Estate planning is evolving rapidly, driven by legal updates, tax law changes, and new strategies for protecting assets and ensuring a seamless transfer of wealth. From digital estate planning to evolving tax regulations, understanding these estate planning trends is crucial for maintaining a comprehensive and effective estate strategy.
At Robbins Estate Law, we focus on helping clients navigate estate planning and probate. Our experienced team stays ahead of estate planning trends to provide informed guidance and ensure our clients’ estate plans align with the latest laws and best practices. Contact us to learn more about how to take advantage of these developments.
Trends We Cover:
- Increased Focus on Digital Asset Estate Planning
- Changes in Tax Laws
- The Rise of Irrevocable Trusts for Asset Protection
- Emphasis on Long-Term Care and Medicaid Planning
- Estate Planning for Blended Families and Non-Traditional Heirs
1. Increased Focus on Digital Asset Estate Planning
As more aspects of daily life move online, digital asset estate planning has become essential to any comprehensive estate plan. Ensuring that individuals can access and manage digital assets after you are gone is an essential part of estate planning in modern life.
Types of Digital Assets
Digital assets can take many forms, each requiring plans to ensure proper management after the owner’s passing. These include:
- Cryptocurrency,
- Social media accounts,
- Online financial accounts,
- Cloud-stored data, and
- Non-fungible tokens (NFTs) or digital collectibles
These accounts also bring unique privacy concerns. The legal landscape surrounding digital assets continues to evolve, and some platforms restrict posthumous access through terms of service agreements.
Incorporating Digital Assets into an Estate Plan
- To plan for handling digital assets, you can:
- Designate a digital executor to manage digital assets after death;
- Maintain a secure inventory of digital assets, including login credentials and security keys; and
- Include clear instructions on accessing and managing these assets in estate planning documents.
Incorporating digital assets into your estate plan enables you to account for modern life.
2. Changes in Tax Laws
Changes to tax laws can significantly impact estate planning strategies, especially for high-net-worth individuals. Not addressing these changes can lead to increased tax burdens, reduced inheritances, or the need for costly revisions to existing plans. On the other hand, proactive planning can help maximize exemptions, reduce liabilities, and ensure effective asset transfer.
Tax Changes
The federal estate tax exemption—the amount of an estate not subject to federal estate taxes—has fluctuated in recent years. The exemption is scheduled to revert to pre-2016 levels in 2026, meaning individuals may need to adjust existing plans to adapt.
Texas does not impose estate or inheritance tax, making it attractive for estate planning. However, individuals with property or business interests in other states may need to address state law changes in those states.
Minimizing Tax Liabilities
Individuals can work to minimize estate tax liabilities by:
- Implementing lifetime gifting strategies;
- Using trusts, such as irrevocable life insurance trusts (ILITs) that keep life insurance proceeds out of the taxable estate; and
- Lifetime and estate-centered charitable giving.
By incorporating these strategies, individuals can maximize wealth preservation while complying with evolving tax laws.
3. The Rise of Irrevocable Trusts for Asset Protection
Irrevocable trusts have become a popular tool for protecting assets and providing for loved ones. These trusts offer asset protection, reduce tax burdens, and help ensure the distribution of estate assets according to the grantor’s wishes.
Benefits of Asset Protection Trusts
Depending on how they are structured, irrevocable trusts provide many advantages, including:
- Protection from creditors and legal judgments,
- Reduction of estate tax burdens, and
- Preservation of assets for heirs.
These benefits make irrevocable trusts a valuable estate planning tool.
Irrevocable Trust Structures
In general terms, irrevocable trusts offer long-term asset protection and tax efficiency. Yet, different types of irrevocable trusts serve distinct purposes, such as:
- Asset protection trusts (APTs) safeguard assets from creditors and legal claims,
- Medicaid asset protection trusts (MAPTs) allow individuals to qualify for Medicaid while preserving assets, and
- Dynasty trusts enable multi-generational wealth transfer with tax advantages.
Strategically using trusts allows you to create more flexible and practical estate plans.
4. Emphasis on Long-Term Care and Medicaid Planning
With rising healthcare costs, long-term care planning is crucial to a well-rounded estate strategy. As of 2023, the average cost of a private room in a nursing home was more than $100,000 per year, and costs continue to rise.
Medicaid Eligibility
Medicaid eligibility requires strict income and asset limits. When planning for Medicaid eligibility, consider:
- Look-back periods. Medicaid reviews financial transactions from the past five years to determine eligibility, and transfers can result in ineligibility for a specific period.
- Asset and income limits. Applicants must meet specific financial thresholds, but certain assets, like primary residences, may be exempt.
- Spend-down strategies. Individuals may legally reduce their countable assets through carefully executed strategies.
In the modern age, estate planning involves considering how to qualify for Medicaid long-term care coverage without losing assets.
Planning for Long-Term Care Costs
Long-term care expenses can quickly deplete an individual’s assets. Estate planning strategies can help reduce these costs through:
- Long-term care insurance,
- Hybrid insurance plans that combine life insurance with long-term care benefits,
- MAPTs, and
- Medicaid income protection trusts.
Individuals should assess their healthcare needs and select the most suitable planning option.
5. Estate Planning for Blended Families and Non-Traditional Heirs
Blended families, unmarried partners, and non-traditional heirs—individuals not related to the deceased person by blood or marriage—have become more common over the years. As a result, planning for stepchildren, friends, and other loved ones to inherit has become increasingly important. State laws, however, still default to family members taking ownership of a person’s property after they die in the absence of an estate plan, making creating a comprehensive plan essential.
Let Us Help
Estate planning is an ever-evolving field, and staying informed about estate planning trends is crucial to protect your loved ones. Robbins Estate Law does just that. We can guide you through implementing the newest strategies to help you protect your loved ones even after you are gone. Whether you need to update your estate plan to reflect recent tax law changes, secure your digital assets, or create a trust for future generations, Robbins Estate Law is here to help. Contact us today to schedule a consultation.
Kyle Robbins
Kyle Robbins is the founder and sole owner of The Law
Offices of Kyle Robbins. He received his J.D. with honors from the University of Texas School of Law and his B.S. in Food Chemistry and Microbiology from Oklahoma State University.
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