Navigating The Evolving US Estate Planning Landscape
FAMILY WEALTH REPORT- Among the topics covered here are the pros and cons of using large firms and boutiques to provide advice and solutions for estate planning
Estate planning, traditionally viewed as a static legal domain, has evolved into a vibrant field marked by substantial transformations in recent years. These changes are propelled by updates in legislation, technological advancements, and shifts in societal norms. As a trust and estates attorney, I closely monitor these trends and understand the significance of staying abreast to offer superior service to my clients. Here are the key topics in contemporary estate planning and the advantages of engaging with either large or boutique law firms.
Tax regulations and exemptions
A critical issue in estate planning is the potential expiration of provisions from the Tax Cuts and Jobs Act by the close of 2025 (1). The heightened estate and gift tax exemption, presently at $12.92 million per individual, is slated to revert to the previous threshold of $5.6 million ($6.2 million adjusted for inflation). This reduction in the exemption will have a profound impact on numerous estate plans.
Professionals in estate planning are recommending that clients evaluate the ramifications of these alterations, including the opportunity to make substantial gifts now to leverage the existing exemption levels but in such a way that funds can be recovered if, as in 2016, the sunset provisions are repealed.
Digital estate planning
The digitalization of the estate planning sector is an emerging trend. Several states are adopting laws on digital estate planning, facilitating digital notarization and the management of digital assets like cryptocurrencies and social media accounts (2). This transition may enhance the accessibility and security of estate planning, although the industry awaits full alignment of laws with these technological advancements.
Inclusivity and accessibility
A troubling trend is the decrease in estate planning participation among older Americans, particularly within Black and Hispanic communities (3). This underscores the urgency of raising awareness and providing support for estate planning in these demographics. The industry acknowledges the necessity of fostering greater inclusivity and accessibility in estate planning for individuals of all wealth levels.
The significance of flexibility
Amid the potential shifts in legislation and life's inherent unpredictability, flexibility within estate planning proves indispensable (4). Professionals stress the need for adaptive plans that can accommodate legal modifications and personal changes. This involves leveraging trusts with adaptable features and analyzing diverse scenarios during the planning phase and always having a “plan B” in case “plan A” does not work.
Navigating digital assets
In an increasingly digital world, it is imperative to contemplate the posthumous management of digital assets. This encompasses ensuring access to these assets and determining their distribution. Handling digital assets is progressively becoming a critical component of estate planning.
Tackling the decrease in estate planning
Studies reveal a diminishing trend in the establishment of wills and estate planning documents, particularly among specific demographic segments (5). This pattern highlights the necessity for enhanced education and outreach efforts to underscore the importance of estate planning for all individuals, regardless of age or financial status.
Holistic estate planning solutions
For individuals with intricate financial profiles or unique possessions like collections, comprehensive estate planning services are imperative. These services may entail crafting specialized trusts and evaluating tax implications to guarantee that assets are safeguarded and bequeathed in alignment with the individual's desires.
Planning for unique assets and situations
Trusts tailored for unique assets, like collections or specific properties, demand specialized expertise to ensure proper management and distribution according to the grantor's intentions. Services in this realm may involve crafting specialized trusts such as a Charitable Remainder Trust (CRT) for art collections or a Special Needs Trust (SNT) for beneficiaries with disabilities. Recently, there has been a move to employ Purpose Trust as a simpler and more cost effective way of minimizing taxes in exiting a family business especially since the recent creation of the Holdfast Trust for the Patagonia company (6).
Business succession planning
For business succession planning, strategies are crucial to facilitate a seamless transition of business ownership and management. This may include drafting buy-sell agreements, establishing family limited partnerships or LLCs, and advising on tax-efficient transfer strategies. Effective planning in this domain is essential for preserving business value and minimizing tax burdens. It must include access to the three key pillars of successful transitions – access to resources, the correct governance and fostering an innovative and learning organization. This requirement can sometimes get lost in all the paperwork.
Tax planning
In the realm of tax planning, strategies are essential to reduce estate, gift, and income taxes. This may encompass structuring gifts to leverage annual exclusions and lifetime exemptions, using trusts for income shifting, and devising charitable donations to lower estate tax obligations. Given the intricate nature of tax laws, these services play a critical role in maximizing asset preservation.
Digital estate planning
Digital estate planning addresses the management and disposition of digital assets, such as social media accounts, digital currencies, and online accounts. Services can include creating digital asset trusts, appointing digital executors, and ensuring legal access to digital assets after death. This area is increasingly important as our lives and assets become more digital (7).
One source of procrastination in estate planning is making the choice between using a large law firm or a small, boutique, law firm. When deciding between large and boutique law firms for estate planning, the choice carries weight. Each type offers unique benefits, with the right fit dependent on individual client needs and estate complexity.
Large firms present a wide array of services and resources, potentially serving as a comprehensive solution for estate planning. However, they may come with higher costs and less personalized attention. The result is that, relatively, you are a minnow in their ocean (8).
On the other hand, boutique firms specialize in estate planning, offering tailored services and personalized care. They often provide better value and nurture a closer attorney-client relationship, especially valuable for intricate or sensitive matters. Boutique firms are usually more cost-effective, granting direct access to experienced attorneys, fostering trust, and gaining a deeper understanding of your specific circumstances. In other words, you are a big fish in a small pond (9).
The latest trends in estate planning focus on adapting to legal changes, embracing digital advancements, enhancing accessibility and inclusivity, ensuring flexibility, managing digital assets, and offering comprehensive services for complex situations. These trends mirror the evolution of estate planning in response to shifting laws, technological progress, and societal changes.
Do not let your decision on estate planning services go on too long. The decision between a large firm and a boutique firm should be guided by the firm's expertise, estate complexity, and personal service preferences. Due to the intricate nature of trusts, digital estate planning, business succession planning, and tax strategies, boutique firms may be better equipped to provide tailored and expert services. Boutique firms bring specialized knowledge, contemporary solutions, and targeted approaches crucial for modern estate planning demands, all while nurturing a close attorney-client bond. In either case, doing something is better than doing nothing at all.
Footnotes
1, https://creativeplanning.com/insights/taxes/preparing-for-the-2025-tax-sunset/
2, 3 Trends Shaping the Estate Planning Industry | Trust & Will (trustandwill.com)
3, Wills, Wealth, and Race – Center for Retirement Research (bc.edu)
4, Your Estate Plan Must Be Coordinated To Work (forbes.com)
5, 2024 Wills and Estate Planning Study – Caring.com
6, Yvon Chouinard And The Patagonia Purpose Trust – What Is It And Will It Work? (forbes.com)
7, How to Create a Comprehensive Estate Plan for Your Digital Assets | Heritage Law Office (heritagelawwi.com)
8, Another Large Corporate Firm Pulls the Plug on Trusts and Estates: More Reason to Work with a Boutique Estate Planning Law Firm! | Altman & Associates – Estate, Legacy and Business Planning (altmanassociates.net)
9, Big or Boutique? Why Startup Businesses Should Choose a Smaller Boutique Firm over a Big Law Firm (spillerlaw.com)