David S. Alexander

Senior Wealth Advisor

Planning to Protect Your Legacy

A vital part of comprehensive wealth planning is the estate plan. If you have invested the effort to define your goals, manage your cash flow, and save and invest toward your goals, it is important to consider what happens to your accumulated wealth at the end of your life. Questions to consider include:


  • How and when will my assets transfer to my family?
  • Will my charitable wishes be fulfilled?
  • What expenses or taxes will be due upon my death?
  • Who will handle the settlement of my estate?


These questions are addressed in your estate plan.

Overview of Basic Estate Planning

An estate plan is drafted by an attorney to facilitate the management and transfer of your assets in the event of your disability or death. Typical documents that could be part of an estate plan are a will, trust(s), financial and health care powers of attorney, and a living will.


How Assets Transfer at Death


Understanding how assets transfer to your heirs is key to the success of your estate plan. Assets transfer to heirs by four methods:


  • By Contract. A designated beneficiary receives assets at your death. Examples include retirement plans (401k, IRA) and life insurance.
  • By Law. A common example is an account titled “Joint Tenants with Rights of Survivorship.” The surviving account holder becomes the sole owner of the assets.
  • By Probate. Your will can be used to transfer assets not covered by contract, law, or trust. Examples include bequests or assets owned solely by the decedent.
  • By Trust. A trust may be funded with assets during life or via the terms of your will after death.
    Because of the many ways that assets can transfer to your heirs, it is important that the titling of your assets is coordinated with the terms of your will and/or trust. Without proper planning, the transfer of your assets may become complicated, resulting in delays, additional expenses, and unnecessary taxes.




A will is a legal document that permits a person, the testator, to declare how their estate is managed and distributed after death. A will is also used to name a guardian for minor children and, if needed, for the creation of trusts for the beneficiaries of the estate.


A will names an executor to settle the estate. The executor can be an individual or entity, such as a bank or trust company, qualified under state law to serve in that capacity. Some responsibilities of the executor include:


  • Filing the original will with the probate court;
  • Gathering, valuing, and safeguarding the assets of the decedent;
  • Paying debts and expenses of the estate;
  • Filing the final tax returns of the decedent and estate; and,
  • Distributing the estate assets.




A trust is a legal entity between three parties: the grantor (who funds the trust), the trustee (who administers the trust), and the beneficiaries (who receive benefits from the trust).


Duties of the trustee include:


  • Managing the assets of the trust;
  • Administering the trust distributions of income and principal to the beneficiaries;
  • Filing trust income tax returns; and,
  • Distributing assets to beneficiaries per vesting provisions or at trust termination.

Regularly Review & Update Your Estate Plan

Most individuals complete their estate plan as part of their comprehensive wealth plan. Unfortunately, some estate plans are not regularly reviewed and updated as needed. A good rule of thumb is to review your plan with your attorney every two to three years or whenever there is a significant change in your overall situation. Examples of significant changes include:


  • Marriage and/or children;
  • Permanent health changes for you or your family;
  • Financial events such as a new job, potential sale of a business, or inheritance; and,
  • Divorce or death of a spouse.


You should also periodically review the named executor of your will, trustee of any current or future trusts, and their successors. Consider the following:


  • If individuals are named in your estate plan, are they still willing and able to serve as executor and/or trustee? Circumstances change (e.g., age, moving away, lack of expertise) and the person you named may no longer be the best fit.
  • If corporate executors and trustees are named in your estate plan, or if they are serving as trustee of existing trusts, similar questions apply. Organizations change (e.g., mergers, service models, employee turnover), so include these entities in your review.

Upcoming Legislative Changes that May Affect Your Estate Plan

The Tax Cuts and Jobs Act of 2017 (TCJA) significantly increased the estate, gift, and generation-skipping tax exemptions for individual taxpayers. The 2017 law also allowed for annual increases to these amounts, based on inflation. The 2023 estate tax exemption now stands at $12,920,000 per individual. In other words, an individual could transfer almost $13 million dollars in assets to their heirs without incurring a federal estate tax.


Assuming no prior taxable gifts during their lives, a married couple would enjoy double the benefit with an ability to transfer just under $26 million to their heirs without any estate tax being due. A couple’s estate larger than $26 million would pay a federal estate tax of approximately 40% on the excess amount above the nearly $26 million exemption.


This large exemption amount means that most estates today will not owe federal estate taxes. There is, however, a catch. The current estate and gift law exemption amounts sunset at the end of 2025 back to pre-TCJA values adjusted for inflation. This could cause the exemption amount to be roughly cut in half to an approximate inflation-adjusted amount of $7 million per individual or $14 million for couples beginning in 2026.


Congress will likely postpone any changes or extensions of the estate and gift tax exemptions until the 2024 election. If divided government remains in place after the 2024 elections, the possibility of the sunset provisions kicking in certainly increases. In anticipation of that, families with a current net worth at or exceeding $12 million should schedule a review of their estate plans before the end of 2025 to consider if implementing estate-tax-saving techniques could benefit their heirs.

Advanced Estate Planning Strategies

The main objectives of advanced estate planning strategies are to:


  • Transfer wealth to heirs and/or charitable entities in a tax-efficient manner;
  • Reduce the taxable estate of the grantor to minimize or eliminate federal estate and state inheritance taxes; and,
  • Provide asset protection to beneficiaries from creditors, poor decision making, and lack of financial experience.


Some common planning strategies include:


Outright Gifts: Individuals in 2023 have an annual exclusion amount to give up to $17,000 to anyone other than a spouse or charity ($34,000 per donee for married couples who split gifts) without incurring any gift tax. Gifts above the annual exclusion amount are considered taxable unless the donor utilizes part of their lifetime exclusion amount by filing an IRS Form 709 gift tax return.


Charitable Split-Interest Gifts: A split interest gift divides the gift of assets into a portion for the donor (grantor) and a portion for a charity (remainder). Charitable remainder trusts (CRTs) and their variations, such as a CRUT (Charitable Remainder Unitrust), provide a payment back to the donor for their lifetime or a period of years with the remainder of the assets passing to charity at the end of term or death of the donor. A Charitable Lead Trust (CLT) reverses this structure, providing a payment for a period of years to the charity, with the remaining assets reverting to the donor or other beneficiary at the end of the term. These strategies may provide tax benefits in addition to meeting the donor’s charitable goals.


Transfer of Assets to an Irrevocable Trust: The transfer of assets to an irrevocable trust can occur during the life of the grantor or at their death. During the life of the grantor, most irrevocable trust strategies use gifts, sales of property, or a combination of the two in order to move assets into a trust. The primary goal in these situations is to transfer the future appreciation of those assets out of the estate of the grantor. This strategy is commonly known as an estate freeze. Because the grantor no longer owns the assets, any appreciation of those assets occurs outside of their estate and is not subject to estate taxes. Some examples of trusts funded during life include:


  • Grantor Retained Annuity Trusts (GRATs);
  • Qualified Personal Residence Trusts (QPRTs);
  • Spousal Lifetime Access Trusts (SLATs); and,
  • Intentionally Defective Grantor Trusts (IDGTs).


Transfers to irrevocable trusts after death occur via the terms of the decedent’s will or a revocable trust. The goals of these transfers are to provide asset management, protection for trust beneficiaries, and to reduce or eliminate estate taxes. Typical examples include:


  • Credit Shelter and Marital Trusts;
  • Trusts for children or grandchildren; and,
  • Special Needs Trusts.


These trusts allow the grantor to determine how the trust provides for the beneficiaries and when the assets are distributed. Common provisions within these trusts include protection from creditors (spendthrift) and limiting distributions to only family members.


Special Needs Trusts include provisions to ensure that the trust will not disqualify the beneficiary from receiving federal and state benefits.


Discounting Strategies: Family Limited Partnerships (FLPs), Limited Liability Companies (LLCs), and recapitalization of closely held businesses into voting and non-voting shares are strategies to obtain a valuation discount due to lack of control, marketability, or minority interest of the asset. These discounts enhance the ability for families (e.g., parents) to transfer assets to the next generation(s) (e.g., children and grandchildren) at favorable values for gift and estate planning purposes. These sophisticated strategies require legal and tax counsel and coordination with outside financial advisors to properly implement.


These strategies are not stand-alone ideas. Frequently, they are used in combination (e.g., discounting and gifts or sales to a trust) to achieve your objectives. The list of examples above is not comprehensive. There are additional techniques, such as wealth replacement with life insurance or private installment sales, that can also be used as part of your estate plan.

Will You Enjoy the Sunset?

Periodic review of your estate plan is important to ensure your legacy. Individuals and families approaching the current exemption or sunset exemption amounts should consider how the sunset provisions of the TCJA may impact them at the end of 2025.


If your net worth is near or exceeds the current exemption amounts of $12,920,000 per individual or $25,840,000 for couples, and you have a significant amount of your gift and estate exemption remaining, consider what planning should be done to utilize your higher exemption amount before the sunset occurs in 2025. Outright transfers or transfers via trust to your heirs before the sunset may result in significant estate tax savings down the road.
This is especially important if you own complex assets such as closely held businesses, investment real estate, and land. Planning for estates with complex assets takes extra time. Obtaining the asset valuations, evaluating business entities, making titling changes, and drafting the estate documents to execute the plan properly is a lengthy process.


If your net worth is approaching or at the sunset exemption amounts anticipated in 2025 ($7,000,000 individual or $14,000,000 for couples) and your assets are growing, then consideration should be given to what strategies can be implemented now to minimize estate and gift taxes. Proper use of the available exemption, estate freeze techniques, and gifting strategies can make a significant difference in the amount that passes to heirs or your charitable causes in a lower exemption environment.

Concluding Thoughts

Your estate plan is an essential element of your comprehensive wealth planning. Thoughtful consideration of the individuals and professional organizations you choose to execute your plan coupled with periodic reviews and updates of your plan can make a significant difference in maximizing your legacy. Consult with your wealth advisor to help you consider techniques and strategies that may be appropriate for you because the December 31, 2025 sunset is quickly approaching.



DISCLAIMER: The information provided in this piece should not be considered as a recommendation to buy, sell or hold any particular security. This report includes candid statements and observations regarding investment strategies, individual securities, and economic and market conditions; however, there is no guarantee that these statements, opinions, or forecasts will prove to be correct. Actual results may differ materially from those we anticipate. The views and strategies described in the piece may not be suitable to all readers and are subject to change without notice. You should not place undue reliance on forward-looking statements, which are current as of the date of this report. The information is not intended to provide and should not be relied on for accounting, legal, and tax advice or investment recommendations. Investing in stocks involves risk, including loss of principal. Past performance is not a guarantee of future results.


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