Tag: Estate Planning

Navigating Capacity and Conflict: The Estate Planner’s Role in Combating Elder Financial Abuse

Testamentary capacity and contractual capacity are critical, yet often subtle, threats to the validity of a client’s estate plan and whether their final wishes will be respected. If you work with a client who is older and where capacity to make a will or a trust may be questioned by any of their potential beneficiaries, you should consider the implications of, and how to protect against, a claim that your client lacked testamentary capacity.

Testamentary capacity is the legal term for a person’s mental ability to create or alter a valid will. It is generally considered to be a lower standard than contractual capacity, which is required for making any kind of contract, which includes a trust. Both are tested by courts at the time when the will or trust is created or updated.

For financial advisors and their firms, the responsibility extends beyond simple compliance. It requires a proactive, defensive posture within the estate planning process. When an older client’s decisions regarding their estate appear coerced or their final wishes seem to suddenly and illogically shift, the core issue quickly pivots to legal capacity and the presence of undue influence. A breakdown in capacity awareness and a failure to address influence concerns can lead directly to contested documents and subsequent, costly litigation against the client’s estate and the firm itself.

In passing, it’s important to recognize that the same vulnerabilities that expose a client to undue influence in their estate planning are also strong indicators that they may be vulnerable in managing their day-to-day financial affairs. However, the primary focus for firms must be on the legal standard of undue influence as it relates to the validity and contestability of essential estate planning documents.

The Critical Challenge of Client Capacity

It is common for an elderly client to communicate through a close family member, personal assistant, or caretaker. This dynamic, while practical for daily interaction, raises a significant concern for the advisor: ensuring the estate plan truly reflects the client’s autonomous will and not the demands of an interested party. This is required under the legal standard for ensuring there is not undue influence in the estate planning process. The presence of an overbearing or overly-involved third party is a crucial red flag that requires immediate, objective documentation by the attorney, and a financial advisor may be called upon to assist.

Case Study: The Brooke Astor Scandal

The worst-case scenario for any professional serving an elderly client is having their professional judgment—particularly regarding the client’s mental capacity—challenged under oath in a public courtroom. No situation illustrates this professional and reputational hazard more vividly than the high-profile litigation surrounding the estate of Brooke Astor.

The case centered on allegations that Mrs. Astor’s son, Anthony Marshall, and her attorney, Francis X. Morrissey Jr., exerted undue influence to change her will in 2003 and 2004, when she was suffering from Alzheimer’s disease. The resulting criminal trial and civil litigation placed many of the people closest to Mrs. Astor—including her long-time, trusted attorneys, financial advisors, and even personal staff—on the witness stand.

The core of the defense and prosecution arguments required these professionals to testify in granular detail about their interactions with Mrs. Astor, including:

  • When they last saw her.
  • What she said and how she acted.
  • Whether, in their professional opinion, she possessed the legal capacity to understand and execute the documents in question.

This litigation demonstrated how the judgment of trusted advisors regarding client capacity and freedom from influence can become the central, devastating question after a client’s death, turning private financial planning into a public, protracted legal spectacle.

Proactive Capacity Determination

If you are a financial advisor and you suspect that your client’s mental capacity or influence from trusted intermediaries could become an issue upon death, you can proceed with helping them with estate planning, but documentation and a litigation-avoidance mindset become important. 

Your client must hire an attorney, and you should help the attorney document the client’s mental state and intentions, moving beyond simple observation to establish an auditable record.

After your client has passed away, a person seeking to challenge their updated or newly created estate planning documents will have the burden of proof, by clear and convincing evidence, that your client suffered from diminished capacity and was subjected to undue influence. The burden of proof will feel even higher if you helped your client to document their intent and capacity before the claim when the estate plan is executed. Importantly, greater weight is usually given if the evidence is close-in-time to the date when a legal document was signed.

To do this:

  1. Have an Honest Conversation: The initial engagement must include an open discussion with the client, acknowledging the dynamics in the family and any risk of post-death litigation. It should be the attorney’s role to address this issue, but if you are the more trusted advisor, this topic may fall to you. 
    1. Address that awkwardness head on. Frame the contemporaneous capacity review as a protective measure in the best interests of the client’s intended beneficiaries. “Now, I know that no one wants to talk about this topic, but you have told me in the past that you are concerned about your daughter being angry that you’re changing your mind about her share. The most obvious way to attach your estate plan is to claim that you didn’t know what you were doing when you signed your will.” “The point here is not to embarrass you. It is to make sure that how you define your legacy is respected.”
    2. Mention that solutions exist to defend against a claim and make it almost impossible to attach the plan. Leave the details to the attorney. “Your wishes as a client should be respected by the court and those who remain after you. If you think this may be an issue, as I do, would you like us to think about how to achieve that?”
  2. Document Capacity: The attorney should have a standard bag of tricks for creating the documentation to defend the validity of their estate planning documents. These tactics may have a wide range of costs and reliability, but are all aimed to create a record that would present significant hurdles to a litigant. 
    1. First, the attorney may  use a standardized, reputable assessment tool to determine capacity before accepting to update or create an estate plan. The most commonly used one is published by the American Psychological Association (APA). Of course, an attorney is not specifically trained to assess mental capacity, but this may be better proof than the litigant can submit that your client had capacity at the time the estate planning documents were executed.
    2. Second, your client may seek a psychological assessment from their primary physician, and their findings could be entered into their medical records.
    3. Lastly, your client may choose to be examined by a neurologist for the express purpose of establishing the minimum mental capacity and free will to be able to execute estate planning documents. A geriatric neurologist or forensic neuropsychologist specializing in assessment of testamentary and contractual capacity may be preferred. 
  3. Clearly Delineate the Intermediary’s Role: Your client should write or orally dictate how the client wants the attorney and other advisors to interact with the relaying party (i.e., a child or caretaker). Importantly, the client should establish the boundaries of the intermediary’s authority. This step prevents the intermediary from inadvertently or deliberately controlling the process and helps ensure a clear line of communication directly to the client regarding sensitive decisions. 
  4. Avoid Digital Estate Planning Platforms: Where your client’s mental capacity may become an issue, it is important to consider whether your client can meaningfully make their own legally effective selections in a browser-based tool. Moreover, an attorney is ideally positioned to advise your client on strategies to mitigate litigation risk based on a claim of undue influence or lack of mental capacity. Those are not issues that a digital estate planning platform should be handling because they require legal advice.

The Higher Bar: Testamentary vs. Contractual Capacity

The requisite capacity changes based on the type of document being executed. The legal standard for capacity to execute a will is lower than the standard required to execute a trust, which is at its core, a contract:

  • Testamentary Capacity (Wills): Most states use a standard requiring the client to understand three core elements: the nature of the act (making a will), the general nature and extent of their property (bounty), and the natural objects of their bounty (beneficiaries). This threshold is deliberately designed to be low to uphold the personal autonomy of the testator. The test for a will focuses on basic comprehension at the time of execution.
  • Contractual Capacity (Trusts): Because a trust is fundamentally a contract that involves ongoing fiduciary responsibilities and property management, the client must meet the higher standard of contractual capacity. This typically requires a greater comprehension of the document’s long-term effects, including the potential financial consequences and the ongoing obligations being created for the trustee and beneficiaries. This higher bar reflects the complexity and longer time of effect of a trust agreement.

In situations where the likelihood of litigation based on mental capacity is significant, the most stringent defense is to recommend the client undergo a neurological assessment on the day of or the day before document signing. The resulting report must be comprehensive, specifically addressing both the lower testamentary capacity standard and the higher contractual capacity standard, and in the absence of any persons other than the client and the person conducting the assessment. In particular, none of the attorney, the advisor, nor any intermediaries should be present. A positive report removes issues of fact that the litigant might otherwise bring before the court. 

Conclusion

For wealth management firms and their advisors, proactively addressing the risks of undue influence and diminished capacity is not merely a matter of compliance, but a fundamental pillar of fiduciary responsibility and reputational defense. The case of Brooke Astor serves as a stark warning that failure to establish a robust, objective, and auditable record of a client’s autonomous will can result in costly, public litigation where professional judgment is placed on trial. By adopting a litigation-avoidance mindset, collaborating with legal counsel to implement contemporaneous capacity documentation—including objective medical assessments—and clearly defining the role of intermediaries, advisors can create significant hurdles for potential challengers, ultimately ensuring the client’s final wishes and legacy are honored.

The SECURE 2.0 Trap: Why ‘Stretch IRA’ Beneficiaries Need Estate Plan Updates

For clients, a key component of sound financial and tax planning has always been maximizing the tax-deferred growth within an inherited Individual Retirement Account (IRA). Historically, trusts were the primary tool used to control and “stretch” those IRA distributions over a beneficiary’s lifetime.

The passage of the original SECURE Act of 2019 and the subsequent clarifications under SECURE 2.0 (2022) have dismantled this core planning strategy for most non-spouse beneficiaries, replacing it with a hard 10-year distribution rule. Many existing trusts drafted before 2020 are now ticking tax time bombs. These trusts risk accelerated income taxes, loss of asset protection, and unexpected penalties.

Advisors who proactively identify and resolve these outdated trust structures can turn regulatory confusion into a powerful client retention and value opportunity. Wealth.com, as the leading estate planning platform for financial institutions, is designed to immediately address this exact challenge. The platform empowers financial advisors to modernize estate planning for their clients by providing the infrastructure needed to identify at-risk documents and bridge estate planning and wealth management, ensuring regulatory shifts do not compromise client legacies.

In This Article: An Advisor’s Guide to the SECURE 2.0 Trust Trap

  • The Collapse of the Stretch IRA Strategy
  • Conduit vs. Accumulation: A New Tax-Time Dichotomy
  • Identifying the Clients Most at Risk
  • Rewrite vs. Amendment: The Decision for Advisors
  • How Wealth.com Modernizes Regulatory Change for Your Firm

 

The Collapse of the Stretch IRA Strategy

Before the SECURE Act, a trust named as an IRA beneficiary could often “look through” to the individual beneficiary, allowing distributions to be spread, or stretched, over that beneficiary’s life expectancy. This provided decades of tax deferral and protection.

The new legislation largely eliminated this benefit for Designated Beneficiaries (DBs), which include most adult children and grandchildren, requiring the inherited IRA to be fully distributed by the end of the tenth year following the original account owner’s death.

For many clients, the Wealth.com platform serves as the critical tool for stress-testing these trusts against the new rules and initiating necessary restructures.

Conduit vs. Accumulation: A New Tax-Time Dichotomy

The 10-year rule dramatically alters the consequences for the two most common types of trusts used as IRA beneficiaries:

1. Conduit Trusts (High-Risk Payout Acceleration)

  • Original Intent: Designed to mandate that every distribution received by the trust from the IRA must be immediately passed out (“conduited”) to the individual beneficiary. This ensured the trust qualified for the favorable stretch IRA rules.
  • SECURE 2.0 Trap: Under the 10-year rule, a Conduit Trust must pass the entire IRA balance to the beneficiary by the end of the tenth year. This forced lump-sum payout can create a massive tax bill in year 10, pushing the beneficiary into a higher income tax bracket and exposing the inheritance to creditors, divorce, and poor financial decisions. The trust’s original goal of asset protection is lost.

2. Accumulation Trusts (High-Risk Tax Inefficiency)

  • Original Intent: Designed to give the trustee discretion to either pay out or retain (“accumulate”) IRA distributions within the trust for asset protection purposes.
  • SECURE 2.0 Trap: While the trustee can still accumulate the distributions and provide asset protection, the trust itself is a separate tax entity that reaches the highest federal income tax bracket (currently 37%) at an extremely low threshold (e.g., just over $15,000 in undistributed income). This dramatically erodes the inheritance through avoidable taxation, negating the benefit of tax-deferred growth.

Identifying the Clients Most at Risk

You must prioritize an immediate review for clients whose plans risk catastrophic tax outcomes.

  • Clients with Trusts Established Pre-2020: These documents were drafted with the expectation of a lifetime stretch and must be reviewed for language that now unintentionally forces a lump-sum payout.
  • Clients with Trusts Naming Non-Eligible Designated Beneficiaries (DBs): This includes trusts for financially unsophisticated adult children or trusts for grandchildren. These beneficiaries lose the stretch and are subject to the strict 10-year rule, creating maximum exposure.
  • Clients Who Died Post-2019 (Deceased Account Owner): If the account owner died after 2019 and had already begun Required Minimum Distributions (RMDs), their non-spouse beneficiaries are subject to a subtle, but critical, annual RMD requirement during the 10-year period. Failure to take these RMDs in years 1-9 may result in an additional  tax of up to 25% on the missed amount. Wealth.com helps manage this complex calculation and compliance burden for the firm.

Rewrite vs. Amendment: The Decision for Advisors

The necessary action depends on the trust’s original intent and the severity of the tax exposure. Wealth.com accelerates this decision process by providing a clear structure for documenting client intent.

ConditionImmediate Action RequiredStrategyRationale
Outdated Conduit Trust (Named for a DB)

IMMEDIATE

Rewrite or Significant Amendment

The trust’s core function (forcing payout) now causes a severe tax acceleration. The risk is too high to wait.

Trust for Eligible Designated Beneficiary (EDB) (e.g., minor child, disabled individual)

Wait for Next Planning Cycle

Strategic Amendment

EDBs retain the life-expectancy stretch. An amendment is likely needed to clarify RMD commencement (age 21 for a minor child) but the core benefit remains.

Accumulation Trust (Tax inefficiency is severe)

HIGH PRIORITY

Amendment (to update tax provisions)

The trust should be amended to give the Trustee more flexibility (discretion) to pay out income to the beneficiary to avoid the punitive trust tax rates.

 

This process often involves collaboration between the financial advisor and the estate attorney. Wealth.com simplifies this collaboration, ensuring that the necessary document changes are implemented efficiently and are tied directly to the client’s asset schedule.

By helping clients navigate this regulatory complexity, you demonstrate the firm’s commitment to comprehensive, modern estate planning. You ensure the client’s legacy is protected from unintended taxes and that their wealth transfer goals are ultimately met.

How Wealth.com Modernizes Regulatory Change for Your Firm

Wealth.com empowers advisors to close the regulatory gap and deliver compliant estate planning solutions at scale.

  • Proactive Planning Workflows: The platform provides a structured, step-by-step workflow that guides advisors in identifying pre-2020 trusts and flagging them for mandatory review, turning a compliance risk into a structured planning opportunity.
  • Intelligent Document Management: Wealth.com ensures that once a trust is updated, the new language and distribution instructions are securely recorded and seamlessly integrated with the client’s financial overview, creating a clear audit trail for the compliance team.
  • Advisor-First Efficiency: By integrating estate planning intelligence directly into the advisor’s workflow, the platform enables you to efficiently communicate complex regulatory concepts like SECURE 2.0 without becoming a tax attorney, thus elevating your role as the trusted advisor.

By adopting Wealth.com, you deliver better client outcomes, reinforcing your firm as the trusted expert in securing wealth for the future.

 

Sources

  • Carolina Estate Planning. What Is a Conduit Trust? and Why It Could Break or Protect Your Estate Plan.
  • Charles Schwab. Inherited IRA Rules & SECURE Act 2.0 Changes.
  • Fidelity Investments. Inherited IRA Withdrawals | Beneficiary RMD Rules & Options.
  • IMARC. Digital Asset Management Market Size, Share, Trends and Forecast by Type, Component, Application, Deployment, Organization Size, End-Use Sector, and Region, 2025-2033.(Used for general market context).
  • Wolters Kluwer. IRAs & Beneficiary Distributions: SECURE Act Updates.

The Modern Inheritance Trap: How DNA Tests Make Specificity the New Standard in Estate Planning

At-home genetic testing has transformed how families uncover their histories, but it has also introduced new complexity into estate planning. According to The Wall Street Journal article, “They Found Relatives on 23andMe and Asked for a Cut of the Inheritance,” unexpected discoveries are now leading to inheritance claims from previously unknown relatives, intensifying disputes that have existed for generations.

This is the ultimate modern cautionary tale: The person you thought was your sole child might have an unknown half-sibling who now has a legal claim to your estate.

The issue isn’t simply using general terms like “to my descendants” or “to my children.” The real vulnerability lies in using these terms without precisely defining who is included and, crucially, who is excluded.

Fortunately, a well-drafted estate plan is the definitive defense against unknown heirs and unintended consequences.

The Three Pillars of Protection Against Unknown Heirs

To shield your intended beneficiaries from costly challenges, your estate plan must be exceptionally clear. These three essential steps help ensure your legacy goes exactly where you intend:

  1. Establish a Formal Estate Plan: The foundation of protection is a legally sound Will and/or Trust. Dying intestate (without a plan) subjects your estate to state intestacy laws, which rely on biological relationships—a perfect scenario for an unknown heir to stake a claim based on genetic proof.
  2. Define a Closed Set of “Children”: Clarity begins at the first generation. Your documents should specifically list your intended children (by name) and explicitly state that any child not listed is disavowed as an heir. This closes the door to newly discovered half-siblings or biological children unknown to you.
  3. Coordinate the Definition of “Descendants”: For inheritance purposes beyond your children’s generation (grandchildren, great-grandchildren), the plan should incorporate a similarly limited definition of “descendant” that seamlessly coordinates with the specific list of children defined in Step 2. You may also want to consider limiting further descendants to exclude potential unknown descendants of your children and further generations as well.

The Power of Per Stirpes

While you must specifically name your primary children, it is impractical (and unnecessary) to list every future grandchild and remote descendant. This is where a powerful legal concept comes into play: per stirpes.

Per stirpes (Latin for “by the branch”) is a legal term defined for estate planning that allows a deceased person’s share of an inheritance to pass down to their descendants. It’s a mechanism of representation. For example, if you have two children (A and B), and A dies before you, A’s share would pass per stirpes to A’s children (your grandchildren).

By defining your children narrowly (Step 2) and then using the legal concept of per stirpes (Step 3) for all subsequent generations, you ensure that only the family lines you explicitly approve can benefit. However, as noted above, further consideration should be given to the possibility that your children or further descendants may have unknown descendants of their own. This is where a carefully crafted definition of “descendants” comes into play within your estate planning documents to ensure that further generations can inherit property by representation (per stirpes), but that those generations are again limited to those actually included in your own personal definition of family. This is particularly vital if your estate plan creates further trusts for future generations, such as dynasty trust structures (where children’s shares are held in further trust for their lifetime and then passed down to their own descendants).

As the legal landscape continues to grapple with the complexities introduced by genetic testing, the lesson for anyone writing or updating their estate plan is simple: specificity is paramount. According to legal experts, “If you leave property to ‘all your nieces and nephews’ as a class gift, and someone can prove through DNA to be a niece or nephew, he will be included in the class gift.” (Stouffer Legal, 2021). The best practice is to use precise, intentional language to name or exclude, giving your wishes the legal weight they deserve. Additionally, if the intent is that assets are held in further trust structures for multiple generations, you should consider all possible scenarios for future potential unknown heirs/descendants that you may want to exclude.

Usually, this is accomplished by taking a dual approach to the problem in your legal documents. First, name the individuals whom you consider to be your children. Legally, you will be closing the set of individuals who can make a claim as a member of the next generation. Second, your legal document should clearly define the word “descendant” by covering the situations under which you would or would not consider someone to be a descendant. This definition would apply to the descendants of your children (or any other family member who is named as your beneficiary and whose descendants might inherit your assets). For example, the definition might address adoption, assistive reproductive technology, the child who is conceived before death but born after death, and the child who is born out of wedlock.  

A comprehensive estate planning platform like Wealth.com is perfectly positioned to operationalize these three pillars of protection. First, users create estate planning documents that are legally binding, override default laws, and provide guidance in areas where laws are silent. Second, the guided forms require users to explicitly name a closed set of children, if the user has at least one child, and automatically provide a comprehensive definition of “descendant” to cover unusual circumstances and of “per stirpes” to describe who qualifies as a member of the user’s subsequent generations. This integrated approach ensures that the digital convenience of the platform results in a legally robust document, giving users confidence that their estate plan is fortified against the modern challenges posed by DNA discovery and unexpected claims.

Sources and Further Reading

EstateCon 2026: The Top 10 Product Announcements Shaping the Future of Planning

In front of a sold-out in-person audience, with more than 2,000 joining virtually, Wealth.com opened its annual product keynote with insights from Chief Product Officer Danny Lohrfink, SVP of Product Nicole McMullin, and CEO Rafael Loureiro.

As he noted in his opening remarks, we are in the middle of the largest wealth transfer in history, with $124 trillion changing hands. Yet the industry still relies on tools not designed for this moment. Fragmentation creates friction and missed outcomes, preventing planning from compounding and scaling.

To solve this, we unveiled new advisor updates, integrations, and Wealth.com Tax Planning. Here are the top 10 announcements from the EstateCon 2026 Product Keynote.

  1. Introducing Wealth.com Tax Planning

The headline of the event was the official launch of Wealth.com Tax Planning. Historically, tax and estate planning have lived in separate silos, but we know these decisions are inseparable. This new module unifies them, allowing advisors to model how tax strategies—like exercising options or relocating—directly shape the legacy a client leaves behind.

  1. A Landmark Integration with Goldman Sachs Custody Solutions

Opening a trust account has traditionally been a tedious process defined by manual data entry. By integrating Wealth.com with Goldman Sachs Custody Solutions (GSCS), advisors can now move from document review to account funding in a single, unified workflow.

Leveraging Ester®, the first AI assistant specifically trained in estate planning, the system automatically extracts key trust details—such as grantors, trustees, and beneficiaries—directly from legal documents to pre-fill account applications. Advisors can open trust accounts, link bank accounts, and initiate ACAT transfers without ever leaving the Wealth.com dashboard.

  1. In-App Deed Preparation

One of the most persistent challenges in estate planning is the funding gap, the period after a trust is created but before assets, especially real estate, are formally transferred into it. Historically, deed transfers required outside attorneys, manual title research, and months of coordination.

To eliminate that friction, we launched In-App Deed Preparation. Clients can now initiate deed transfers directly within their Wealth.com portal and complete the process in days, not months, and with coverage across every county in all fifty U.S. states.

The entire experience is client-led. Clients select their properties, choose their timeline including a 48-hour rush option, schedule a mobile notary at their convenience, submit payment by credit card, and notarize their entire Wealth.com estate plan in one coordinated step.

  1. Meeting Intelligence: Jump, Zocks, and Zoom AI

Planning shouldn’t start with data entry; it should start with listening. We announced new integrations with Jump, Zocks, and Zoom AI that turn meeting transcripts into actionable data. If a client mentions a liquidity event or a move during a call, that context flows directly into their Wealth.com profile without you having to type a word.

  1. Ester Becomes Consequence-Aware

Our AI assistant, Ester, has evolved beyond simply extracting information from documents. She now understands consequences, and soon, policy. During the keynote, we showed Ester analyzing a 50-page trust in seconds, flagging real risks such as ambiguous distribution language and potential trustee conflicts. But coming in April, Ester goes a step further.

Advisors will be able to simply ask:
“What if the leading Democratic candidates in New York City were to enact their proposed policies? How would my clients be impacted?”

In seconds, Ester will do what an analyst would normally spend an entire day on. First, she reviews the latest polling data to identify the leading candidates. Next, she researches their proposed legislative agendas, with a focus on personal finance issues such as income and estate taxes. Finally, she analyzes those proposals against the client’s actual circumstances, their real balance sheet and their actual estate plan.

The output is a clear, side-by-side view of how potential policy changes could impact a client’s financial outcomes, translating abstract policy into real dollars and real decisions.

  1. The New Report Builder & Visual Flowcharts

We have completely rebuilt how estate plans are visualized . The new Report Builder moves away from static PDFs to create living flowcharts. These visuals show exactly how assets move and when trusts activate, ensuring clients truly understand their plan.

  1. Integrating Alternatives with Arch

Building on our robust suite of integrations with eMoney, Addepar, and BlackDiamond, we announced an upcoming integration with Arch. This will allow advisors to seamlessly capture hundreds of alternative investments owned by HNW clients and incorporate them directly into the planning process.

  1. Major milestones in estate planning at scale

Wealth.com announced:

    • Over 100,000 estate plans completed

    • Coverage across all 50 states

    • Average completion time under 30 minutes

    • 94 percent start-to-completion rate

  1. Side-by-Side Scenario Comparisons

Clients often ask, “What if I moved?” Now, you don’t have to guess. Our new comparison tool lets you run scenarios—like a move from New York to Florida—side-by-side. The system instantly calculates the differences in income tax, estate tax, and family outcomes.

  1. Compounding Estate Impact Metrics

Finally, we introduced a metric that changes how clients view tax strategy. When you model a decision—like a Roth conversion—Wealth.com now explicitly shows how that choice impacts the estate size decades in the future. It’s the power of compounding, made visible.

 

The Future is Already Here

As Rafael said in his closing, this isn’t an academic exercise. It’s about giving families certainty and ensuring that fragmentation never gets in the way of compounding. Ready to see these features in action?

Watch the EstateCon Keynote Replay

 

Wealth.com Launches Proprietary Tax Planning Platform, Fully Integrated within Industry Leading Estate Planning Ecosystem

PHOENIX, AZ – JANUARY 27, 2026— Wealth.com, the modern planning platform for wealth management firms, today announced the launch of Wealth.com Tax Planning, a next-generation solution that unifies tax planning, estate strategy and execution workflows within a single platform for advisors. The announcement was made during the keynote address at Wealth.com’s inaugural EstateCon, delivered to a sold-out in-person audience and more than 1,000 virtual attendees nationwide.

As advisors navigate increasingly complex client lives, including multi-state residency, concentrated equity, Qualified Small Business stock considerations, advanced trusts, evolving tax legislation and multigenerational planning needs, fragmented tools and disconnected workflows have struggled to keep pace. Wealth.com Tax Planning is designed to close this gap by connecting tax strategy, legal intent and execution inside one integrated system.

“Tax planning and estate planning are inseparable parts of a holistic financial plan, yet the industry has historically treated them as disconnected disciplines,” said Rafael Loureiro, Co-Founder and Chief Executive Officer of Wealth.com. “Advisors are being asked to do more, with greater precision and accountability. We built Wealth.com Tax Planning to move beyond calculating a tax bill and toward architecting a client’s future. It is the difference between optimizing a moment and compounding a lifetime.”

 

Introducing Wealth.com Tax Planning

Wealth.com Tax Planning enables advisors to model forward-looking tax strategies while understanding their downstream impact on estate outcomes, gifting capacity, charitable planning and long-term family legacy. Rather than optimizing for a single tax year, the platform connects tax decisions to multigenerational outcomes.

Key capabilities include:

  • Multi-state tax scenario modeling with side-by-side comparisons
  • Guided planning workflows through intuitive “Quick Actions”
  • Natural-language data capture from advisor and client inputs
  • Client-ready reporting with delivery through a secure client portal

“Advisors don’t think about tax planning, estate planning and execution as separate workflows. They think in terms of outcomes for real families,” said Danny Lohrfink, Co-Founder and Chief Product Officer of Wealth.com. “We built Wealth.com Tax Planning to reflect how advice is actually delivered, connecting tax decisions to legal structures and execution in one continuous system. This gives advisors confidence that what they plan is what ultimately gets implemented.”

Tax Planning is embedded directly within the Wealth.com platform, ensuring tax strategies remain continuously connected to trusts, legal documents and execution workflows, and will be available on April 2, 2026.

 

Second-Generation AI Built for Planning, Not Just Calculation

During the keynote, Wealth.com also unveiled major advancements to Ester®, its proprietary AI engine. Ester now analyzes federal and state tax documents alongside estate documents and trust provisions to surface risks, conflicts and future-state implications across a client’s plan.

These insights power Wealth.com’s redesigned Report Builder, enabling advisors to deliver clearer, more actionable planning narratives that connect tax decisions to estate outcomes, funding gaps and long-term legacy considerations.

 

Additional Platform Announcements

Wealth.com also introduced several new execution-focused capabilities designed to reduce friction and accelerate outcomes for advisors and clients:

  • Mobile Notary: Enables advisors or clients to engage a notary public directly within Wealth.com, supporting same-day document execution and automatic digital upload.
  • Nationwide Deed Preparation: Now available in all 50 states through a partnership with Dec Law, simplifying trust funding for real property. Nationwide deed preparation is offered at a flat $175 per deed, plus recording fees, with advisors and clients able to track deed status and transfers directly within the Wealth.com platform.

 

New Integrations Across the Wealth.com Ecosystem

To further streamline workflows and reduce manual work, Wealth.com announced several new integrations:

  • Goldman Sachs Custody Solutions: For trust accounts held at GSCS, advisors can open and fund accounts directly within the Wealth.com platform. By automatically extracting trust data via Wealth.com this integration streamlines account setup, reduces manual data entry and increases visibility into onboarding status of complex trust structures and estate plans.
  • Zocks and Jump: Sync meeting intelligence so advisor conversations, notes and action items are reflected across estate and tax planning workflows
  • Arch: Aggregates complex client financial data, including K-1s and alternative investment holdings, to bring richer context into Wealth.com.

Together, these integrations further position Wealth.com as a system of record for tax, estate and legacy planning.

 

Continued Industry Momentum

At EstateCon, Wealth.com highlighted continued growth across both enterprise and independent advisor channels, including expanded firm-wide deployments and approvals. The company also announced plans to open a New York City office in February 2026, further expanding its physical presence and commitment to serving advisors nationwide.

 

Wealth.com Tax Tour

To bring its next-generation tax and estate planning platform directly to advisors, Wealth.com announced the Wealth.com Tax Tour, with planned stops in 20 cities throughout 2026.

To learn more about Wealth.com and its tax and estate planning platform for advisors, visit www.wealth.com/tax.

 

 

About Wealth.com

Wealth.com is the industry’s leading estate and tax planning platform, empowering thousands of wealth management firms to modernize how planning guidance is delivered to clients. Purpose-built for financial institutions, Wealth.com is the only tech-led, end-to-end platform that enables firms to scale estate and tax planning with efficiency, consistency and measurable client impact.

Trusted by some of the largest names in finance, Wealth.com combines proprietary AI, enterprise-grade security, and deep legal and tax expertise to support the full spectrum of client needs—from foundational estate plans to advanced estate and tax analysis and reporting. With the introduction of Wealth.com Tax Planning, firms can deliver more integrated, proactive planning through a single platform. Wealth.com has been widely recognized for innovation and leadership, earning Top Estate Planning Technology and Top Estate Planning Implementation at the 2025 WealthManagement.com Industry Awards, as well as the #1 estate planning market share in the 2025 Kitces AdvisorTech Study.

 

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Decidely Wealth Management Drives Client Loyalty and Referrals with Wealth.com

 

In this testimonial, Sanger Smith, founder of Decidedly Wealth Management, shares how Wealth.com transformed the way he delivers estate planning for clients.

Sanger begins with a deeply personal story about his grandfather passing away without a will, an experience that shaped his commitment to helping families avoid unnecessary stress and uncertainty. He recounts working with clients Ruth and Terry, who finalized their will just 12 days before Ruth passed away, a moment that underscored both the urgency and the impact of timely estate planning.

With Wealth.com, Sanger explains, the friction is gone. He can analyze documents instantly, move faster with confidence, and complete estate plans in as little as 30 minutes. The result is not just efficiency, but stronger client relationships, increased loyalty, and more referrals. As Sanger puts it, the return on investment is undeniable, and the cost is insignificant compared to the value delivered.

The Three-Body Problem: Why Your Estate Planning Conversations Aren’t as Protected as You Think

Most financial advisors correctly assume that their estate planning discussions with clients are confidential. However, the critical distinction between confidentiality and legal privilege often goes unaddressed. This creates a silent risk: without the protection of attorney-client privilege, many of the communications about a client’s estate strategy, family dynamics, or even beneficiary rationales can be discoverable in litigation, a family dispute, or an IRS audit.

Not only that, the presence of a financial advisor or any non-attorney in a discussion between an attorney and a client about the client’s estate plan will also break the attorney-client privilege. 

Herein lies a problem: by joining a conversation with an attorney to help steer the conversation on behalf of your client, are you inadvertently causing an ethical issue? And importantly, should you, the client, or the attorney care?

As the industry’s leading estate planning platform for financial institutions, Wealth.com helps firms reduce operational risk by demonstrating sophisticated practice standards. A core part of that is helping advisors understand and manage the compliance boundaries that protect both the client and the firm.

The Three-Body Problem: When Confidentiality Breaks Down

Attorney-client privilege protects confidential communications made between a client and their attorney for the purpose of obtaining or giving legal advice. This privilege is owned by the client and is meant to encourage full and candid communication.

The “three-body problem” occurs when an advisor is brought into a conversation between the client and their attorney. The presence of a non-attorney third party, the advisor, can sometimes waive the privilege over the communication, even if the attorney is leading the discussion.

  • The Problem in Practice: Simply including an attorney on an email chain about an estate strategy does not automatically shield every line of text. An advisor’s input, such as meeting notes discussing family dynamics or rationale for a designation, could be exposed and used as evidence in litigation involving a contested trust, a divorce, or a tax audit.
  • The Advisor with a JD Nuance: Even if an advisor holds a law degree, their communications are only privileged when they are acting as the attorney and providing legal advice. If they are acting in their capacity as a financial advisor, the privilege is likely lost. That being said, interspersing legal advice in the conversation will likely ensure that the entire conversation is protected by the attorney-client privilege.

“Attorney Work Product” Versus Privilege: Understanding Both Shields

Advisors must understand the distinction between attorney-client privilege and the attorney work product doctrine.

  • Attorney-Client Privilege: Shields the confidential communication itself and requires the presence of a legal professional acting in their legal capacity.
  • Attorney Work Product: Shields documents, notes, or materials prepared by an attorney or their agent in anticipation of litigation. This shield can potentially extend to an advisor’s notes or analysis if they were prepared at the direction of the client’s attorney and for a defined legal purpose.

A Practical Framework: What Advisors Can Do

Advisors cannot assume their status as a trusted expert extends automatic privilege. Protecting high-stakes planning conversations requires a proactive, structured approach to risk management. As an advisor, you can protect both your clients and your firm by implementing these best practices:

  1. Define Boundaries in Engagement Letters: Your firm’s engagement letters should include clear language that explicitly states you are not providing legal or tax advice, managing client expectations and setting clear privilege boundaries. This helps prevent the assumption of privilege where none exists.
  2. Refer Legal Counsel First: For all complex or potentially litigious matters, your first action should be to ensure the client has engaged appropriate legal counsel. Encourage the client to establish their legal goals and preferences in private consultations with their attorney. Allow the attorney to clearly establish a relationship with the client – not you – especially during the first meeting. Prepare the client for their meeting with the attorney and refrain from joining the meeting.
  3. Educate the Client on Third Parties: Counsel the client on the risk that inviting any third party, including adult children or even the advisor, into their private consultations with their attorney can unintentionally waive privilege.
  4. Consider Kovel Letters: Where the legal matter being discussed is sensitive because of pending or ongoing litigation, there are formal ways to have non-attorneys covered under the attorney-client privilege, namely having the attorney engage the advisor under a so-called Kovel agreement. These agreements are generally viewed as impractical for humdrum estate planning matters, but if the matter could lead to litigation (for example, the capacity of your client to execute new estate planning documents or during an ongoing tax audit), it may be worth the trouble of properly papering the relationship between the attorney and all of the client’s advisors who are not attorneys.  

A Sample Communication Protocol for High-Stakes Planning

For high-net-worth and complex estate-planning conversations, establishing a clear internal protocol before the conversation starts helps mitigate risk and demonstrate compliance-aware practice standards.

StageAdvisor ActionRisk Mitigation Goal
I. Pre-Engagement1. Confirm that the client has engaged their own legal counsel for the estate matter.Reinforce that the attorney is the source of legal advice and the advisor is providing financial services to the client, not to you.
2. Review your engagement letter with the client to ensure the “No Legal Advice” clause is clear.Prevent the client from having a reasonable expectation of attorney-client privilege with the advisor.
II. Communication Structure1. If counsel requests the advisor’s involvement, clarify the precise purpose: Is the advisor needed to interpret financial data for the attorney, or is the advisor offering business/investment advice?Ensure the communication’s purpose is not simply for convenience, which could break the privilege.
2. Direct all written materials intended to support the legal advice to the attorney first, copying the client.Maximize the chance that the communication is protected as part of the attorney’s service.
3. When creating documents (e.g., financial models, analysis) at the attorney’s request, use clear compliance labeling, such as “Confidential” or “Attorney Work Product.”Assert the privilege or work product protection over the document itself.
III. Documentation & Filing1. Segregate files for documents created specifically to assist legal counsel from general financial advisory files.Avoid accidentally waiving privilege by co-mingling protected and non-protected information.
2. Document the rationale for involving the attorney (e.g., “Client is seeking legal advice regarding a complex transfer of business ownership”).Create an internal audit trail demonstrating a risk-aware, compliance-focused approach.

 

Wealth.com modernizes estate planning for the way advisors work today. By understanding and proactively managing the delicate boundaries of legal privilege, you turn administrative housekeeping into genuine risk management, reinforcing your firm’s sophisticated practice standards.

References

  1. Estate Planning/Privilege: Cote Law Group. “Why Your Estate Plan Might Not Be as Private as You Think.” Cote Law Group, Jan. 7, 2025.
  2. Kovel Mechanics: Holland & Knight. “Maintaining Privilege with Non-Lawyer Experts Under Kovel.” Holland & Knight, Dec. 2021.
  3. Advisor/Privilege: Nelson Mullins. “Are the Client’s Estate Planning Consultations with Counsel Privileged?” Nelson Mullins, May 26, 2020.
  4. Attorney-Client Privilege Basics: Ryan, Charles J. “Kovel agreement basics for you and your client.” Journal of Accountancy, July 1, 2022.
  5. Agency Exception: Loeb & Loeb. “Family Office.” Loeb & Loeb, Feb. 2019.
  6. JD Advisor Role: North Carolina State Bar. “RPC 238.” North Carolina State Bar, 2004.
  7. Waiver of Privilege: Proskauer Rose LLP. “Fiduciary Exception to Attorney-Client Privilege for ERISA Plans.” Proskauer Rose LLP, 2024.
  8. Waiver & Confidentiality: Barron, Rosenberg, Mayoras & Mayoras P.C. “Attorney-Client Privilege and Confidentiality.” Barron, Rosenberg, Mayoras & Mayoras P.C., May 14, 2025.
  9. Attorney/Accountant Privilege: Marquette Law Scholarly Commons. “Privileged Communications with Accountants: The Demise of United States v. Kovel.” Marquette Law Review, 2007.
  10. Kovel Letter Mechanics: Bethell Law. “The Kovel Letter: Extending Attorney-Client Privilege to Accountants.” Bethell Law, Oct. 14, 2024.
  11. Confidentiality Practices: Thapar Law. “Confidentiality in Estate Planning.” Thapar Law, 2024.

The POA Paradox: Why Your “Grandfathered” Document Could Fail Your Family

For many clients, a Durable Power of Attorney (POA) is a set-it-and-forget-it document, signed years ago and filed away. The traditional wisdom is that even with changes in law, old POAs are “grandfathered in” and remain perfectly valid.

While technically true if the statutes governing the POA explicitly recognizes the continued validity of POAs executed prior to a more recent change in the state, the unfortunate reality is that a POA’s true measure isn’t its validity in the eyes of the legislators, but its practical usability before a financial institution or other third party in the chaos of a real-life crisis. Today, we’re facing a rising POA paradox: a legally sound, decades-old document is increasingly likely to be rejected by the financial institutions who need to honor it most.

This critical gap is driven by a perfect storm: changes in POA laws, stricter know-your-customer regulations over financial institutions, and the ubiquity of leading digital lives. 

Between 2007 and 2023, 28 state legislatures, including the District of Columbia, have adopted the Uniform Power of Attorney Act championed by the Uniform Law Commission. This period also coincides with the rise of Know Your Customer and Anti-Money Laundering regulations and an intense fear of fraud by financial institutions. 

Financial institutions have enacted their own ad hoc policies for accepting POAs that go beyond the requirements of the POA’s governing laws – the minimum requirements for your client’s agent’s authority to be effective. More and more clients and their agents are finding financial institutions rejecting POAs for various reasons.

POAs can also help a client’s agent access the client’s digital life. Even if a client has no high-value digital assets, their agent may need a POA to access their email and cloud storage. Why? Because critical information, like insurance policies, medical records, or login recovery codes for financial accounts, is often stored there. Without specific authority granted in a modern POA, the agent is legally blocked from accessing the client’s inbox or photo archive, causing delays and frustration at the worst possible time. This operational need for access to digital communications is just as vital as accessing a bank account.

For advisors using Wealth.com’s platform, recommending a proactive POA review isn’t just good service, it’s essential maintenance that prevents an emergency when your client is unavailable or in their most vulnerable moment.

Two Reasons Your Old POA Is a Ticking Clock

Recent developments have created two major hurdles for older Powers of Attorney: one institutional, and one legal.

1. Institutional Risk: Banks Are Getting Wary

Financial institutions are on high alert for regulatory compliance, leading to tighter internal compliance rules about identifying who the customer is and who acts on behalf of the customer. For financial institutions, the regulatory areas of concern are as follows:

  • KYC (Know Your Customer) is the process of verifying customer identity, which is a part of the broader 
  • AML (Anti-Money Laundering) framework that aims to prevent illegal financial activities like fraud and terrorism financing. 
  • OFAC (Office of Foreign Assets Control) is a specific set of sanctions lists that financial institutions screen against during the KYC/AML process to ensure they are not transacting with prohibited individuals or entities. 

Skittish about the compliance risks of dealing with agents, financial institutions are increasingly imposing their own requirements on POAs that are extraneous to the default requirements for having a valid POA under state law. 

This trend is troubling. POA laws are designed to incentivize third parties to accept a valid POA by protecting that third party if it relies on the representations of the agent. For example, the financial institution will not be held liable if it undertook the actions requested by the agent, even if the principal later disagrees with the agent.

Having a legally valid POA is no longer enough. Clients are being forced to re-draft their POAs to conform with the bank’s wishes, rather than their own. Their agents are being forced to go through additional administrative hurdles to gain authority to access an account or conduct business with the bank. 

2. Legislative Obsolescence: The Digital Asset Gap

Most statutory form POAs still do not address whether agents have explicit authority to access digital accounts and assets. An agent’s power must be explicitly granted and ideally reference with specificity the Electronic Communications Act, at the federal level, and the equivalent state law.

The Problem: Clients now hold a significant portion of their wealth in accounts that are most easily accessed through an online account and conduct a significant portion of their personal lives on digital platforms. Without specific authorization in the POA, an agent could be completely locked out of these digital accounts. Many states have updated their laws, often based on the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), to address this. If your client’s POA predates these laws, the agent may need a costly, time-consuming court order just to pay a bill or close an old email account.

The Wealth.com Solution: Our software’s document creation engine is continuously updated to incorporate the latest state laws, including those that govern fiduciary access to digital assets. When your client drafts a new POA using Wealth.com, you should ensure the document includes the necessary, explicit language to cover all modern asset classes. Importantly, giving an agent authority to act over the principal’s digital assets and accounts is not yet considered a general power. Your client must explicitly grant this power, usually by initialing next to this power at the time your client executes the POA.

Based on feedback from Wealth.com’s network of attorneys and customers across the country, we’ve noticed two trends:

  • The Age Factor: Many banks simply don’t want to deal with “stale” POAs (documents executed more than two years ago). In fact, some financial institutions require a POA to be “re-certified” every six months. 
  • The Agent Complexity Hurdle: Banks are increasingly rejecting documents that name two or more co-agents, regardless of whether the agents have joint or several liability. From the bank’s perspective, two agents means twice the administrative risk and complication. Your client may want to name both adult children as joint agents based on family dynamics. Now, the bank’s preferences must also be taken into account because that document might be refused.

If your client is able to plan into the use of a POA, you should encourage your client to preview the POA with the financial institution or third party well in advance of the date when that POA will be used. For example, your client may be closing on a house right as she is traveling outside of the country where notarization or even e-signing might be impossible. In that case, have your client circulate the POA to the escrow officer, mortgage lender, and title company so that all parties have signed off on using the POA. It will avoid any unfortunate surprises.

The Advisor’s Red Flag Checklist: Don’t Wait

Advisors should recommend a POA review, particularly if the client:

  • Lives in a state with recent law changes (e.g., Michigan, New York and Vermont have updated witnessing and signing rules in the last two years).
  • Does not have a digital assets power explicitly given to their agent.
  • Originally named two or more co-agents.

The Wealth.com Advantage: Use Ester® to quickly assess the age and completeness of existing documents. If a new POA is needed, our software provides a more modern approach to the state’s statutory form and state-specific signing and witnessing guidelines. Plus, documents created on our platform can be securely stored and shared in the Wealth.com Vault, giving Emergency Access contacts instant access when an emergency strikes.

How to Talk to Your Clients About POAs

The conversation shouldn’t be about fixing a mistake. Frame it as proactive plan maintenance and optimization.

Suggested Client Communication:

Subject: A Simple Check-Up for Your Financial Peace of Mind

Dear [Client Name],

We want to make sure your estate plan is protected against modern headaches. While your Durable Power of Attorney (POA) is legally valid, recent changes in state laws and bank policies mean older documents can be easily rejected by financial institutions.

I noticed that the last POA you signed was dated [Date].

Updating your POA is simple. Using the Wealth.com platform, we can generate a new document that:

  1. Includes the explicit language needed for your agent to access and deal with your digital assets (like your online accounts).
  2. Complies with all the latest signing and witnessing requirements in [Client’s State].

It ensures the person you chose to act for you won’t face unnecessary delays when you are unavailable or if something has happened to you. Let’s schedule a brief time to review your document.

Key Takeaway

A proactive POA review demonstrates thoughtful client service, prevents family emergencies, and naturally opens the door to broader estate planning conversations. Don’t wait until incapacity makes the update impossible. By leveraging Wealth.com’s continuously updated document engine, you can deliver peace of mind and operational clarity to your clients today. 

 

What is a Trust and Is It Right for You? Part 2

TL/DR

A Trust is a financial agreement between someone who owns an asset and a trusted person to hold and manage that asset for them. In estate planning, a Revocable Trust is often used as a substitute for a Will, but there are many types of Trusts that accomplish different objectives. If you’re trying to decide whether you should have a Trust in your estate plan, read this two-part article.

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What’s the difference between a Marital Trust and a QTIP Trust? Are Bypass Trusts and Credit Shelter Trusts trying to accomplish the same goals? As you start learning about Trusts, you’ll learn that there are subtle differences between the Trusts that you might include in your foundational estate plan. Adding to the confusion, each lawyer has a different name for Trusts that do pretty much the same thing, and we try to provide the most common names for them.

Choosing to use a Trust in your estate plan is about being clear on your goals for how your assets should go to your loved ones. Trusts are created through a contract, and so there are a million different ways to write a contract to meet your specific goals.

This Article is divided into two parts. Part 1 is a primer on the key differentiators between Trusts. This Part 2 is a summary of the most commonly created Trusts in a foundational estate plan and their benefits.

The trusts named in this article are the ones you are most likely going to encounter when creating your foundational estate plan, which is centered on a Will or Revocable Trust and disposes of your assets when you pass away. This article does not discuss Trusts that you might create during life for wealth transfers or tax planning.

It is also important to realize that the descriptions for these Trusts are not mutually exclusive; you can use multiple adjectives to describe one Trust in your estate plan. For example, you can create a Marital Trust that is also a Spendthrift Trust.

Revocable or Living Trust

This Trust is most often used as an alternative to a Will for disposing of someone’s assets at death. It is also a great vehicle to transition the management of your financial affairs smoothly to someone whom you trust, in case you become incapacitated.

Learn more about Revocable and Irrevocable Trusts in Part 1 of this article.

Marital Trust

The Trust’s creator (“trustor”) creates this irrevocable Trust for the primary benefit of the spouse (i.e., your spouse can enjoy your assets after you have passed away). A Marital Trust is useful for someone who has a blended family, worries about elder abuse of their spouse or someone influencing their spouse to disinherit their beneficiaries, or is wealthy enough to worry about the estate and generation-skipping transfer taxes. There are many ways to design a Marital Trust, but if you also want your spouse’s inheritance to qualify for a benefit called the “unlimited marital deduction” (i.e., you could pass an unlimited amount of property to your spouse completely free of estate tax at your death), the Tax Code has stringent requirements for the design of this Trust (see “QTIP Trust” below).

QTIP Trust

The Qualified Terminable Interest Property Trust is a specific kind of Marital Trust. Its terms are properly structured to comply with the tax rules so that you can pass your property to your spouse in a trust and still benefit from the unlimited marital deduction.

One of the biggest “loopholes” under the estate tax rules is the unlimited marital deduction. This deduction allows you to pass unlimited amounts of property to your spouse (beyond the estate tax exemption of $12.92M in 2023), completely free of the estate tax.*

Not all Marital Trusts comply with these rules. For example, your Marital Trust may say that your spouse will be the only beneficiary for the rest of your spouse’s life, but if your spouse remarries, the Trust will end and your assets will pass to your other loved ones. By inserting the condition about remarriage, your Marital Trust does not comply with the tax rules. Your gift to your spouse counts toward the federal tax exemption, along with any property you pass to other non-charitable beneficiaries, and could lead to an inadvertent foot fault where your estate owes estate taxes.

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*As with all things tax, there are a lot of factors to unpack in this statement. Importantly, your spouse must be a U.S. citizen. In addition, the federal government only grants this benefit to individuals who are legally married, and not individuals in a domestic partnership, civil union, or other relationship arrangements. The fact that the unlimited marital deduction was not available for individuals in same-sex marriages performed under state law was the basis for the seminal case, U.S. v. Windsor, 570 U.S. 744 (2013). The case declared the federal law, the Defense of Marriage Act, to be unconstitutional and forced the federal government to grant the same government benefits to same-sex spouses. Those government benefits include the estate tax deduction!

Family, Bypass, or Credit Shelter Trust

This Trust goes by many names, but in essence, it is an irrevocable Trust created at your death to allow your family to engage in death tax planning.* If your estate may have a tax issue, this Trust allows your executor or trustee to use what remains of your tax exemption amount ($12.92M in 2023 at the federal level*2) and shelter those assets from future death taxes. This Trust becomes a “family bank,” where assets continue to grow and benefit a family, but no death tax will be imposed with the passing of each generation.

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*“Death taxes” in this article refers to the estate tax and generation-skipping transfer tax. These two tax regimes exist at the federal and state levels.

*2 The exemption amount may be significantly lower at the state level, and can be as low as $1M.

A/B Trusts

This term applies to estate planning for couples. It describes the most common combination of Trusts that are formed at the death of the first person who passes away: the Marital Trust (“A Trust”) and the Family Trust (“B Trust”). Your estate plan will then specify a mechanism for how your executor, trustee, or even your spouse, can allocate assets between those two Trusts.

As an additional variation on this term, if you and your spouse have a joint Trust (i.e., you created your estate plan together through one Revocable Trust), your estate plan may use A/B/C Trusts. In addition to the Marital and Family Trusts, your estate plan might create a Survivor’s Trust (read more below).

Survivor’s Trust

The Survivor’s Trust is relevant only when a couple creates a joint revocable Trust; it is the continuation of the revocable Trust once one person has passed away. With a joint Trust, the estate plan must describe where all of the couple’s assets will go – not only the deceased person’s assets, but also the survivor’s assets. Because one half of the couple is still living, the Survivor’s Trust exists to collect and hold the survivor’s assets without requiring the survivor to create a brand-new estate plan. The survivor can thus change and revoke the Survivor’s Trust as desired (but a Marital Trust or Family Trust is irrevocable).

Trust for Descendant or Trust for Issue

This type of Trust goes by many names, and often references the name of the primary beneficiary (e.g., Trust for Sara). This irrevocable Trust allows the beneficiary to enjoy the Trust assets, but without the full control that comes with owning assets in their own name. This Trust is useful for designating someone else to manage financial affairs while the beneficiary is not ready or able to handle the responsibility, ensuring that assets stay within a family, protecting an inheritance from divorce or creditors (e.g., the beneficiary’s personal debts), and planning for death taxes.

These Trusts are drafted in many different ways, and can take the form of a Holdback Trust or Special Needs Trust, as appropriate.

Holdback Trust

The primary purpose of this Trust is to “hold back” the inheritance for a younger beneficiary until the beneficiary comes of age. This irrevocable trust is meant to be a temporary vehicle and is more robust than a UTMA account in allowing the trusted person to manage the beneficiary’s finances. Usually, you will be given the opportunity to decide on which birthday the trust will end and the beneficiary should be able to receive all the assets.

Special Needs Trust

This irrevocable Trust is structured with a beneficiary who has long-term special needs in mind. The Trust usually lasts during the life of the beneficiary and preserves the beneficiary’s eligibility for government programs like Medicare. This Trust should have provisions allowing a trusted person to modify the Trust terms to optimize the Trust for the needs of that beneficiary, such as restricting certain powers, or adapting to government rules to access benefits.

Charitable Trust

This irrevocable Trust benefits a charity, and usually is created so that the gifts to the Trust qualify for a charitable deduction for income tax purposes, estate tax purposes, or both.

The second of the biggest “loopholes” in the estate tax rules is that a properly made gift to charities qualifies for an unlimited deduction (see “QTIP Trust” for the other unlimited deduction). To set up a Charitable Trust for tax planning, you must make sure that there are restrictions so that the organization cannot receive a Trust distribution unless it qualifies under the Code (usually, an organization that has maintained its 501(c)(3) status, but the estate tax rules have slight variations).

Pet Trust

This irrevocable Trust benefits pets. You would name someone to take care of the pets and to handle the finances for your pets (which may be the same person or different people). However, Pet Trusts are disfavored under the law. For example, you may be able to benefit only the pets who are alive when you pass away, and not their descendants, and the Trust’s distributions are taxed as income to the caretaker even if they are used to cover the pets’ expenses.

Spendthrift Trust or Asset Protection Trust

This Trust must be properly structured according to state law to grant the layer of protection from legal claims against the beneficiary and the creditor’s state must also respect that result. When the asset protection is respected, the Trust’s assets are considered separate from the personal assets of the beneficiary to satisfy personal claims against the beneficiary. For example, the Trust’s assets may not be considered in alimony calculations upon divorce, or the Trust’s assets cannot be forced out of the Trust to pay the debt or a monetary judgment against the beneficiary. Oftentimes, creating this Trust requires an affirmative statement in the Trust document and giving the trustee full discretion to decide when distributions can be made.

Originally published January 27, 2023, and updated on November 14, 2025.

What is a Trust and Is It Right for You? Part 1

TL/DR

A Trust is a financial agreement between someone who owns an asset and a trusted person to hold and manage that asset for them. In estate planning, a Revocable Trust is often used as a substitute for a Will, but there are many other descriptions for any single Trust such as Irrevocable, Living, Joint, Testamentary, and Grantor. If you’re trying to unpack these terms and decide whether you should have a Trust in your estate plan, read this two-part article.

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A Joint Trust, a Testamentary Trust, a Sub-Trust, a Revocable Trust (which sounds so much like “Irrevocable Trust” when said out loud)… There are so many adjectives used to describe Trusts, and it can quickly make your head spin. Once you dig deeper into these descriptive words for Trusts, you realize that many of these concepts come in pairs. Once you understand what feature of a trust is being described, and what the point of comparison is, it becomes much easier to understand the Trust’s use case.

This Article is divided into two parts. This Part 1 is a primer on the key differentiators between Trusts. Part 2 is a summary of the most commonly created Trusts in a foundational estate plan and their benefits.

Choosing to use a Trust in your estate plan is about being clear on your goals for how your assets should go to your loved ones. Trusts are created through a contract, and so there are a million different ways to write a contract to meet your specific goals.

Here are the ways to describe a Trust that we will explore in this article:

Different types of Trusts

Every term describes a different aspect of a Trust, and they are not mutually exclusive. In fact, every Trust can be described using one of the two choices from each category above. For example, if you use a Trust as a substitute for a Will in your foundational estate plan, you likely created a Revocable, Individual, Inter Vivos, Grantor Trust (most commonly shortened to “Revocable Trust”). If a Marital Trust will be created at your death, you will be creating an Irrevocable, Individual, Testamentary, Non-Grantor Trust. Let’s unpack each of these terms.

Revocable vs Irrevocable Trusts

The Revocable Trust, as the name implies, can be undone or unwound; the person who creates the Revocable Trust can simply “revoke” or “pull back” the Trust. The Irrevocable Trust, on the other hand, is much harder to change.

The Revocable Trust is often used as an alternative for a Will. It can also be used as an alternative to LLCs or Corporations to own an asset more privately while the owner is still alive.

The Irrevocable Trust is often used to give away assets while maintaining control over how the assets are used or to protect from specific types of taxes.

For most people, the introduction to Trusts begins with their own estate planning when they have to choose between making a Will or a Trust. In this context, the type of Trust you will be considering is the Revocable Trust (also commonly called a “Living Trust”).*2

Just as you would be able to change or completely revoke a Will (in many states, you could do this by ripping the original document!), you should be able to change or completely revoke your Revocable Trust. This is important because you could change your mind over the course of your life about key terms, such as who should get what asset. While you are alive and have mental capacity, you can easily change or revoke your Revocable Trust by signing a new Trust document.

An Irrevocable Trust is much harder to change, and it becomes especially difficult to remove or add beneficiaries or modify their individual rights. You might encounter this type of Trust even when creating your foundational estate plan (for example, a Marital Trust). In most states, once the Irrevocable Trust exists, changing this Trust requires the appointment of an independent trustee (if the Trust allows for it), the agreement of all the beneficiaries, or a court action. All of these options may be expensive and may require hiring an estate planner to do it right. For this reason, you must be certain you understand what powers and benefits you are giving up when you transfer property into an Irrevocable Trust.

That being said, Irrevocable Trusts are powerful vehicles for wealth transfer and preservation because you can control how the assets will be used. When properly structured, they provide protection against death taxes and creditors, which Revocable Trusts cannot do.

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*This article is about different adjectives describing Trusts. To learn more about why you would want a Revocable Trust instead of a Will, check out the article.

*2 “Living” is also sometimes used interchangeably with “Inter Vivos” (see section on “Inter Vivos v. Testamentary Trusts”). But its most common use is to mean a Revocable Trust that is used as a substitute for a Will.

Individual vs Joint Trusts

An Individual Trust has one creator (called a “trustor,” “grantor,” or “settlor”), whereas a Joint Trust has two or more trustors. If you would like to create a Trust with someone else, be clear on why.

The most common reason to set up a joint trust is with your spouse. You already share in the management of the assets (e.g., you live in a community property state), file income taxes together, and share similar values, goals, and beneficiaries.

Income tax filings and payments may become messy if you and the other person are expected to report and pay the income taxes on the assets of the Trust (see “Grantor vs Non-Grantor Trust”) below.

For gift tax reasons (as well as introducing potential for complicated legal claims), you should also consider carefully giving your assets into a Trust that was created by someone else. For example, it may be tempting to give an inheritance to your nephew in a Trust that your parents set up for your nephew. It may be better for you to set up your own Trust to keep the Trust management straight-forward.

Inter Vivos vs Testamentary Trusts

Inter Vivos Trusts* are created during the trustor’s lifetime, whereas Testamentary Trusts are created only at the trustor’s death. This description is about the timing of when a Trust exists and can hold assets.

Inter Vivos Trusts allow the creator of the trust to transfer assets during life. Testamentary Trusts lie in wait until the creator has passed away and receive assets only then. The most common way to create a Testamentary Trust is to draft it into a Will or within another Trust (i.e., a “Sub-Trust”).

You may encounter both Inter Vivos and Testamentary Trusts when creating your foundational estate plan. For example, if you use a Revocable Trust as a substitute for a Will, you are creating an Inter Vivos Trust. In fact, it is important to transfer as much of your assets into this Trust during your life, if minimizing probate is important to you.

Your estate plan may also involve any number of Testamentary Trusts (created under your Will or your Revocable Trust) in order to specify how your assets can be used or given away after your death or to allow your loved ones to minimize future taxes. For example, you might set up a relatively short-lived Testamentary Trust called a “Holdback Trust” just so someone can help your child manage their financial affairs until your child is older.

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*This term means “among the living” in Latin, and the English translation is “Living Trust.” However, the Living Trust is now commonly associated with Revocable Trusts used as a substitute for a Will, and so “Living” has become a confusing term because you can create an Irrevocable Trust during your life.

Grantor vs Non-Grantor Trusts

If you’ve made it this far in this article, you are really well on your way to understanding the features of a Trust that are important to an estate planner. Here is one more concept, which may matter more to your CPA. Your Trust may own assets that produce income (for example, real estate that is leased). It’s important to understand who is responsible for paying income taxes for Trust assets: you or the Trust.

A Grantor Trust does not pay its own taxes; another person (usually the Trust creator) must include the Trust’s income on his, her or its tax return and pay any income taxes. A Non-Grantor Trust pays its own taxes using the tax brackets for estates and trusts, which are different from the tax brackets for individuals.

Grantor Trusts retain enough of a connection to its “owner” (or “Grantor”) under the Tax Code so that the Grantor pays the taxes. Who is an owner is determined under a complex set of tax rules, and estate planners often intentionally turn on or turn off Grantor status on the Trust; but at a minimum, the owner must still be alive.

Having a Grantor trust is beneficial if you do not want to complicate tax reporting by having the Trust file a separate tax return or you want to treat the payment of taxes as an additional annual gift to your loved ones. In addition, a Non-Grantor Trust generally pays more income taxes than an individual taxpayer on the same amount of income. This is because the trust tax brackets are “compressed”; a Trust taxpayer reaches the maximum tax rate (i.e., 37%) at a lower income than does an individual taxpayer.

How does this concept apply to your foundational estate plan? If you use a Revocable Trust as a substitute for a Will, it will be a Grantor Trust that you “own” during your lifetime. A Revocable Trust does not result in any income tax savings: you must include the Trust’s income on your own tax return and pay those income taxes.

If you use a Sub-Trust (or Testamentary Trust) in your Will or Trust, that Trust will be created at your death and will usually be a Non-Grantor Trust. It will have to file and pay its own income taxes.

If you’re ready to get started creating a Revocable Trust follow this link.

To learn more about specific types of Trusts and their objectives, read Part 2 of this series.

Originally published January 24, 2023, and updated on November 14, 2025.

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