Estate Planning
Wills, trusts, probate, powers of attorney, and wealth transfer planning.
Overview
Estate planning is the process of arranging for the management and distribution of a person's assets during their lifetime and after death. This area of law involves creating legal documents and structures to ensure that property is transferred according to the individual's wishes, minimize taxes and costs, protect assets, and plan for incapacity.
The core estate planning documents include a will (directing asset distribution at death), trusts (providing flexible management and distribution of assets), durable power of attorney (authorizing someone to handle financial affairs during incapacity), healthcare proxy or medical power of attorney (authorizing healthcare decisions), and a living will or advance directive (expressing end-of-life treatment preferences). Proper estate planning can avoid probate, reduce estate taxes, protect assets from creditors, and provide for minor children or dependents with special needs.
Probate is the court-supervised process of administering a deceased person's estate, including validating the will, inventorying assets, paying debts and taxes, and distributing remaining property to beneficiaries. Probate can be time-consuming and expensive, which is why many estate plans are designed to avoid it through the use of revocable living trusts, beneficiary designations, joint ownership, and transfer-on-death accounts.
Key Statutes
Uniform Probate Code
Adopted in ~18 states
Model legislation governing wills, trusts, estates, and probate administration, promoting uniformity across states.
Internal Revenue Code – Estate and Gift Tax
26 U.S.C. §§ 2001-2801
Federal estate tax (40% rate above exemption), gift tax (unified with estate tax), and generation-skipping transfer tax provisions.
Uniform Trust Code
Adopted in ~35 states
Comprehensive model legislation governing the creation, modification, and administration of trusts.
Employee Retirement Income Security Act (ERISA)
29 U.S.C. § 1001 et seq.
Governs beneficiary designations and distribution of employer-sponsored retirement benefits, often preempting state law.
Key Cases
Shelley v. Kraemer
334 U.S. 1 (1948)
Held that judicial enforcement of racially restrictive covenants in property deeds constitutes state action violating the Equal Protection Clause.
Estate of Kuralt
15 P.3d 931 (Mont. 2000)
Addressed the validity of a holographic (handwritten) will in the context of Charles Kuralt's estate dispute.
Hillman v. Maretta
569 U.S. 483 (2013)
Held that ERISA preempts state laws that would redirect life insurance proceeds away from the named beneficiary.
Key Regulations
IRS Estate Tax Regulations
Internal Revenue Service
Detailed regulations interpreting estate and gift tax provisions, valuation rules, and filing requirements.
Uniform Principal and Income Act
Uniform Law Commission
Model legislation governing the allocation of receipts and expenses between income beneficiaries and remainder beneficiaries of trusts.
Common Forms
Frequently Asked Questions
What is the difference between a will and a trust?
A will takes effect only at death and must go through probate. A trust can take effect during life and continue after death, avoiding probate for trust assets. A revocable living trust allows the grantor to maintain control during life, provides privacy (unlike wills which become public), and enables seamless management during incapacity. A will is simpler and less expensive to create, but a trust offers more flexibility and privacy.
What is probate and how can I avoid it?
Probate is the court process for validating a will and distributing a deceased person's estate. It can take 6 months to 2+ years and costs 2-5% of the estate in fees. Probate avoidance strategies include creating a revocable living trust, using beneficiary designations on accounts and insurance, holding property in joint tenancy with right of survivorship, and using transfer-on-death (TOD) or payable-on-death (POD) designations.
What is the federal estate tax exemption?
The federal estate tax exemption is $13.61 million per individual (2024), meaning estates below this threshold owe no federal estate tax. Married couples can effectively shield $27.22 million. The 40% estate tax rate applies to amounts above the exemption. The current high exemption under the TCJA is scheduled to be cut roughly in half after 2025 unless Congress acts. Some states also impose their own estate or inheritance taxes with lower exemptions.
What is a power of attorney?
A power of attorney (POA) is a legal document authorizing another person (the 'agent' or 'attorney-in-fact') to act on your behalf. A financial POA covers financial transactions. A healthcare POA (or healthcare proxy) covers medical decisions. A 'durable' POA remains effective if you become incapacitated. A 'springing' POA only takes effect upon incapacity. POAs are essential estate planning documents for managing affairs during disability.
Recent Developments
Estate planning law is in a period of significant uncertainty due to the scheduled reduction of the federal estate tax exemption at the end of 2025 under the TCJA sunset provisions. Estate planners are advising clients to make gifts before the exemption potentially decreases. Other developments include growing use of digital estate planning (covering cryptocurrency, social media accounts, and digital assets), the SECURE Act's changes to inherited IRA distribution rules, and increasing state adoption of directed trust and trust decanting statutes. Asset protection trusts (domestic and offshore) continue to generate litigation and legislative attention.
State Variations
Estate planning law varies significantly by state. Community property states treat marital assets differently than common law states for estate purposes. State estate tax exemptions range from $1 million (Oregon, Massachusetts) to matching the federal exemption, and six states impose inheritance taxes on beneficiaries. Trust law varies in terms of rule against perpetuities (some states have abolished it, creating 'dynasty trusts'), directed trust provisions, and trust modification procedures. State laws on will execution formalities, holographic wills, and elective share rights for surviving spouses also differ substantially.