Back to InsightsBy Kyle Young, CFP®, CRPS®, ADPA®
Estate planning is one of the most important areas of wealth planning, touching on some of the most personal parts of life: family, health and the future.
At its core, an estate plan helps define what happens to your assets, who can make financial and healthcare decisions on your behalf, and how your wishes will be carried out. For individuals and families with significant wealth, that can involve trusts, taxes, businesses, property and charitable giving.
The topic, however, can be complex, contributing to delays in putting an estate plan in place. Even families with plans face questions about whether their documents are current, whether beneficiary designations and account ownership are consistent with them, and whether the plan still reflects their family and wishes.
At Pierstone, we understand the work that goes into building wealth and the importance of protecting it for today and tomorrow. We also recognize that every family is different, and we take the time to understand yours and make sure your estate plan reflects it.
Put the Foundation in Place
A complete estate plan may include a will, one or more trusts, powers of attorney, healthcare directives and current beneficiary designations. Each serves a different purpose.
A will establishes how certain assets should be distributed after your death and can address other important decisions, such as guardianship for minor children. A will, however, can be subject to probate, which generally makes it part of the public court record.
A properly established and funded revocable trust can allow assets to pass outside probate and generally remain private. It can also provide greater control over how assets are managed and distributed. For individuals and families who value privacy, particularly those with significant wealth, businesses or public profiles, that distinction can be important.
Powers of attorney and healthcare directives allow you to decide who can make decisions on your behalf if you become incapacitated and are unable to make them yourself.
In addition, beneficiary designations and asset titling deserve close attention, as I continue to see beneficiary forms that have not been updated in years, sometimes still naming a former partner from decades ago. Retirement accounts, insurance policies and certain other assets can pass according to these designations regardless of instructions in a will. Given the weight they can carry when assets are distributed, regular review is important.
Together, these pieces create the foundation. The next step is making sure they reflect your life.
Plan for Your Family
We live in one of the most dynamic periods in American life, with evolving ideas about what family means.
Families may include spouses or partners, children and stepchildren, aging parents, close friends or even a beloved pet. They can also include chosen family: the people we consider family regardless of bloodline or legal relationship. For many of us in the LGBTQ+ community, these relationships can hold an especially important place in our lives.
These changing dynamics have significant implications for family wealth and estate planning. A well-designed plan can help clearly identify the people you want to protect and the wishes you want carried out.
A blended family, for example, may need to balance the financial security of a surviving spouse with an inheritance intended for children from a previous marriage.
Today, 9% of U.S. adults identify as LGBTQ+, more than double the percentage when Gallup began tracking it in 2012.¹ Estate planning for LGBTQ+ individuals and families may need to account for spouses, unmarried partners, children, former spouses, chosen family, and other relationships, making it especially important to clearly document financial and healthcare authority, beneficiaries and how assets should pass.
Women may face different considerations following divorce, widowhood or an inheritance, particularly when assuming greater responsibility for wealth that had previously been managed jointly. McKinsey projects that assets controlled by women in the U.S. will grow from approximately $18 trillion in 2023 to $34 trillion by 2030². Beneficiaries, fiduciaries, account ownership and existing estate documents should reflect their current circumstances and wishes.
For a business owner, the estate plan may also need to address ownership, succession and what happens to an asset that could represent a significant portion of the family’s wealth.
Legacy can extend beyond family as well. You may want to support charitable causes and organizations, create opportunities for future generations or make provisions for the care of a beloved pet. An estate plan can help define how those wishes fit within the legacy you hope to leave.
Choose Your Trustee Carefully
Creating a trust also means deciding who will carry out its terms. Naming a family member or close friend may feel natural, but serving as a trustee comes with significant fiduciary and administrative responsibilities.
A trustee may need to administer assets, maintain records, make distributions, address tax and accounting requirements, communicate with beneficiaries and make difficult decisions while remaining impartial.
Family dynamics can make those responsibilities even more demanding. Consider a trust intended to provide for a second spouse during his or her lifetime while preserving assets for children from a previous marriage. Asking someone within the family to make distribution decisions can put that person in a difficult position.
For families with substantial or complex wealth, an independent professional or corporate trustee may be worth considering for the objectivity, continuity and administrative capabilities the role can require.
Keep Your Plan Current
An estate plan should change as your life changes, including marriage, divorce, remarriage, the birth or adoption of a child, the death of a spouse, an inheritance, the purchase of a house, a move to a new state, the sale of a business, new charitable interests or any significant change in wealth.
Changes in the law can be equally important. For example, I have met with several LGBTQ+ individuals and families whose estate plans were created before the Supreme Court’s 2015 decision recognizing same-sex marriage nationwide. Some of those plans included provisions designed for a time when same-sex couples did not have the same marriage recognition and related legal rights available today. Those plans deserve another look to determine whether the provisions still serve their intended purpose.
Moving to another state can also affect domicile, state estate or inheritance taxes, trust situs, governing law and fiduciary appointments.
The review should extend beyond the documents to make sure accounts and beneficiary designations remain consistent with the plan.
Regular reviews can help keep your estate plan current with changes in your life, as well as evolving federal and state laws.
Bringing the Pieces Together
Estate planning can involve attorneys, tax professionals, trustees and financial advisors, each with a different role. Advisors can help connect those pieces, and clients appear receptive to that involvement, with one study finding that 73% of investors use estate and trust planning when it is offered by their financial advisor.³
At Pierstone, we help clients simplify the process and connect their estate planning to their broader financial lives. That includes identifying areas that deserve attention, organizing financial information, reviewing beneficiary and ownership considerations, and coordinating with the legal and tax professionals responsible for developing and implementing the appropriate strategies.
We also help clients bring family members into the process when appropriate, clarify their wishes and prepare the people they care about for responsibilities that may eventually come with inherited wealth.
Your estate plan should reflect your wealth, your family, and your life. Putting the fundamentals in place, choosing the right people for important responsibilities, and keeping your plan current can help protect what you have built and give the people you care about greater clarity about your wishes and their future.
