By Jim Joseph, CFP®
Nobody wants to reopen a folder labeled “In case something happens to me.” But somewhere between paying off the mortgage and funding the kids’ 529 accounts, many high-income families end up with an estate plan that was solid the year it was signed and out of date by the time anyone needs to implement it.
2025 presented the estate planning world a real deadline, then Congress took it away. The federal exemption that was scheduled to be cut roughly in half on January 1, 2026, was instead made permanent at a much higher level. That’s good news, but it doesn’t mean your plan can sit untouched. Here’s what a plan built to hold up requires and how we guide our clients with their late-life financial planning.
Your Estate Plan’s Foundation: The Documents That Matter
A core estate plan relies on five documents, and skipping any one may leave a gap and potential problems that your remaining family may have to deal with, usually in court.
- The Last Will and Testament generally names guardians for minor children and directs property not otherwise covered by a trust or a beneficiary form.
- A Revocable Living Trust holds title to your major non-IRA assets, lets a successor trustee step in without a court proceeding if you’re incapacitated, and keeps the eventual distribution out of the public probate process.
- A financial power of attorney names someone to pay bills and manage investments if you can’t.
- A healthcare power of attorney names someone to make medical decisions on your behalf.
- A Living Will details your wishes on life-sustaining treatment.
A trust without a Last Will still needs one to catch anything left outside it, and a power of attorney without a healthcare proxy may leave your medical decisions to a court-appointed guardian. If you’d like to explore strategies for shielding your wealth, reducing potential estate taxes, and preparing the next generation, this article on building and preserving generational wealth is a helpful place to start.
Titling and Beneficiaries: Where Good Plans Go Wrong
A trust that owns nothing does nothing and is just a piece of paper. Signing a revocable trust is only step one. Step two is retitling your home, non-IRA brokerage accounts, and business interests into the trust’s name, or naming the trust as account holder where applicable. An unfunded trust means those assets are still in your name and will pass through probate, defeating the point of setting the trust up in the first place.
Retirement accounts, life insurance policies, and annuities work differently. They pass by solely by beneficiary designation, not by your will or trust, and cannot be altered after you’re gone.
A beneficiary designation form completed last decade doesn’t update itself when you divorce, remarry, have a grandchild, or lose a family member.
Also remember that IRA accounts passing to heirs are subject to the SECURE Act 2.0 rules, requiring the 10-year “clean-out” of inherited IRAs by recipients, including annual distribution requirements. For high-income heirs, this rule may complicate their future income tax situation.
A Quick Beneficiary and Titling Checklist
- Every retirement account and life insurance policy should list both a primary and a contingent beneficiary(s) by name (and DOB).
- Beneficiary designations should reflect your current marital and family status.
- Jointly titled property, transfer-on-death designations, and trust ownership should all match your current intentions and work together seamlessly.
- No beneficiary designation still names an ex-spouse (unless that is your intention) or someone who has passed away.
The Sunset That Didn’t Happen, and What Comes Next
For most of 2025, the federal estate and gift tax exemption was set to “sunset” and be cut nearly in half on January 1, 2026, reverting from roughly $14 million per person to something closer to $7 million as per the Tax Cut and Jobs Act of 2017. That change would have pulled many families into taxable territory who had never had to think about it before.
The One Big Beautiful Bill Act, signed into law in July 2025, changed that outcome. The federal exemption is now $15 million per individual and $30 million per married couple for 2026, indexed for inflation and set up to stay that way rather than expire on a schedule. Income tax rates were treated the same way: the seven brackets in place since 2018, topping out at 37 percent, are now permanent instead of reverting to the pre-2018 structure and its 39.6 percent top rate.
Even still, none of these changes may mean the plan you wrote a decade ago is still the right one. As an example, a higher federal exemption doesn’t erase state-level estate tax. Maryland, for one, applies its own exemption ($5 million per individual) well below the federal number, so a plan built only around federal thresholds can still leave a Maryland estate exposed.
Remember too, a law Congress made permanent last year is still a law a future Congress can change. For families with concentrated, appreciating assets or property in more than one state, this is a good year to have the plan reviewed.
Gifting With Purpose: Annual Exclusions, SLATs, and GRATs
The annual gift tax exclusion for 2026 is $19,000 per recipient, or $38,000 for a married couple electing to split gifts. Gifts at or below that amount move outside your estate without touching your lifetime exemption or requiring a gift tax return.
For a couple with several children and grandchildren, consistent annual gifting adds up over time. Note that lifetime gifting trades away a step-up in tax basis at death in exchange for removing future appreciation from the taxable estate.
For families with assets well above the exclusion amount, two irrevocable trust structures come up often in our client conversations. A spousal lifetime access trust (or SLAT), lets one spouse move assets out of the couple’s combined estate into an irrevocable trust for the benefit of the other spouse.
Growth inside the trust happens outside the taxable estate, while the non-donor spouse can still receive distributions if the family needs access to the funds later. It’s a way to use exemption now without giving up all practical access to the money.
A grantor retained annuity trust, or GRAT, works differently. You transfer an asset into the trust and receive annuity payments back over a set term, and growth above the IRS’s assumed rate passes to your beneficiaries with little or no use of your lifetime exemption.
GRATs tend to work best for assets you expect to appreciate significantly during the trust term, such as a concentrated stock position or a stake in a growing business. They aren’t the right fit for every family or every asset, and the term length and payment structure both affect how well the strategy performs.
Neither tool makes sense on its own. Each works as part of a coordinated plan built around your specific assets and family situation, which is exactly what our FSA Get Wealth Planning Process™ is designed to address.
Let’s Look at Your Plan Together
An estate plan isn’t something you finish once and then put away in a drawer. It’s something you revisit as the law changes, your family grows, and your assets shift. If it’s been a few years since anyone (including you!) has reviewed your documents, your titling, or your beneficiary forms, now is a reasonable time to have that conversation.
To schedule a meeting, call (301) 949-7300 or email jim@FSAwealthpartners.com. Not ready for a full review yet? Consider reading this article to start exploring strategies for trusts, lifetime gifting, tax-efficient wealth transfer, and preparing the next generation to manage family wealth.
Frequently Asked Questions
Do I still need a Last Will if I have a revocable trust?
Yes. A trust only controls assets that have been retitled into it. A will, often called a pour-over will in this context, catches anything left outside the trust and directs it there, and it’s also where guardians for minor children are named.
Does the higher federal estate tax exemption mean I don’t need a trust anymore?
Not necessarily. Trusts serve purposes beyond reducing estate tax, including avoiding probate, keeping your affairs private, and controlling how and when beneficiaries receive assets. State estate tax exposure and non-tax goals still matter even with a higher federal number.
What’s the difference between a SLAT and a GRAT?
A SLAT moves assets out of your estate permanently while allowing your spouse indirect access to the funds if needed. A GRAT is built around an asset you expect to grow, returning annuity payments to you while passing the growth above a set rate to your beneficiaries. The two solve different problems and are sometimes used together.
How often should beneficiary designations be reviewed?
At least once a year, and any time there’s a marriage, divorce, birth, or death in the family. Beneficiary forms on retirement accounts and life insurance policies override what your will or trust says, so an outdated form can send assets to the wrong person.
About Jim
Jim Joseph, CFP®, is the President and Partner of FSA Wealth Partners in Rockville, Maryland, where he has provided personalized financial and estate planning guidance since 2004. Drawing on a career that began in 1997 at firms including Charles Schwab and Morgan Stanley, Jim helps pre-retirees, retirees, and business owners coordinate their investment, tax, and estate strategies using the firm’s proactive FSA Safety Net® approach. A West Virginia University finance graduate whose insights have appeared in The Wall Street Journal, Jim spends his free time with his three daughters, playing ice hockey, and working toward his private pilot’s license.
FSA’s current written Disclosure Brochure and Privacy Notice discussing our current advisory services and fees is available at www.fsawealthpartners.com/disclosures or by calling 301-949-7300.
