Paul O. Dillon, Attorney at Law

The Coming ‘Great Wealth Transfer’ and Estate Planning

As a huge number of baby boomers turn 65 from now through 2027, most people should be thinking about managing their money amid the so-called “great wealth transfer,” when as much as $72 trillion is expected to move from one generation to the next. A recent article from MarketWatch, “As a $72 trillion ‘great wealth transfer’ is set to begin, here are 4 estate-planning rules to follow,” offers some tips.

Every adult should have a last will and testament and a financial power of attorney, so someone can manage their financial affairs if they become incapacitated. You’ll also need a healthcare proxy to name a person who can make medical decisions on your behalf.

Update beneficiary designations on 401(k)s, investment accounts and any financial accounts naming a beneficiary. Whatever is on those documents supersedes trusts and wills. These should be reviewed every few years or after any major life events like marriage, divorce, the birth of new children or grandchildren, or the death of a beneficiary.

Secure your important documents and make sure your executor, trustee and a trusted family member know where they are. The executor should also have contact information for your estate planning attorney, CPA and financial advisor.

Review your overall estate plan every three to five years. If your estate plan was created when your  children were minors and now they’re adults, it’s time to revisit your estate plan.

A will alone might work for a simple estate. However, if you have complicated finances or significant wealth, you should talk with your estate planning attorney about a Revocable Living Trust. Putting assets into trusts allows assets to pass to beneficiaries without going through probate, which is often expensive and time-consuming. Once the trust is established, you’ll need to fund it by retitling assets, so they are taken out of your estate and owned by the trust.

Wills, trusts and estate planning documents should be reviewed and updated on three occasions: every three to five years if your life doesn’t change much, every time there is a major event in your life, commonly called a “trigger” event and whenever there is a large change to tax laws.

The estate planning community is now preparing for the possible end of the Tax Cuts and Jobs Act of 2017, which raised the federal estate and gift tax exemptions to historically high levels. Unless the rule is extended, on January 1, 2026, these limits will return to previous amounts, with estates around $7 million subject to federal estate taxes. If your wealth is near the $7 million mark and you haven’t met with your estate planning attorney to prepare for this potential change, now is the time to make an appointment.

Once your estate plan is up to date, it’s a good idea to have conversations with family members, the people you’ve named as executors, power of attorneys and beneficiaries. If you have a plan but haven’t shared it with children or heirs, it could lead to family fights, even leading to litigation.

Your estate planning attorney will help create an estate plan to meet your needs and protect your loved ones. It’s a task to tackle sooner, rather than later.

Reference: MarketWatch (April 3, 2025) “As a $72 trillion ‘great wealth transfer’ is set to begin, here are 4 estate-planning rules to follow”

How to Address Cryptocurrency in Your Estate Plan

Cryptocurrency has become an increasingly prevalent part of personal wealth. This new asset class requires traditional tools, like wills and trusts, to be updated to account for the decentralized nature of digital assets. The many stories of people who lost millions, because they didn’t secure their own crypto, should serve as a warning to anyone who wants to bequeath their digital wealth. What to do is addressed in a recent article from Kiplinger, “Heirs Inheriting Crypto? Don’t Make It a Headache for Them.”

Probate is a genuine concern for crypto. Probate is the process of a court validating a will and distributing assets. It often takes a long time and can be expensive. The volatility of crypto makes the lengthy process of probate a serious concern. Delays in probate could create dramatic losses.

Access to cryptocurrency is another challenge. Ownership of digital assets is tied to private keys. A lost key means lost wealth. Since crypto, like Bitcoin or Ethereum, are decentralized and operate on blockchain technology. As a result, there’s no financial or trading institution to call for help. If the access is lost, so is the asset.

With traditional assets, designating beneficiaries is the simplest way to pass assets directly to heirs and skip probate entirely. To do this with crypto, you must log into your account and see if the platform allows beneficiary designations.

Some cryptocurrencies call this a Transfer on Death or TOD form. Fill out the form correctly and keep hard and digital copies for your records. Even if you never print any other documents, you may want to print these and keep them in a secure location.

Digital wallets are also part of crypto estate planning. Digital wallets store private keys required to access, send and receive digital assets. Some digital wallets don’t offer beneficiary designations, so you’ll need to be very diligent about keeping a record of access credentials and secure private keys.

You’ll need to include detailed instructions on accessing a digital wallet, including passwords, recovery phrases, or locations of physical devices, including your phone, tablet, or computer. Consider using an encrypted file or hardware wallet for private keys. Custodial services are available. However, be sure they offer the security you need.

Estate planning attorneys may recommend using a trust for digital assets to be sure that they are managed and transferred without court involvement. Your estate planning attorney will explain how a revocable living trust may help you retain control of your crypto while you are living and provide directions for how you want it to be distributed after your death.

Just as you need to fund the trust by retitling assets for a traditional asset, you’ll need to move your cryptocurrency to a wallet owned by the trust. You may need to create a new wallet under the trust’s name if you can’t transfer funds to an existing wallet.

The trust will need a successor trustee. This trustee must know how private keys and recovery works for digital assets. They’ll oversee keeping your private keys and other information safe and how to access wallets or exchanges holding your wealth.

Your will should not include account numbers or wallet addresses, as they become part of the public record during probate. You’ll need another document to contain the information for your trustee to access the digital assets. If you own crypto or less well-known types of digital assets, providing access information and specific directions will be even more critical.

Speak with an estate planning attorney who has experience with digital assets. They’ll help you protect these assets, so they aren’t lost if the unexpected should occur.

Reference: Kiplinger (Feb. 16, 2025) “Heirs Inheriting Crypto? Don’t Make It a Headache for Them”

What Kind of Trust Helps a Family with Young Children?

Trusts are not just for wealthy people. They are used when a family has young children and wishes to ensure that there is a plan in place to care for the children in case the parents die or become incapacitated. A recent article from Business Insider, “I asked an estate planning attorney the best way to establish a trust for my 2-year-old daughter,” explains what parents can do to protect their youngest loved ones.

There are a few different trusts to consider, depending on your situation:

Revocable Living Trust. The revocable trust is the most flexible. It is a separate legal entity with language directing how assets will be used for different scenarios. For instance, if someone dies or becomes disabled and their beneficiaries are all children, the trustee will manage and allocate necessary financial resources to support the children. Many estate planning attorneys consider a trust even more important than a will, since it doesn’t require the estate to be settled before trustees can access the assets.

An IRA Trust. You may want to consider creating an IRA trust if you own an IRA. This allows a minor child to be the beneficiary of the retirement account. On the death of the IRA owner, assets go into the trust, which has a trustee who manages the asset until the person comes of age or whenever the original owner wants them to receive the money.

When a regular IRA account is left to a minor, the family must petition the court to obtain a court-appointed guardian to manage the account until the minor is of legal age. With an IRA trust, you’ve clarified who the trustee should be and when the child will receive the money. If the money is not needed and can remain in the trust, it is a protected asset for their future.

A Trust for Minors. This allows you to leave assets to a child until they reach a certain age, which you articulate in the trust. You can leave all or a portion of the money to the beneficiary to be distributed when you feel they can manage it. You decide when to release the funds, who the trustee should be, the rules for how the money is to be spent and when the minor may receive income.

An Education Trust. In addition to creating a 529 College Account for a minor child, it’s a good idea to create an Education Trust to be sure the funds will be used for education. You can assign a certain amount for education and state the age you’d like the beneficiary to receive any leftover funds.

An estate planning attorney can help you create a plan for your children or grandchildren to ensure that they have the funds they need in case of tragedy and place guardrails on the money so it’s protected.

Reference: Business Insider (Jan. 31, 2025) “I asked an estate planning attorney the best way to establish a trust for my 2-year-old daughter”

Why Estate Planning Is Essential for Small Business Owners

Estate planning should be a top priority for anyone who has built and grown a successful small business, especially if they intend to build generational wealth and create a legacy. The title of a recent article from Business Insider says it all: “You might not want to think about estate planning, but as a financial planner, I know it’s essential for small-business owners.”

There are more complex issues for business owners than employees for estate planning. Therefore, be sure to work with an experienced estate planning attorney who will create a plan to protect you, your family and your business. As you go through the process, keep these basics in mind:

Last Will and Testament. This document is the foundation of an estate plan, providing directions to the state probate court regarding your wishes for distributing assets. It also names a guardian responsible for minor children upon your passing. If you don’t have a will, assets are distributed according to your state’s intestacy laws, typically based on kinship. You can update and change your will throughout your lifetime, and it should be reviewed every three to five years.

Revocable Living Trust. Having a revocable living trust gives you more control over assets, which could be necessary to distribute business assets. A revocable living trust can be altered while you are living, so changes in your business can be reflected in the directions in the trust.

Financial Power of Attorney. This document is critical if you are the business owner who performs most of the financial tasks of your business. When a business owner becomes incapacitated, having someone named Power of Attorney gives the POA the ability to pay bills, make bank deposits and withdrawals, file business and personal taxes and make any other financial decisions you wish. POA can be limited if you only want someone to pay bills, or they can be broad, allowing the agent to do anything you would do to keep the business running while you are incapacitated. Your estate planning attorney can craft a POA to suit your needs.

Business Succession Plan. A business succession plan should be in place as soon as your business gains traction and becomes successful. Distributing shares of the business after you pass is fine. However, what if your heirs don’t have a clue how the business works? Do you want them to sell it after you pass or maintain it for the next generation? A succession plan requires the help of an estate planning attorney, CPA and financial professionals to create a management team, define roles, set performance guidelines, etc.

Digital Estate Plan. We spend so much time online. However, few have plans for our digital assets. If your business is online, has a website, and uses social media, online finances, and cell phones, you need a digital estate plan to identify assets and provide instructions on what you want to be done with those assets after you have passed.

Review Beneficiary Designations. Any account that can name a beneficiary, such as retirement plans, investment accounts, or life insurance policies, must be reviewed every few years or whenever a trigger event, including birth, death, divorce, or remarriage. Upon your passing, these assets will be passed directly to the beneficiary. Be sure the person you named twenty years ago on your life insurance policy is still the right person to receive proceeds upon your passing.

An experienced estate planning attorney can review your current estate plan to ensure that it covers all bases for you and your business.

Reference: Business Insider (March 22, 2024) “You might not want to think about estate planning, but as a financial planner, I know it’s essential for small-business owners”

Do I Need a Pour-Over Will?

A living trust, also known as a revocable trust, is used in estate planning to transfer ownership of assets in trusts and accomplishes several things. It takes assets out of your probate estate, while permitting you to continue to control the assets. You can be the trustee while living and of sound mind, as explained in the article “What Is A Pour Over Will?” from Forbes. The trust names a backup or successor trustee who manages the trust assets if you become incapacitated or die. The living trust includes the names of your beneficiaries, which may be individuals or charitable organizations.

When you die, assets held in the living trust are transferred using the trust administration process. Assets held (owned) outside the trust must be addressed differently. This usually means going through probate.

If you have no will, your state's intestacy laws will apply. These laws would distribute your assets to family members based on their relationship to you—kinship. This may not be what you wanted, especially if a family member is estranged from you. However, it won’t matter, and other family members will have to live with the court’s decision.

However, you can use a pour-over will to “pour over” any assets not in the trust at the time of your death into the trust after your passing. This ensures that the assets will be transferred through the trust administration as well.

When the living trust is established, assets must be retitled so the trust becomes the legal owner. But you might not do this with everything you own, or you may acquire assets after the trust is created and die before you can transfer them. You might simply forget some assets.

As you create a trust for the specific reason to facilitate effective management and transfer of property through the trust administration process, it makes sense to have all your property moved into that trust upon your passing.

An experienced estate planning attorney can help create the living trust and coordinate it with your will and instructions for all assets not otherwise accounted for to pass into the trust upon your death. You’ll need to work with an estate planning attorney to be sure the trust, will and other estate planning documents comply with your state’s laws.

An estate planning attorney can help you understand other options for transferring assets and provision for loved ones. The pour-over will is one of many estate planning tools available to protect your loved ones.

Reference: Forbes (Jan. 29, 2024) “What Is A Pour Over Will?”

Do You Know How to Probate an Estate?

Being asked to serve as an executor is flattering, as it shows someone you love trusts you enough to put you in charge of managing their estate. However, probating an estate is no simple task, says a recent article from The Mercury, “Planning Ahead: Do you really want to handle probating an estate on your own?”

Having an experienced estate planning attorney help with probate may be the difference between years of headaches and a few months of involvement, but not being overwhelmed with finalizing your loved one’s estate.

First, do you have time or energy to deal with many different bureaucracies? Financial institutions, insurance companies, annuity providers, governmental entities and other entities can be challenging.

Next, are you familiar with the laws, procedures and tax laws in Aunt Lucy’s state? If she lived in your state, you’re about to learn how your state works. If she lives in another state, you’ll need to learn a lot about how an estate is settled in a place you might never have been. However, you may need to travel to and take care of Aunt Lucy’s estate.

If your aunt owned property in more than one jurisdiction, being her executor may require you to become involved in a process called “ancillary probate,” where assets need to be transferred into the names of the beneficiaries listed in her will. You might need to work with an estate planning attorney from Aunt Lucy’s state to get this done.

Another consideration: are you prepared to navigate the family dynamics? This may not be too bad if you are Great Aunt Lucy’s only heir. However, you may become embroiled in family spats if your aunt had a family of children, grandchildren and great-grandchildren. If the family members are contentious, you may deal with more than bureaucracies.

A few other things you’ll need to know:

Some states have an estate tax, while others have an inheritance tax. Even if there’s no federal estate tax due on the estate, you’ll need to address these two taxes.

The inheritance tax follows the jurisdiction of the decedent, not the beneficiary. If the state has an inheritance tax, it doesn’t matter if you live out of state. Heirs still must pay the tax.

Non-probate property may still be taxed. In some states, like Pennsylvania, property passed through a Revocable Living Trust is still taxable for the state’s inheritance tax. So is property passing as “Payable on Death” (POD) or Transfer on Death (TOD). Jointly titled assets are taxable at a proportionate share of the value.

These details are just a few reasons an experienced estate planning attorney brings value to the estate. It’s not easy for a layperson to settle an estate without the help of skilled professionals.

Reference: The Mercury (Jan. 31, 2024) “Planning Ahead: Do you really want to handle probating an estate on your own?”

Estate Planning When a Loved One Needs Hospice Care

Many families discover their loved ones haven’t done any estate planning, only when moving a parent into hospice. Whether or not any last-minute estate planning can be done depends upon the loved one’s condition, explains the article “The Challenge of Last Minute Estate Planning” from HomeCare.

If they cannot speak for themselves and do not have a Power of Attorney prepared, last-minute planning is no longer an option. If they can speak for themselves, there may be time to complete a few tasks to make things easier for surviving family members. The family should immediately seek guidance from an experienced estate planning attorney. Here are the steps to be implemented.

Create or update the will. If there is no will, have one created as soon as possible. If one exists, it needs to be reviewed and updated. Use this opportunity to communicate their wishes with family members and others to prevent misunderstandings.

Designate beneficiaries. Ensure that all accounts (bank, retirement, life insurance policies, trusts) have updated designated beneficiaries.

Consider a Revocable Living Trust. If time permits, a revocable trust could be considered for certain assets to take them out of the probate estate and provide flexibility in managing the estate.

Power of Attorney and Healthcare Proxy. They’ll need to designate someone they trust to make financial and healthcare decisions on their behalf.

Guardianship for minor children. If the person entering hospice has minor children, they can designate a guardian in their will to ensure the children’s care and well-being. Someone who is terminally ill at a young age usually has thought about who they want to care for their children. However, this needs to be put into the will.

Emergency document kit. It’s a good idea to prepare a document kit including important information, including a list of assets, passwords, insurance policies and contact information for the estate planning attorney, CPA and financial advisor. Keep these documents in a secure and accessible location.

Digital assets. Create a list of assets, including user logins, passwords and the nature of the digital asset. Include instructions for managing or transferring digital assets, including social media, email and online accounts. There are ways to create legacy contacts for social media, so the accounts can be memorialized or shut down in the future.

Discuss and finalize important decisions. Wishes about end-of-life care are more important than ever. Do they want to be kept alive by artificial means, or is pain management their primary concern? If possible, have these discussions in a supportive and loving manner. A hospice counselor or death doula may be helpful.

Ideally, estate planning should be done long before hospice becomes necessary to ensure that the estate is handled correctly, and a person’s wishes are followed. When last-minute estate planning is needed, it’s critical to collaborate with an experienced estate planning attorney.

Reference: HomeCare (Jan. 16, 2024) “The Challenge of Last Minute Estate Planning”

How Does a Pour-Over Will Work?

A Revocable Living Trust allows a married couple or a single person to direct what they wish to happen to their possessions after death. It also indicates who will be in charge of carrying out their instructions without the involvement of a probate court, explains a recent article from Coeur d’Alene/Post Falls Press, “If you have a living trust, you also need a pour-over will.”

It should be noted that the Revocable Living Trust instructions only apply to assets placed into the Trust, referred to as “funding the trust.” This crucial step must occur as soon as the trust is created. Your estate planning attorney can help you get your assets into the trust. However, if you acquire any new assets over time, they, too, must be placed into the trust.

If you don’t remember to put them into the trust, they become part of your probate estate unless you take steps to prevent this from happening.

If you don’t have a will and assets are not included in your Revocable Living Trust, your assets will be distributed according to your state’s laws. This is probably not what you thought when you created the Revocable Living Trust.

However, this is a problem with a solution. Your estate planning attorney needs to create what is referred to as a “Pour-Over Will.” This type of will differs from a traditional one because it includes specific instructions to place any assets not already in your trust into your trust as soon as possible.

This type of will must go through the probate process. However, probate will only apply to assets left out of the trust. Having most of your assets inside the Revocable Living Trust will help probate to be less arduous for all concerned.

The goal of using a Revocable Living Trust is to avoid probate altogether. Therefore, combining the Revocable Living Trust with a Pour-Over Will adds another layer of protection all trust users should have in place.

If you are a parent with minor children, you should have had a will created by an experienced estate planning attorney as soon as your children were born. The will is used to name the person or people who you want to serve as guardians for your minor child or children if both of the child’s parents are deceased or unavailable to act as parents.

Without this provision in your will, a court will determine who will raise your child. Will it be the person you would have chosen? There’s no way to know unless you put this information into your will.

These details in estate planning go a long way in protecting your family and ensuring that your wishes are carried out.

Reference: Coeur d’Alene/Post Falls Press (Nov. 29, 2023) “If you have a living trust, you also need a pour-over will”

Revocable Living Trust can Help with Planning for Incapacity

Planning for potential disability and mental incapacity is part of a comprehensive estate plan. Women, in particular, are at a higher risk of becoming disabled, with 44% of women 65 and older having a disability. Most people understand the value of an estate plan. Nevertheless, few know how to use a Revocable Living Trust, or RLT, when planning for incapacity, as explained in the article “Incapacity Planning: The Hidden Power Of A Revocable Trust” from Financial Advisor.

Revocable Living Trusts are highly effective tools to protect assets against failing capacity. Although everyone should have both, they can be more powerful and efficient than a financial Power of Attorney. An RLT offers the freedom and flexibility to manage your assets while you can and provides a safety net if you lose capacity by naming a co-trustee who can immediately and easily step in and manage the assets.

Cognitive decline manifests in various ways. Incapacity is not always readily determined, so the trust must include a strong provision detailing when the co-trustee is empowered to take over. It’s common to require a medical professional to determine incapacity. However, what happens if a person suffering cognitive decline resists seeing a doctor, especially if they feel their autonomy is at risk?

Do you need an RLT if you already have a financial Power of Attorney? Yes, for several reasons.

You can express your intentions regarding the management and use of trust assets through the trust. A POA typically authorizes the agent to act on your behalf without specific direction or guidance. A POA authorizes someone to act on your behalf with financial transactions, such as selling a home, representing you and signing documents. The co-trustee is the only one with access to assets owned by the trust, while the POA can manage assets outside of the trust. Having both the POA and RLT is the best option.

Trustees are often viewed as more credible than a POA because RLTs are created with attorney involvement. POAs are often involved in lawsuits for fraud and elder abuse.

Suppose there is an instance of fraud or identity theft. In that case, RLTs provide another layer of protection, since the trust has its own taxpayer ID independent of your taxpayer ID and Social Security number.

Your co-trustee can be the same person as your POA.

Adding a trusted family member as a joint owner to accounts and property provides some protection without the expense of creating a trust. However, it does not create a fiduciary obligation, enforceable by law, for the joint owner to act in the original owner’s best interest. Only POAs or trustees are bound by this requirement.

Once a POA is in place, it is wise to share it with all institutions holding accounts. Most of them require a review and approval process before accepting a POA. Don’t wait until it’s needed, when it will be too late because of incapacity, to have a new one created.

Talk with your estate planning attorney about planning to create an RLT and POA to ensure that your assets will be protected in case of incapacity.

Reference: Financial Advisor (Oct. 18, 2023) “Incapacity Planning: The Hidden Power Of A Revocable Trust”

What Is a ‘Residuary’ Estate?

This is also known as estate residue or residual estate. It simply means the assets left over after a will has been read, assets have been distributed to heirs and any final expenses have been paid. An estate planning attorney can help avoid leaving residual assets behind, with a comprehensive estate plan, reports a recent article titled “How to Write a Residuary Estate Clause in a Will” from yahoo!

A will is a legal document used to name guardians for minor children and providing directions for how you want assets to be distributed when you pass. Any assets not included in your will or distributed through a trust automatically become part of the residuary estate on your death.

This can happen deliberately or unintentionally. For example, your will can state your wishes to have certain assets left to certain people. However, your will could also include a residual estate clause explaining what should happen to any assets not already named in the will. In this case, you’re intentionally creating a residual estate, and planning for it at the time of the will’s creation.

Some residual estates are created without advance planning. Here’s how that happens:

• If you forget to include assets in your will.
• If you acquired new assets after drafting a will and do not add a codicil making provision for the distribution of the assets.
• Someone named in the will dies before you or is unable to receive the inheritance you left for them.

This can also happen if you set up a Payable On Death (POD) account but neglect to add a beneficiary to the account. Any funds in the account would be lumped into the residual estate.

What happens if you draft a will and don’t have a residuary estate clause? Any unclaimed or overlooked assets will be distributed, according to your state’s inheritance guidelines. However, this is only done after any estate taxes, outstanding debts or final expenses have been paid. Assets would be distributed as if you did not have a will. Heirs at law would receive assets according to kinship, including spouse, children, parents, siblings and other relatives.

How does a trust work in relation to a residual estate? Trusts are legal entities allowing you to transfer assets to a trustee. The trustee is responsible for managing assets on behalf of the trust for beneficiaries according to your wishes. You may want to establish a trust if you have a substantial estate, want to plan for a family member with special needs or if you wish to create a charitable giving legacy.

Speak with an experienced estate planning attorney to determine whether your will should have a residual clause and what assets should be included. The estate planning attorney will also be able to determine whether you need additional estate planning strategies, including a revocable living trust.

Reference: yahoo! (Dec. 4, 2022) “How to Write a Residuary Estate Clause in a Will”