.

If the king executed a revocable living trust as part of his estate plan, he would also have a will, but it would be called a pour-over will. This document would be referred to if one or more of the king’s assets were not properly transferred to his trust during his lifetime or at his death by beneficiary designation, or if a guardian needed to be appointed for Snow White. The difference between a will and a pour-over will is that a pour-over directs that all assets subject to the probate proceeding be transferred to the trust instead of a person. Although the king’s loved ones would still have to go through probate, the probate assets would end up in the trust, managed and distributed according to his trust instructions.

An Estate Plan Would Have Appointed Someone to Be in Charge

Once the king passed away, the law would dictate who could step in to handle his affairs if he did not have a legally valid estate plan. The stepmother might be at the top of the list as the surviving spouse, and because she was older than Snow White, she might have had more leverage to step in and take control. By creating an estate plan, the king could have appointed and empowered a trusted person as the personal representative under his last will and testament or as a successor trustee under this trust to handle his affairs, such as a trusted friend, advisor, or neutral third party.

An Estate Plan Would Have Protected Inheritances

Given Snow White’s young age when her father passed, it is likely that she was too young to manage a large sum of money or rule a kingdom without some guidance and oversight. Therefore, whatever he wanted to leave behind for Snow White could have been held in trust for her, either under his will as a testamentary trust or as a subtrust of his revocable living trust. A trust would have allowed him to craft specific instructions on when and how Snow White would receive her inheritance. If the king created a separate subtrust for Snow White, he could provide instructions so Snow White would receive her inheritance when the king died instead of waiting until her stepmother passed away to receive whatever was left over.

Holding an inheritance in trust is not just for minors. The king could have also placed whatever inheritance he wanted to leave his wife in trust. He could have provided specific instructions about how much she would get and when she would get it so that he would have that assurance that she was provided for. He would have also been able to dictate who would receive the money or property left in the stepmother’s subtrust when she died. In this case, he could have named Snow White as next in line to receive whatever was left in the stepmother’s trust.

Snow White Could Have Had a Better Guardian

Upon the king’s passing, a decision had to be made about who would look after Snow White. In this instance, it appears as though her stepmother was in control and did not make for a kind or caring guardian. However, had the king truly thought about this, he could have nominated someone else. Perhaps there was a grandparent, aunt, or uncle who would have been able to step in—instead of the dwarfs who ultimately took care of her. A guardian’s nomination is usually included in a last will and testament or pour-over will. While this is just a nomination made by the deceased parent, it can carry significant weight when a judge is looking to appoint a suitable guardian. Some jurisdictions also have a separate document that a person can use to nominate a guardian. This document would be referenced in the will or pour-over will as well but would be the only document needing revision if the king changed his mind about who he wanted to raise Snow White.

Help Ensure a Fairy Tale Ending for Your Loved Ones

While the story of Snow White is just a fairy tale, important lessons can be learned. We all want our loved ones to have happy endings. We can help you take steps to avoid the bad outcomes that are part of the typical fairy tales. To discuss ways we can help you craft your happily ever after, give us a call.

As a millennial, you are contributing to the workforce in a major way and are making positive changes in the world around you. We understand that your concerns may differ from someone of a different generation, and we are here to help you craft an estate plan that protects your future and addresses the things that matter most to you. The following are some important steps you need to take to ensure that you have a comprehensive estate plan.

Choose Your Key Decision-Makers

If you become incapacitated (for example, due to a severe injury, dementia, or a stroke) and can no longer manage your affairs during your lifetime, no one can step in for you without court intervention unless you have legally designated someone to act on your behalf while you still had the mental capacity to do so. By law, no one can automatically make your medical decisions or manage your finances—not even your parents or your spouse.

If the court is required to appoint someone to make decisions for you and you are unmarried, state law will generally prioritize your immediate family members over a significant other or friend to take on this role. You need the right legal tools to ensure that you get to choose the people who will be making these important decisions.

If you need someone to make financial decisions for you, you need to make sure that you name an agent under a financial power of attorney and give them whatever authority you are comfortable giving. You can allow the agent to act on your behalf immediately after you sign the document (in other words, without waiting until you are no longer able to manage your affairs) or require that the agent waits until you cannot act (depending on the type of financial power of attorney prepared for you and your state’s law). You may also need to have someone make medical decisions for you if you are unable to make or communicate your wishes. You must appoint an agent under a medical power of attorney to carry out this role. It is important to remember that these are two different roles and two different legal tools. You have the option of selecting the same or different people to act in these roles depending on skill sets or other considerations.

Make Sure to Fill Out All Employment Forms Appropriately

According to a 2023 article analyzing U.S. Census Bureau data, millennials make up the largest group of individuals in the workforce at 49.5 million people, as compared to 42.8 million Gen Xers, 17.3 million baby boomers, and 17.1 million Gen Zers.¹ Many jobs come with employer-provided life insurance and the ability to contribute to a retirement plan. These are two very important financial tools. However, you must review the beneficiary designations for these tools and ensure that they have been completed correctly. If the beneficiary designations are not filled out properly or are not filled out at all, the money may end up going through probate and distributed according to your will or, if you do not have a will, according to the state’s rules. Not only does this mean that you may not be able to choose who gets this money, but your loved ones may also end up going through the probate process, which can be time-consuming and costly. Alternatively, some accounts or policies have their own rules about what happens if the beneficiary designation form is not filled out. In that case, the retirement account or life insurance policy agreements will determine who will get the money and how much they will receive. In both of these cases, you are not in control of who receives these accounts and policies.

In addition to ensuring that the beneficiary designation is completed, you also need to think carefully about whom you want to name as the beneficiary. We can assist you in determining the right beneficiary and the right way to leave the retirement account or life insurance death benefit to carry out your wishes.

Naming an Individual as a Life Insurance Beneficiary

While leaving a lump sum to a loved one sounds like an easy and lovely way to be remembered, it comes with potential drawbacks. In most cases, the beneficiary will receive the death benefit in one lump sum to do with as they please. This may make administration easy, but the lump sum would then be vulnerable to your beneficiary’s creditors, divorcing spouse, or a lawsuit. Further, you may believe that your beneficiary is not able to handle inheriting a large sum of money all at once (or your beneficiaries may be minor children or individuals with special needs). If the death benefit for your life insurance policy is rather large, you may want to investigate other options.

Naming a Trust as a Life Insurance Beneficiary

Using a trust can be a great way to protect the inheritances you leave behind for your loved ones. If you designate your trust as a beneficiary, the lump sum is paid to the trustee, and the trustee will then use the money according to the instructions you have provided in the trust agreement. This means that you can dictate what the funds will be used for and possibly add provisions that make it more difficult for your beneficiary’s creditors, divorcing spouses, or lawsuit plaintiffs to reach the funds.

Naming a Charity as a Life Insurance Beneficiary

Making a charity the beneficiary of your life insurance policy can be a great way to leave a philanthropic mark at your passing. At your death, the death benefit can be paid directly to the charity. When leaving money to a charity, you need to work with the organization to understand their needs and any special requirements that must be met for them to be able to accept your donation. Gathering this information at the time you create your estate plan is incredibly important if you have specific requests for how the money will be used. You may need additional planning tools to ensure that the death benefit is distributed and used the way you want.

Naming a Spouse as a Retirement Beneficiary

Many married couples look at saving for retirement as saving for their joint retirements. This often leads to the spouse being named as the primary beneficiary of a retirement account. In some cases, the spouse must be named as the primary beneficiary unless they consent to someone else being named as the primary beneficiary. Naming the spouse as the direct beneficiary of the account will likely give the spouse the option to transfer the inherited account into their own retirement account (often called a spousal rollover) and treat the account as their own. This can provide additional asset and bankruptcy protection since the spouse would be the account’s new owner. However, this option is only available to surviving spouses. Alternatively, the spouse could keep the account separate from their own retirement assets as an inherited account. The spouse may be able to use their life expectancy when withdrawing money from the retirement account instead of being locked into the 10-year payout.

Naming a Minor Child as a Retirement Beneficiary

A minor child who inherits retirement assets as a direct beneficiary may take small distributions (called requirement minimum distributions, or RMDs, which are based on their life expectancy) every year until they reach the age of 21. At that age, they are required to take the remaining balance of the account within 10 years, or by the time they reach the age of 31. While children are still minors, their RMDs will likely be held in a protected account overseen by their guardian or conservator until they reach the age of majority in their state of residence (usually between the ages of 18 and 21). Once the child becomes an adult, they can choose to make periodic withdrawals during the 10-year period, or they can choose to withdraw everything all at once. Once the child is an adult, they are free to make whatever decisions they want.

Naming an Adult Loved One as a Retirement Beneficiary

An adult loved one may be considered part of the group that is required to receive the entire retirement account within 10 years of the account owner’s death unless some other exception applies. However, nothing prevents an adult beneficiary from withdrawing the entire retirement account balance the day they inherit it.

Naming a Trust as a Retirement Beneficiary

Another option for naming a beneficiary of a retirement account is to create a trust for your loved one and name the trust as the beneficiary (rather than naming your loved one individually). This option can work for see-through trusts that meet certain criteria under the law and allow the applicable trust beneficiaries to be treated as beneficiaries of your retirement account. 

There are two types of see-through trusts: conduit trusts and accumulation trusts. A conduit trust requires that all distributions made from the retirement account to the trust are distributed to the beneficiary (or used for the beneficiary’s benefit) as soon as the trust receives it. The terms of the trust can ensure that the full distribution period is observed and that a beneficiary does not liquidate the retirement account immediately. An accumulation trust allows the trustee to decide whether to pay out the withdrawals to the beneficiary (or for the beneficiary’s benefit) from the retirement account or to retain the funds in the trust. As a result, the full amount of the funds distributed from the retirement account to the trust can stay in the trust and can potentially be protected from claims made by outside creditors. Like a conduit trust, the accumulation trust will enable you to ensure that the beneficiary cannot liquidate the retirement account immediately after you pass away. With both types of trusts, you can dictate who will inherit the retirement account if the named beneficiary passes away before they receive the entire account.

Naming a Charity as a Retirement Beneficiary

Another option is to name a charity as the beneficiary of your retirement account. Because the charity would receive the distribution, there would be no income tax consequences for the charity or you. Although you would still have to count the retirement account as part of your estate, the fact that the account is going to charity (so long as it is a qualified organization) means that there will be a reduction in the amount that would be subject to estate tax, and therefore less tax would potentially be due.

Have a Game Plan If You Are Not Married

According to Statista, only 44 percent of millennials were married between the ages of 23 and 38 in 2020, while 53 percent of Gen Xers, 61 percent of baby boomers, and 81 percent of the silent generation were married between those ages.² Just because you are not married does not mean that you do not have a loved one whom you care for and would like to provide for when you pass away. If you do not create a proactive estate plan, your money and property will be distributed according to rules established by the state. These laws typically prioritize giving your money and property to your spouse, children, parents, and siblings. An unmarried significant other will have no right to your money and property. You need a proper estate plan if you want money and property to go to someone other than your family members.

Do Not Forget Your Pet

Another unique characteristic of millennials is that they make up the largest percentage of current pet owners, according to Forbes.³ These beloved family members need care and attention, much like a child does. It is therefore important that you address your pets in your estate plan. The extent to which you include them in your estate plan can vary depending on the types of pets, the number of pets, the pet’s current health, and the pet’s ongoing needs. 

Who Will Take Care of Your Pet?

The role of pet caregiver is similar to the guardian of a minor child. This person will care for your pet if you no longer can. Not only is it important to make sure that you have chosen a caregiver for your pet; you should also choose backups just in case your first choice cannot care for your pet. You can leave detailed instructions or general recommendations for your pet’s care, whichever works best for your pet’s situation. 

You can also decide whether you would like to set aside money to help the caregiver cover the pet’s cost of care. Some people choose to give their chosen caretaker a one-time monetary gift. Others may consider creating a budget to more accurately determine the amount they want to leave for their pet’s needs. Your approach will be based on the available funds and your caretaker’s ability to assume the financial responsibility of caring for your pet. When dealing with a larger sum of money, it is important to consider how it will be managed. Some people are comfortable giving the full amount to the caretaker so that the caretaker can easily access the money for the pet’s needs. Others prefer a trust to hold the funds and ensure that some oversight is in place. This can be done by using a trustee to manage the funds. 

Lastly, you will want to consider whether you would like to provide compensation for your chosen caretaker as a thank-you for the time and energy required to care for your beloved pet.

Now Is the Time to Plan

It is not pleasant to think about what will happen if you cannot manage your own affairs or when you die. We are here to walk you through some important considerations so you can have peace of mind knowing that you and your loved ones (human and animal alike) are prepared for whatever life may throw at you. Call our office to schedule your appointment.

1. Emily Peck, Zoomers Will Overtake Boomers at Work Next Year, Axios (Nov. 22, 2023), https://www.axios.com/2023/11/22/gen-z-boomers-work-census-data. ↩︎
2. Share of Americans Who Were Married Between the Ages of 23 and 38 in 2020, by Generation, Statista, https://www.statista.com/statistics/318927/percentage-of-americans-whe-were-married-between-age-18-32-by-generation (last visited June 25, 2024). ↩︎
3. Michelle Megna, Pet Ownership Statistics 2024, Forbes (Jan. 25, 2024), https://www.forbes.com/advisor/pet-insurance/pet-ownership-statistics. ↩︎

Thinking about the world and how our loved ones will fare after we pass away can be very difficult. Although we all know that we will pass away at some point, this is not something most people like to dwell on. However, by proactively planning and prioritizing your goals, you can craft an estate plan that allows your wish to provide the best future for your loved ones to become a reality. The first step in creating an estate plan is to consider your priorities. Your goals and wishes will be unique to your circumstances, the needs of your loved ones, and your desires to support your favorite charities. 

Getting clear on your priorities is important to the estate planning process because we need to work together with your other advisors to ensure that you have enough money and property at your death to carry out your wishes. This coordinated effort will also help ensure that your wishes do not contradict each other or create any significant issues.

Some Common Priorities You May Consider

Look at the following list and see if any of these priorities resonate.

• Avoiding probate. Many people want their loved ones to avoid the probate process because it can be expensive, time-consuming, and public. It can also be difficult for a loved one to manage while they are grieving. However, some people appreciate having a neutral third party (the judge) oversee the winding down of their affairs in the event there may is a conflict.
• Avoiding conservatorship or guardianship.Estate planning is not just about what happens when you die. There may come a time when you are alive but unable to manage your own affairs (this is commonly referred to as being incapacitated). If you have not legally appointed someone to manage your finances or make medical decisions for you, your loved ones may be forced to appear before a judge and petition to have someone appointed to take on these roles. This process can also be expensive and time-consuming and is public as well. However, if there has been a lot of familial flighting, a neutral third party may offer the consistency and oversight needed.
• Making postdeath administration easy for your loved ones. One of the reasons people have an estate plan is to make things easier for their loved ones. By having legally enforceable tools in place, your loved ones can follow your instructions and hopefully have a peaceful administration after you pass.
• Ensuring your loved ones have everything they need. How much your loved ones need will depend on their unique needs. If you have a loved one who will require a lot of care (a minor child or family member with special needs), they may end up taking a majority of the inheritance you leave behind, which means that there may be less money for other things.
• Providing and protecting an inheritance for your child or grandchild. Depending on their age and needs, children and grandchildren may not be best served by receiving an inheritance outright. You can instead create a plan so that the inheritances you leave to your beneficiaries are held over time, with distributions being made at certain ages, stages in life, or at the discretion of a trusted person you designate to be in charge. There are many ways to structure these types of inheritances, and you should know the pros and cons of each.
• Protecting your surviving spouse’s inheritance. Providing for a surviving spouse may be at the top of your list of priorities. However, it is important to consider how you want to protect their inheritance. The more protections you put in place, the less flexibility and control your surviving spouse will have over the inheritance.
• Disinheriting a family member. You may want to leave a family member out of your estate plan. If you disinherit a family member who thought they might receive something, there is a likelihood that the family member may contest the will or trust. There is also an increased likelihood of your loved ones ending up in probate court to settle the dispute.
• Providing for charities. Whether for tax or philanthropic reasons, giving money to charity can be a great way to leave a lasting legacy. Just remember, the more money you leave to charity, the less that will be left for your loved ones. 
• Reducing estate tax liability. Although estate tax only impacts high-net-worth individuals, potential tax liability is always something that you should consider. If you want to include estate tax planning in your estate plan, you may have to decide between saving your loved ones from estate tax liability and retaining control over some of your money and property while you are alive.
• Reducing the amount of income tax a trust may owe. When a trust owns accounts and property that generates income, it is subject to income tax. Unfortunately, a trust reaches higher tax brackets faster than an individual would. If you want the income to be taxed at the beneficiary’s rate (likely lower), the income may have to be given to the beneficiary and treated as their money for income tax purposes. 
• Avoiding will or trust contests. If your objective is to keep family harmony, especially if disinheriting a family member, you will want to ensure that your estate planning tools are clear about your wishes. This means you need to work with an experienced estate planning attorney who can counsel you on your options and help you choose the path that will result in the smallest number of conflicts possible. 

What You Need to Do to Prepare

You can take the following steps now to ensure that your wishes are reflected in your estate plan and that we can help you create a realistic plan.

1. Make a list of everything you own and any outstanding debts. You need to do a preliminary inventory to ensure everyone is on the same page regarding how much money may be available at your death. Although this amount may fluctuate with time, a current inventory gives your advisors a snapshot of your financial situation. Do not forget to include any life insurance death benefits in your calculation because, although you may not benefit from it during your lifetime, it will be part of the inheritances you pass on to your loved ones.
2. Make a list of your priorities and the people or organizations you want to leave money to. Make a list of the priorities that you would like addressed in your estate plan. You can take this one step further by listing the loved ones and organizations you would like to provide for at your passing, an estimate of how much you would like to provide to each, and how you would like them to receive it. We can discuss these details further, but this will help you by getting all of your thoughts on paper.
3. Rank your list. Looking at the notes you made in Step 2, put these gifts in order of priority. Should you run short on money, which gifts should take priority? You may be able to fund all of your wishes, but it is good to have a Plan B.
4. Meet with your trusted advisors. After considering your wishes, meeting with your advisor team is the next step. Each advisor will be able to offer specific insights as to how we can help you carry out your plan. A financial advisor can look at your current financial situation and make investment recommendations to support the gifts you want to make at your passing. An insurance agent can help you acquire additional liquidity to fund your gifts. Your certified public accountant or tax advisor can look at what you currently own and see what strategies can be used to make the most of your gifts. As your estate planning attorneys, we can help you craft the important tools in a legally enforceable way that conveys your wishes.

Creating an estate plan can be one of the greatest gifts you give to your loved ones. Schedule an appointment to learn more about how we can design a plan to meet your unique needs.

Fewer people are creating estate plans today than in years past. Research shows that, in 2024, less than one-third of Americans report having a will.¹ 

Every adult—whether they are 19 or 99—should have a will at a minimum. Many people can also benefit from estate planning documents such as trusts, powers of attorney, and advance directives. But even if you have created a comprehensive estate plan, it may no longer align with your objectives if it is not up to date. 

Estate Planning Is Down

As we get older, it is inevitable that we become more aware of our mortality. Reflections on life and death do not necessarily have to be morbid. They can also prompt us to take actions that focus on our legacy. 

This is what happened during the peak of COVID-19. Stuck at home and more mindful of health, Americans turned their attention to estate planning, leading to a surge in the creation of new wills and trusts.

But that trend has reversed since 2020, and the long-term trend is towards less estate planning. 

Caring.com found that, in 2024, 43 percent of adults over age 55 have wills—down from 46 percent in 2023 and 48 percent in 2020.² From 2000 to 2020, the share of people aged 70 or over with wills declined from 73 percent to 64 percent, reports the Center for Retirement Research at Boston College.³ 

On the other hand, the number of young Americans who have a will has increased in recent years. However, around 75 percent of 18- to 34-year-olds and 35- to 54-year-olds still do not have one.⁴ 

Procrastination is the top reason people give for not making a will.⁵ Other common excuses are not knowing where to start and concerns about how complicated or expensive estate planning might be.⁶ 

Why Estate Plans Can Fail

The reasons why people do not have an estate plan underscore the more significant point that estate planning can often feel overwhelming and unpleasant. 

However, not having a plan that addresses what happens to our money and property after our death, who cares for our minor child when we cannot, and who will manage our affairs during an emergency while we are alive, among other concerns, puts loved ones in a difficult position. 

Without a plan, your family may have to turn to the courts for answers, which will likely not satisfy anybody. Disagreements can spawn litigation that pits siblings against siblings and squanders money on legal fees. 

These issues can also arise when an estate plan is incomplete, inaccurate, or outdated. 

According to the book Estate Planning for the Post-Transition Period, approximately 70 percent of estate settlements result in asset losses or family disharmony, outcomes the authors attribute to estate planning failures that are within the family’s control.⁷ 

An estate plan can fail for many reasons. Some of the leading causes are a lack of follow-through, not informing heirs about the general outlines of the plan, and not updating the plan. 

You might, for example, set up a trust to avoid probate or to manage accounts and property for an underage or disabled loved one, but if you do not follow through by transferring ownership of your accounts and property to the trust or making the trust the beneficiary, the trust will likely not accomplish your goal of avoiding probate. 

Another common mistake is setting up powers of attorney and medical directives, putting them in a drawer or filing cabinet, and not telling anybody about them. These documents authorize others (i.e., “agents”) to act on your behalf. Some may take effect immediately, while others may take effect only when necessary (e.g., during incapacitation). However, these important tools cannot help you if nobody knows the documents exist and where to find them. 

Having an out-of-date plan can result in failures that are on par with having no plan. As life changes, the desired beneficiaries of your accounts and property, guardians for your minor children, and agents during your incapacity are subject to change. An estate plan that does not reflect the latest circumstances and your current wishes could lead to unintended—and potentially disastrous—outcomes. 

Signs Your Estate Plan Is Out-of-Date

An old, out-of-date estate plan can leave loved ones grappling with many of the same issues caused by not having an estate plan. 

Loved ones may not be adequately taken care of, accounts and property could end up going to inappropriate beneficiaries, your estate may have adverse tax consequences, you may not receive the end-of-life care you want, and your estate could be subject to unnecessary probate proceedings, to name just a few possible consequences. 

While there is no fail-proof set of rules for determining when an estate plan should be updated, estate planning attorneys recommend revisiting a plan every few years or when there is a significant change in your life, your family’s life, or the law. 

Here are a few signs that your estate plan is outdated: 

• It was created between 2018 and 2024. The planned expiration of the Tax Cuts and Jobs Act of 2017 at the end of 2025 is set to dramatically lower the lifetime federal estate and gift tax exemption amount, potentially increasing the number of estates subject to the federal estate tax and the estate tax liability amount.
• You wish to modify who receives an inheritance from your estate, the amounts they receive, or the conditions you place on an inheritance, such as instructions for trust distributions. 
• You decide to make a charitable gift from your estate. 
• A beneficiary, guardian, or agent has died, is sick, or is no longer a proper choice for some other reason, such as developing a substance abuse problem or showing poor judgment. 
• A family member has suggested that they might challenge your will as presently written, and you want to add a no-contest clause (if recognized in your state) that discourages them from doing so using the threat of disinheritance. 
• Your relationship with one or more family members has become strained, and you intend to disinherit them or change their inheritance. 
• You have concerns about protecting a beneficiary’s inheritance from a spouse, divorce, lawsuit, or creditor. 
• You or a family member recently divorced, remarried, became a widow or widower, or had a child. 
• You acquired or disposed of significant accounts or property since your estate plan was created or last updated, for example, by inheritance.
• You purchased a new home, vacation home, rental property, or some other type of real estate. 

This list is not exhaustive, but if even one item applies to you, it may be an excellent time to review and update your estate plan. 

Guidelines for Keeping an Estate Plan Up-to-Date

Agents, beneficiaries, and inheritance amounts and distribution plans constitute the core of your estate plan and should be regularly revisited. 

Be sure to also remember other details such as naming backup beneficiaries, agents, and trustees and adding provisions that allow beneficiaries to replace poorly performing decision-makers. 

Short of changing a beneficiary’s inheritance, you can take steps now to prepare them for the financial implications of a bequest. Talk to them about how to handle their gift and ways you might like them to spend it. If you have serious doubts about their financial acumen but still want to provide for them, consider a gift placed in a trust that specifies how the money can be used. 

Talk to your loved ones now, while you still can, about the value of your estate and what they can expect to inherit. Transparency will allow them to express their feelings. Tell them about any significant changes to your estate plan that could leave them feeling surprised and hurt, leading to conflict. 

Loved ones should also be informed about where vital estate planning documents are kept and how to access them. Depending on where the information is stored, you might have to visit a bank with somebody to access a safe deposit box, give them the code to a lockbox, or let them know your digital passwords for documents stored on a computer or in the cloud. No matter where your records are kept, make sure that your loved ones will have legal access to them after your death. For example, with many banks, a person you designate as being able to access your safe deposit box will no longer have access after your death. Talk to your bank about ensuring your loved ones can access the box’s contents even after death.

Many states allow a copy of a person’s will to be filed with the probate court for safekeeping even during their lifetime. This precaution can ensure access if a key, password, or combination is misplaced or forgotten. 

Make Changes the Right Way: Talk to an Estate Planning Attorney 

The only constant in life is change. An estate plan you created years ago is unlikely to reflect your present situation and priorities and could be almost as bad as not having one. 

While you may be tempted to create and update an estate plan independently, online estate planning tools can be another reason a plan fails, hurting your legacy and burdening your loved ones. 

Contact our attorneys and schedule an appointment to ensure your estate plan is done right. 

1. Rachel Lustbader, 2024 Wills and Estate Planning Study, Caring.com, https://www.caring.com/caregivers/estate-planning/wills-survey/ (last visited June 26, 2024). ↩︎
2. Id. ↩︎
3. Jean-Pierre Aubry, et al., Can Incentives Increase the Writing of Wills? An Experiment, Ctr. for Retirement Rsch. at Boston Coll. (Dec. 2023), https://crr.bc.edu/wp-content/uploads/2023/12/wp_2023-27.pdf. ↩︎
4. Rachel Lustbader, 2024 Wills and Estate Planning Study, Caring.com, https://www.caring.com/caregivers/estate-planning/wills-survey/ (last visited June 26, 2024). ↩︎
5. Id. ↩︎
6. Id. ↩︎
7. Bob Carlson, Most Estate Plans Fail, Don’t Let Yours Be One Of Them, Forbes (Jul. 31, 2020), https://www.forbes.com/sites/bobcarlson/2020/07/31/most-estate-plans-fail-dont-let-yours-be-one-of-them/?sh=60add70d4008. ↩︎

Moving away from home is a major milestone in adulthood. For the first time, you might have to secure housing, buy insurance, sign up for utilities, and manage your finances. All of this can feel overwhelming as you simultaneously adapt to a new living environment and possibly a new career. 

With greater independence comes more responsibility. Your family may see you off with some parting advice about how to navigate the trials of adulting. One thing they might not have mentioned is the importance of having your legal house in order as you start this new life chapter. This includes having an up-to-date estate plan. 

Failure to Launch? Don’t Blame Us. 

Young adults today are less likely than young adults four decades ago to have reached several commonly recognized milestones of adulthood, including marriage, financial independence, and living independently of their parents. 

In 1980, 84 percent of 25-year-olds were living outside their parents’ home, compared with 68 percent in 2021, reports Pew Research. ¹From 1960 to 2022, the percentage of 25-to-34-year-olds living with their parents increased from 11 percent of men and 7 percent of women to 19 percent of men and 12 percent of women, the latest Census data shows.² 

While every generation tends to think their times are tough, today’s 18-to-24-year-olds have a strong case. They have had to deal with the COVID-19 recession, high inflation, and “the tightest labor market since World War II,” according to a recent report from the Federal Reserve Bank of St. Louis.³ 

Americans are also living through the toughest housing market in a generation.⁴ But despite high inflation, rising interest rates, and worsening housing affordability, there has been a post-pandemic trend toward independent living among young adults. The share of 25-to-34-year-olds living with parents in 2022, although high by historical standards, dropped to 19 percent in 2022—the lowest level in a decade.⁵ 

Are You Behind on Making a Will?

As a young person, you likely feel invincible and cocooned by youth from thoughts about death. While these thoughts are natural at every age, older cohorts may be more inclined to meet them with action, such as creating an estate plan. 

You can be forgiven if you have never heard the term estate planning or only have a vague idea of what it is. Your parents may have skipped over this part of your education because many older adults, like younger adults, do not have an estate plan or do not want to talk about incapacity or death with their children. 

At the simplest level, an estate plan is a set of legal tools that governs your assets (everything you own, including your accounts and property) and addresses your healthcare preferences when something happens to you. That “something” could be death. But it could also be a disability that renders you unable to manage your affairs, either temporarily or permanently. 

Your odds of becoming disabled are greater than you might think. Most estimate their odds of long-term disability at 1 or 2 percent, when in reality there is a 25 percent chance that somebody in their 20s today will become disabled before they retire. ⁶

This is right around the same percentage of 18-to-34-year-olds (24 percent) who have a will.⁷ That percentage has increased since 2020, but it is still the lowest of any age cohort.⁸ Adults aged 55 and older are about twice as likely to have a will. Overall, only 32 percent of Americans have a will.⁹ 

What Decision-Making Authority Can You Include in an Estate Plan?

Forty percent of people who do not have a will say it is because they do not have enough assets to leave to anyone.¹⁰ 

Even if you are young and have little or no assets, if you own anything at all and care about what happens to your possessions, you should have a will. And if you have minor children or a beloved pet, a will is a necessity because it names a legal guardian for your child (or fur baby) in the event of your death. 

A will, which only takes effect when you die, is just one aspect of an estate plan. An estate plan also allows you to nominate other people to make decisions for you if you are disabled or incapacitated. 

Thinking about getting sick or hurt can feel low on your priority list, especially when you are young and dealing with the more immediate concerns of moving away from home. But if you value your independence, then you should care about your estate plan because it allows people to act on your behalf with regard to the following types of matters: 

• Your finances, such as paying bills, managing bank and retirement accounts, signing checks, filing and paying taxes, selling property, running your business, and acting as your legal representative. 
• Your health, including decisions about the type of care you receive in various medical scenarios, including palliative and end-of-life care, and who can access your private medical information. 

Financial management in an estate plan is addressed in a financial power of attorney. Health care decision-making is handled with a medical power of attorney.  Powers of attorney are tools that authorize someone, known as an agent, to act on your behalf. 

• Powers of attorney can be general, granting the agent wide latitude to make decisions for you, or more limited in scope. 
• They can also last indefinitely or for a specified amount of time (e.g., for as long as you are incapacitated), depending on state law. 

This type of planning is crucial even if you do not own a home or have nothing in the bank.

Without powers of attorney, the court will appoint somebody to make decisions about your finances and medical care. 

Family members may have to petition the court to serve as your agents for financial and medical decision-making if you cannot make those decisions yourself. They may not agree about who should serve or what decisions to make. Ultimately, someone whom you would not have chosen might end up with the authority to act for you. 

• Instead of, or in addition to, a healthcare power of attorney, you can create a living will that preserves in writing your healthcare preferences as it relates to your end-of-life care. 
• Another tool, called a living trust, can be an alternative to a will and can complement your financial power of attorney. 

These and other estate planning documents should be discussed with an attorney. Developing a relationship with an estate planning attorney in your youth can put you on a lifelong path to greater financial and personal responsibility. 

Who Should Be Your Trusted Decision-Makers?

While you may have moved out of your parents’ home and want to establish and maintain your independence, mom and dad are obvious choices for serving as agents in your estate plan. 

If mom and dad are on the other side of the country, travel frequently for work, or may not be immediately available in an emergency for some other reason, consider choosing someone else. 

Family members and friends are common choices for agents, but an agent can be any competent and trusted adult, such as an accountant or financial professional. 

Whomever you choose, make sure they understand the role and are willing to serve. Being an agent is a huge responsibility, and they can resign or refuse the position. That is why it is important to choose successor, or backup, agents as well.

Is Your Estate Plan on Your Move-Out Checklist?

You are likely to feel a mix of excitement and anxiety when moving away from home to a place that may be far from your familiar support network. You are ready to make new connections, settle into a different routine, and break out of your comfort zone. But are you forgetting about your estate plan? 

Part of being an adult is facing uncomfortable realities head on. Planning for what could go wrong, even if it seems like a remote possibility right now, is the only way to ensure that you will be ready if it does happen. 

Take greater control of your life today by scheduling a meeting with an estate planning attorney. 

1. Richard Fry, Young Adults in the U.S. Are Reaching Key Life Milestones Later Than in the Past, Pew Rsch. Ctr. (May 23, 2023), https://www.pewresearch.org/short-reads/2023/05/23/young-adults-in-the-u-s-are-reaching-key-life-milestones-later-than-in-the-past. ↩︎
2. Paul Hemez &  Chanell Washington, How Many Young and Older Adults Lived Alone?, U.S. Census Bureau (May 30, 2024),      https://www.census.gov/library/stories/2024/05/living-arrangements.html. ↩︎
3. Nishesh Chalise et al., The State of Economic Equity: Challenges and Opportunities for Advancing Economic Security Among U.S. Young Adults, Fed. Rsrv. Bank of St. Louis (Mar. 26, 2024),      https://www.stlouisfed.org/institute-for-economic-equity/state-of-economic-equity/challenges-opportunities-advancing-economic-security-us-young-adults. ↩︎
4. Bryan Mena, An Affordability Crisis Is Making Some Young Americans Give Up on Ever Owning a Home, CNN (Feb. 3, 2024),      https://www.cnn.com/2024/02/03/economy/young-americans-giving-up-owning-a-home/index.html. ↩︎
5. Natalia Siniavskaia, Pandemic Silver Lining: Young Adults Moving Out of Parental Homes, Nat’l Ass’n of Home Builders (Jan. 19, 2024),      https://eyeonhousing.org/2024/01/pandemic-silver-lining-young-adults-moving-out-of-parental-homes. ↩︎
6. Allan B. Checkoway, A Lawyer’s Guide to Filing Long-Term Disability Claims and Appeals 2 (2019),      https://www.americanbar.org/content/dam/aba-cms-dotorg/products/inv/book/346779304/Sample.pdf. ↩︎
7. Rachel Lustbader, Caring.com’s 2024 Wills Survey Finds That 40% of Americans Don’t Think They Have Enough Assets to Create a Will, Caring.com, https://www.caring.com/caregivers/estate-planning/wills-survey      (last visited June 26, 2024). ↩︎
8. Id. ↩︎
9. Id. ↩︎
10. Id. ↩︎

It has been said that the only thing harder than being an addict is loving one. It can be particularly difficult for a parent to bring a child into the world, full of hopes and dreams about their future, and then watch them spiral down into addiction. Having someone in your life who struggles with substance abuse is never easy, no matter the circumstances, the relationship, or their age.

Estate planning often involves dealing with difficult situations. Putting off thinking about these decisions is not the solution. By delaying making plans for how best to care for an addicted loved one when you are no longer around, you risk losing an opportunity and control that can further complicate matters. 

How to Best Help Someone Struggling with Substance Abuse

Approximately 17 percent of Americans over the age of 12 had a substance use disorder in 2022, according to the latest National Survey on Drug Use and Health.¹ That is equivalent to 48.7 million people, including 29.5 million who have an alcohol use disorder, 27.2 million who have a drug use disorder, and 8 million who had both alcohol and drug use disorders.² 

Despite these grim statistics, the good news is that life after addiction is not just possible—it is the norm. Most people experiencing alcohol and drug addiction recover, survive, and go on to live full, healthy lives. A study from the Centers for Disease Control and the National Institute on Drug Abuse found that three out of four addicts eventually enter recovery.³ 

Treatment and recovery services are critical to successful addiction recovery. Financial barriers to these services are one reason why people struggling with substance abuse go untreated.⁴ Family members of addicts might be in a position to provide them with money and material support but worry that doing so will be counterproductive. 

Estate Planning for Beneficiaries with Substance Abuse Issues

There is not a one-size-fits-all solution for assisting a loved one who is dealing with substance abuse. What most experts agree on, though, is that you cannot force someone to undergo treatment. Family members can encourage recovery, but ultimately, the decision to seek therapy is up to the individual. 

When considering including an addicted loved one in an estate plan, it is useful to remember that estate planning can be uniquely tailored to the needs of each family and individual. Here are some points to keep in mind as you try to fit a drug- or alcohol-dependent person into your plan: 

• You do not have to disinherit them. While you may have concerns that any money or property you leave to an addict could not only be squandered but also contribute to their self-destruction, there are ways to provide them an inheritance that does not involve giving them direct access to it. 
• Be cautious when relying on a sibling or relative to care for a family member experiencing addiction, manage an inheritance on their behalf, or help them get treatment. Addiction often takes an emotional toll on a family. A windfall could further heighten emotions, lead to disagreements, and result in an explosive situation that causes discord among family members. And most people agree that maintaining family harmony is important for their estate plan. 
• If you have an underage child battling addiction, you can name a guardian in your will to manage their financial affairs for them until they come of age. But be aware that once they are legally an adult, the guardianship ends, so this is a short-term solution at best. A better solution would be to have their inheritance held in trust and appoint someone to manage their money and property until they reach an age you specify or a particular trigger event occurs. 

Setting Up a Trust for an Addicted Loved One

A trust does not guarantee that an addicted person will be protected from their own bad decisions, but it can be structured in a way that helps ensure that an inheritance is used to their benefit and not to their detriment.

The Instructions Can Be Tailored to Meet Your Loved One’s Needs Without a Windfall

A trust allows you—the trustmaker—to set the terms for how the beneficiaries may use and have access to trust funds. The terms can be as specific as you want and may include provisions specifically designed to tackle addiction. For example, the trust could include the following types of terms: 

• The inheritance must be used to pay for treatment.
• There are incentives to ensure that the beneficiary gets the help they need. 
• Distributions cannot be made until the beneficiary completes rehab, is able to pass a random drug test, or, in the case of a relapse, maintains sobriety for a period of time. 
• If the specified incentives are not met by a certain deadline, the trust’s accounts and property will pass to a different beneficiary or a charity. 
• Trust funds may be used to pay for living expenses, since many addicts have accompanying money problems. A special type of trust can be set up for this purpose if we need to ensure that your loved one maintains access to means-tested government assistance or is able to apply for it in the future. 
• The trust can last for years or even a lifetime, or terminate upon full rehabilitation, at which point the beneficiary takes control of their inheritance. 

Choose the Trustee Carefully

Selecting a trustee is just as crucial as the provisions of a trust created for a beneficiary who suffers from addiction. The trustee should be somebody who will act in the best interests of the beneficiary while striving to preserve family harmony. When selecting a trustee, consider the following:

• The trustee you choose to manage the trust on behalf of an addicted loved one can be given complete authority about how to use the funds (a discretionary trust). 
• The trustmaker can provide some guidance for distributions that address substance abuse concerns, such as requiring the trustee to pay third parties directly for approved expenses rather than giving funds for such expenses directly to the beneficiary. 
• The trustee could be given direction or permission to be in communication with other family members to coordinate treatment and track recovery, if necessary. 
• The trustee can be a member of the family or a professional (e.g., an attorney or a trust administration company). If you are concerned about maintaining family harmony, you may want to consider appointing someone other than a family member. It is also possible to have co-trustees. Further, backup trustees should be named in case the original successor trustees are removed or can no longer serve in their role. 

You Are the Only One Who Can Protect Your Loved One

A final consideration about planning for an addicted loved one is what can happen if you fail to plan. 

Without an estate plan, the unknowns can be greater—and more consequential. The court will rely on state law to determine who gets your money and property, how much they will receive, and when they receive it. Your loved one may end up with a lump sum of money and no restrictions. This default plan does not address the underlying addiction problem. And if your loved one is not a family member, they may not receive anything from you at all if you do not put an estate plan in place. 

Discuss Estate Planning Strategies for a Beneficiary Suffering from Addiction 

You might feel torn between a desire to help an addict in your life and ensuring that your hard-earned money is put to its best use after you have passed away. Or maybe you have been your loved one’s rock, helping them stay sober and avoid relapse, and want to continue doing everything you can for them for as long as you can. 

Addiction is often a lifelong struggle. To make a plan that provides addiction assistance for someone you care about, even after you have passed away, contact our estate planning attorneys. 

1. HHS, SAMHSA Release 2022 National Survey on Drug Use and Health Data, SAMHSA (Nov. 13, 2023), https://www.samhsa.gov/newsroom/press-announcements/20231113/hhs-samhsa-release-2022-nsduh-data. ↩︎
2. Id. ↩︎
3. Christopher M. Jones et al., Prevalence and Correlates of Ever Having a Substance Use Problem and Substance Use Recovery Status Among Adults in the United States, 2018, 214 Drug and Alcohol Dependence 108169 (2020), https://www.sciencedirect.com/science/article/abs/pii/S0376871620303343. ↩︎
4. Barriers to Addiction Treatment: Why Addicts Don’t Seek Help, Am. Addiction Ctrs. (Jan. 30, 2024),  https://americanaddictioncenters.org/rehab-guide/treatment-barriers. ↩︎

The U.S. Department of the Treasury has released its General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals. Commonly referred to as the Greenbook, this document lays out tax proposals that would support President Biden’s policy priorities if he is reelected to a second term. 

A major focus of this year’s Greenbook is increasing taxes on corporations and high-income individuals to ensure that “the wealthy and corporations pay their fair share,” says the Biden administration. 

Some of the proposals in the administration’s budget would modify estate and gift taxation, helping to generate an estimated $97.2 billion in additional revenue over 10 years. These proposals are still a long way from being enacted, but they bear monitoring from an estate planning perspective. 

The Greenbook Proposes Closing Estate and Gift Tax Loopholes

Tax proposals in the Greenbook are not proposed legislation; each budget item would need to be introduced and passed by Congress to become law. 

However, the Greenbook provides insight into tax matters the Biden administration could prioritize in a second term. Among them are closing what the Greenbook calls “estate and gift tax loopholes” that “allow the wealthy to reduce their tax by using complicated trust arrangements to transfer their assets to their heirs.” 

Three proposals in the Greenbook address the following trust and estate tax issues: 

• Modifying grantor trust rules that allow significant value to be removed from an estate without being taxed
• Reclassifying certain appreciated asset transfers so they are subject to capital gain taxes
• Minimizing or eliminating valuation discounts for some intrafamily asset transfers

Grantor Trusts

The Greenbook outlines a plan for modifying tax rules for grantor trusts, including grantor retained annuity trusts (GRATs).  

According to the Greenbook, grantor trusts and GRATs allow taxpayers to use three common tax planning strategies to significantly lower their combined federal income, gift, and estate tax burden: 

• Funding a GRAT with accounts and property (assets) that the grantor expects to appreciate and structuring the GRAT in such a way that incurs very little gift tax when appreciated assets are transferred to remainder beneficiaries 
• Selling an appreciating asset to a grantor trust of which the taxpayer is considered the owner for income tax purposes, allowing the taxpayer to remove future asset appreciation from their gross estate without the recognition of capital gains on the sale or the payment of gift or estate tax 
• Reselling an appreciated asset from the grantor trust back to the trust’s owner, making the purchase disregarded for income tax purposes and not subject to capital gains tax 

The Greenbook proposes the following changes to grantor trusts:

• Recognize sales between a grantor and a grantor trust as taxable and require the seller to pay taxes on them. 
• Treat the payment of grantor trust income taxes by the trust owner as a taxable gift to the trust that would occur on December 31 of the year in which the tax is paid (unless the owner is reimbursed by the trust that same year). 
• Impose a minimum value on a GRAT’s remainder interest for gift tax purposes.
• Require a minimum and maximum term for GRATs.
• Prohibit a GRAT grantor from engaging in tax-free exchanges of trust assets.  

Accounting firm BDO USA writes that these proposals would overturn the Internal Revenue Service rule that disregards grantor/grantor trust transactions as taxable events. The GRAT proposals would also effectively eliminate short-term GRATs used as part of a “rolling GRAT strategy” and prohibit “zeroed-out GRATs,” says BDO.

Appreciated Property Transfers

Another reform proposed in the Greenbook that has trust and estate planning implications deals with the taxation of capital income (i.e., capital gains tax). 

Under current tax law, when someone (a donor) gifts an appreciated asset to another person (a donee) during the donor’s lifetime, there is no realization of capital gain by the donor when they make the gift. In addition, the donee does not have to recognize the capital gain until they dispose of the appreciated asset. 

And when a deceased person passes on an appreciated asset upon death, the recipient receives an adjusted basis equal to the asset’s fair market value at the time of the decedent’s death. If the basis adjustment is a step-up, the postdeath transfer would allow the recipient of the gift to avoid federal income tax on asset appreciation that occurred during the decedent’s lifetime, as all such gain had been wiped out by the adjustment in basis. 

The Greenbook describes these rules as giving preferential tax rates on capital gains that largely benefit high-income taxpayers, resulting in many of them paying a lower tax rate than middle-income earners. Proposals in the Greenbook would tax unrealized capital gains on transferred appreciated property when the following “realization” events occur: 

• Transfers of appreciated property by gift or death
• Property transfers to or from most types of trusts
• Property distributions from revocable grantor trusts to persons other than the trust’s owner or their spouse

BDO calls the proposal a radical departure from how capital assets are currently recognized as income. The addition of realization events would consider a sale of a capital asset to have occurred even when there was no sale, unlike now, when there must be a sale or property exchange to generate a capital gain. 

Taxpayers may not have the money to pay the capital gains tax incurred from a new realization event because the transferor does not receive cash in exchange for the property transferred.  Thus these transferors would need to engage in extremely careful planning to avoid liquidity issues surrounding a deemed sale. This could result in needing to sell assets other than those transferred in order to pay the tax.

Intrafamily Asset Transfers

Family members can transfer hard-to-value assets from one member to another to lower their tax burden. The Greenbook cites two ways this can be achieved: 

• Transfer portfolios of liquid assets, such as marketable securities, into partnerships or other entities; make intrafamily transfers of interests in those entities (rather than transferring the actual liquid assets); and then claim entity-level discounts for valuing the gifted asset. 
• Make intrafamily transfers of partial interests in other hard-to-value assets (e.g., art, real estate, and intangibles), allowing each family co-owner to claim “fractional interest discounts.” 

According to the Treasury, these strategies take advantage of lack of marketability and lack of control factors used to determine the fair market value of such partial interests, but they are not appropriate when families act together to maximize their economic benefits and artificially reduce the transfer tax due. 

A Greenbook proposal to reform these intrafamily asset transfers would 

• reduce or eliminate discounts related to marketability and control when transferring partial interests within a family if the family collectively owns at least 25 percent of the property; and
• make the transferred partial interest’s value equal its pro rata share of the total fair market value of all interests in the property held by both the transferor and their family members. This collective fair market value would be calculated as if all interests in the property were owned by a single individual.

This proposal would replace section 2704(b) of the Internal Revenue Code. 

“Family members,” for purposes of the proposal, would include the transferor, ancestor and descendants of the transferor as well as the spouse of each family member. 

Stay Ahead of Trust and Estate Tax Changes

Themes of fairness and cracking down on what the Biden administration considers tax avoidance strategies by wealthy individuals figure prominently in this year’s Greenbook. 

The future of Biden’s fiscal year 2025 budget recommendations is highly uncertain. But proposed changes to grantor trusts, intrafamily asset transfers, and unrealized capital gains could have a major impact on how wealthy families approach estate and gift taxes and necessitate new and creative estate planning strategies. 

Thinking about the what-ifs of the 2025 Greenbook proposals can be a useful exercise for staying one step ahead of changes to the tax code. To review your estate plan and stay prepared for what could be coming, schedule a meeting with our tax and estate planning attorneys.