Tag: Estate Planning

Estate Planning for Business Owners: One Plan for Personal and Business Wealth

Your client may call the company an asset. That description is technically correct and practically incomplete.

The business may generate the household’s income, employ family members, own real estate, guarantee debt, fund retirement, and represent most of the client’s net worth. It may also depend heavily on the owner’s relationships, judgment, and daily involvement.

If that owner dies or becomes incapacitated, every one of those roles can be disrupted at once.

That is why estate planning for business owners cannot be treated as a standard will-and-trust engagement with a company interest added to the asset list. The personal estate plan, business succession plan, governing documents, valuation, liquidity strategy, and tax plan must work as one system.

For advisors, this creates an opportunity to lead one of the most consequential planning conversations a client will ever have.

What does estate planning for business owners involve?

Estate planning for business owners coordinates what happens to the company’s ownership, control, and economic value if the owner dies, becomes incapacitated, or exits the business. It aligns the owner’s personal estate documents with the company’s governing agreements, succession strategy, valuation process, liquidity sources, and family goals.

The objective is not simply to transfer an asset. It is to protect the business as an operating enterprise while preserving the wealth it represents for the people the owner cares about.

Why a business is different from almost every other estate asset

A marketable investment portfolio can generally be valued, divided, and sold. A closely held business may be difficult to value, impossible to divide without affecting control, and costly to sell under pressure.

It also carries multiple forms of value that do not always pass together:

Economic value: The right to profits, distributions, or sale proceeds.
Voting control: The authority to make major decisions or select leadership.
Employment: A salary, benefits, and a professional identity for the owner or family members.
Operating continuity: The relationships and institutional knowledge that keep the company functioning.
Family meaning: The founder’s legacy and, sometimes, the inheritance family members expect to receive.

A plan can successfully transfer the equity and still damage the company. It can preserve the company and still treat heirs unfairly. It can minimize one tax exposure while creating a liquidity problem somewhere else.

Effective business owner wealth planning has to account for all of these outcomes together.

Business succession and estate planning answer different questions

The terms are often used interchangeably, but they solve different parts of the problem.

Business succession planning asks:

Who will lead the company, make decisions, retain key employees, and maintain relationships with customers, lenders, and vendors?

Estate planning asks:

Who will own the interest, receive its economic value, exercise voting rights, and ultimately benefit from it?

An integrated plan asks the harder question: How do leadership, ownership, and wealth transfer change together without destabilizing the business or the family?

Consider an owner with two adult children. One has worked in the company for 15 years. The other has built a separate career. A personal estate plan that divides everything equally may appear fair, but an equal division of voting equity could leave the active child without clear control. Giving the entire business to the active child could create a different problem if the remaining estate lacks enough value for the other child.

There is no universally correct answer. There is, however, a clear need to distinguish equal treatment from equitable treatment and to model the consequences before the family is forced to live with them.

The six planning questions advisors should lead

1. What does the client actually own?

Start with the legal and economic ownership structure, not the name of the company.

The client may own voting and nonvoting interests, interests in multiple operating entities, intellectual property, real estate leased to the business, shareholder loans, or equity held through a trust or holding company. The client may also have personal guarantees tied to company debt.

A complete ownership map should identify:

  • Each entity and the client’s ownership percentage
  • Voting, management, and distribution rights
  • How each interest is titled
  • Transfer restrictions and rights of first refusal
  • Business-owned and personally owned insurance
  • Debt, guarantees, and obligations connected to the owner
  • Which interests are included in or outside the taxable estate

Without that foundation, the planning team may be solving for an incomplete version of the client’s wealth.

2. Who can act if the owner cannot?

Many business plans focus on death and overlook incapacity. For an owner-led company, incapacity may create the more immediate operating crisis.

The planning team should determine who can exercise voting rights, manage the ownership interest, access necessary accounts, communicate with lenders, and authorize major decisions. A personal financial power of attorney may be part of the answer, but it must be reviewed alongside the company’s operating agreement, bylaws, shareholder agreement, and other governing documents.

The person best suited to manage the client’s personal finances may not be the right person to operate the company. The plan should make that distinction explicit.

3. Who receives control, and who receives value?

Ownership does not have to be treated as a single, indivisible concept. In some plans, voting control and economic benefit may be allocated differently. In others, the business may pass to active family members while life insurance, investment assets, or other property helps provide value to heirs outside the company.

The advisor can help the client explore questions such as:

  • Should active and inactive family members inherit the same type of interest?
  • Does the intended successor have enough authority to lead?
  • Will trusts receive business interests, and can the selected trustees manage them?
  • Could a mandatory buyout create an unsustainable cash demand?
  • What happens if no family member wants or is qualified to run the company?

These are financial, legal, operational, and emotional questions. Addressing them early gives the client more choices.

4. What is the business worth?

Business valuation in estate plans is not a one-time compliance exercise. It influences transfer strategies, insurance coverage, buyout obligations, potential estate tax exposure, and whether the client’s intended division of wealth is realistic.

The IRS has long emphasized that closely held business valuation depends on the facts and circumstances of each case, including the company’s history, financial condition, industry outlook, earning capacity, and other relevant factors. Its guidance makes clear that there is no single formula appropriate for every closely held company. See the IRS memorandum discussing Revenue Ruling 59-60. The IRS also instructs examiners to review governing documents, prior sales, appraisals, and five years of relevant financial records when evaluating a closely held interest. See the IRS examiner guidance.

Advisors should help clients establish a repeatable valuation process and revisit it after material events, including:

  • Rapid growth or contraction
  • A major financing round
  • An acquisition offer
  • The loss of a key customer or executive
  • A change in ownership
  • A new buy-sell agreement
  • A significant shift in the industry

A valuation provision written years ago can produce a number that no longer reflects the company, the agreement’s funding, or the owner’s estate plan.

5. Where will liquidity come from?

Liquidity planning for owners is often the point where a plan that looks sound on paper fails in practice.

The owner’s estate may need cash for taxes, debt, administration expenses, family support, or equalization among beneficiaries. The business may simultaneously need working capital, funds to recruit new leadership, money to redeem an owner’s interest, or reserves to reassure employees and customers.

Those demands may arrive when the family is least prepared to sell the company or borrow against it.

Potential liquidity sources can include personal liquid assets, business cash, life insurance, borrowing capacity, a planned sale, or payments under a buy-sell agreement. Each source has different legal, tax, valuation, and operational consequences.

Federal law also permits certain qualifying estates in which a closely held business exceeds 35 percent of the adjusted gross estate to elect installment payment of eligible estate tax under Internal Revenue Code Section 6166. That relief is subject to detailed requirements and should be evaluated by qualified tax and legal professionals. It is a potential tool, not a substitute for a liquidity strategy. See 26 U.S.C. § 6166.

The essential planning question is simple: If the client were unavailable tomorrow, where would every required dollar come from, and when?

6. Do the business agreements and estate documents tell the same story?

A client may have a will, trust, buy-sell agreement, operating agreement, insurance policy, and succession plan, each prepared by a capable professional. The risk is that they were created at different times, for different purposes, using different assumptions.

Buy-sell agreements in estate planning deserve particular attention. The planning team should review:

  • The events that trigger a purchase or sale
  • Who has the right or obligation to buy
  • How the purchase price is determined
  • How frequently the valuation is updated
  • How the transaction will be funded
  • Who owns and benefits from related insurance policies
  • Whether the agreement aligns with the client’s will and trusts
  • How the structure affects the company’s and estate’s tax exposure

The importance of coordination was reinforced by the U.S. Supreme Court’s 2024 decision in Connelly v. United States. The Court held that life insurance proceeds paid to a corporation increased the corporation’s fair market value and that the company’s obligation to redeem the deceased shareholder’s shares did not offset those proceeds for federal estate tax valuation. The ruling does not make every entity-redemption structure inappropriate. It does show why insurance, valuation, agreement design, and estate tax consequences must be reviewed together. See the Supreme Court opinion.

What integrated entrepreneur estate planning looks like

Imagine a client who owns 80 percent of a manufacturing company. Her daughter is the chief operating officer, while her son does not work in the business. The client’s revocable trust divides the remaining estate equally between both children. The company has a buy-sell agreement, but its stated value has not been updated in seven years. Most of the client’s wealth is tied to the business and the real estate it occupies.

Viewed one document at a time, the client appears to have a plan. Viewed as a system, several questions emerge:

  • Would the trust divide the business interest in a way that undermines the daughter’s control?
  • If the daughter must buy her brother’s interest, where would the money come from?
  • Does the old agreement value meaningfully reflect the company today?
  • Is the business real estate transferred with the operating company or separately?
  • What happens to personal guarantees and company debt?
  • Can the business continue paying employees and serving customers during the transition?

The advisor’s role is not to choose a legal structure in isolation. It is to make the full set of tradeoffs visible, help the client define the desired outcome, and coordinate the attorney, CPA, valuation professional, insurance specialist, and other experts needed to implement it.

The advisor as the integrator

Business owners often have sophisticated professionals around them. What they may not have is one person making sure every professional is working from the same facts and toward the same outcome.

Advisors are well positioned to fill that role because they understand the client’s family, cash flow, portfolio, retirement goals, risk tolerance, and broader wealth picture. They can lead the process by:

Mapping the system. Document the entities, ownership, decision-makers, agreements, assets, liabilities, and family relationships involved.
Defining the client’s priorities. Clarify whether the primary goal is continuity, a family transfer, a third-party sale, employee ownership, family equity, tax efficiency, or some combination.
Identifying conflicts and gaps. Surface stale valuations, unfunded obligations, inconsistent documents, unclear authority, and concentrated liquidity risk.
Modeling alternatives. Show how different transfer, sale, growth, and liquidity events could affect the business, taxes, estate distributions, and family members.
Coordinating specialists. Bring the estate attorney, corporate counsel, CPA, valuation professional, and insurance specialist into a shared planning process.
Tracking implementation. Confirm that documents are executed, titles and beneficiary designations are updated, policies are properly owned, and agreed actions are completed.
Establishing review triggers. Revisit the plan after a valuation change, financing, ownership transition, major hire, family event, tax law change, or acquisition discussion.

The advisor does not need to replace any of these specialists. The advisor creates value by ensuring that no important decision remains trapped inside a professional silo.

Why generic estate planning tools struggle with business owner complexity

Many estate planning tools are built around a simple path: identify an asset, identify its owner, and identify its beneficiary.

Business owner clients rarely fit that model. Their plans may involve layered entities, trusts, voting and nonvoting interests, transfer restrictions, insurance funding, real estate, guarantees, future liquidity events, and family members with different roles. A change to one part of the structure can affect control, tax exposure, cash needs, and estate distributions elsewhere.

Wealth.com is built to help advisors capture and communicate that complexity. Advisors can aggregate and visualize ownership across individuals, entities, and trusts; centralize estate-related documents; and use tools such as the Ownership Balance Sheet, Heritage Map, Report Builder, and Scenario Builder to clarify current structures and compare potential outcomes. Scenario Builder can incorporate future events, including asset sales and liquidity events, so planning conversations can move beyond static documents to the consequences of real decisions. Explore Wealth.com’s platform.

That visibility matters. Clients are more likely to act when they can see how the business, the estate plan, and the family connect.

A business owner estate plan should evolve with the business

The strongest plan is not the one with the most documents. It is the one in which ownership, authority, liquidity, valuation, and intent remain aligned as the company and family change.

For advisors, estate planning for business owners is an opportunity to move beyond a narrow discussion of asset transfer. It is a chance to help protect the enterprise a client built, the wealth it created, and the people who will live with the decisions that follow.

The work begins by putting the whole system in view.


Ready to help business-owning clients connect estate planning, tax considerations, and their broader wealth strategy?


See how Wealth.com brings complex planning into one clear, collaborative platform.

Frequently asked questions about estate planning for business owners

Does a buy-sell agreement replace an estate plan?

No. A buy-sell agreement governs specific ownership transfers under defined events. The estate plan addresses the owner’s broader assets, beneficiaries, fiduciaries, incapacity, and wealth transfer goals. The two must be reviewed together so their instructions, valuations, and funding mechanisms align.

How often should a business valuation be updated for estate planning?

There is no universal schedule. Many owners benefit from regular valuations and additional reviews after material events such as rapid growth, a financing, an acquisition offer, an ownership change, or the loss of a key customer or leader. The appropriate frequency should be determined with a qualified valuation professional and the client’s legal and tax advisors.

What is the difference between business succession planning and estate planning?

Business succession planning focuses on future leadership and operating continuity. Estate planning focuses on ownership, authority, and the transfer of economic value. Business owners need both plans to work together.

How can a business owner create liquidity for estate obligations?

Potential sources include personal liquid assets, company cash, life insurance, borrowing capacity, a planned sale, and payments under a buy-sell agreement. The appropriate mix depends on the company, the owner’s estate, tax considerations, and the timing of expected obligations.

What should a financial advisor review with a business-owning client?

The advisor should review entity ownership, governing agreements, estate documents, decision-maker authority, business valuation, insurance, debt and guarantees, liquidity, family roles, succession goals, and implementation status. Legal, tax, valuation, and insurance professionals should advise within their respective areas.


This material is for educational purposes only and is not intended to provide legal, tax, or valuation advice. Clients should consult qualified professionals regarding their individual circumstances.

How Advisors Can Build a Family Milestones Program

A client’s child turns 18.

Their financial life may look almost exactly as it did the day before. They may be preparing for college, working a summer job, or still relying on their parents for nearly everything. They probably do not have meaningful assets to manage.

But an important planning threshold has arrived.

Once a child becomes a legal adult, parents should not assume they will retain the same access to medical information or the same ability to act on the child’s behalf. The U.S. Department of Health and Human Services explains that only an individual or the individual’s personal representative has a right to access the person’s medical records. An advance directive can provide instructions for medical care if someone cannot communicate and, depending on the document and applicable state law, can allow that person to name someone to make health care decisions for them.

For families, this creates a real and often overlooked need. For advisors, it creates a natural opportunity to help.

Turn a one-time gesture into a named client benefit

Rather than addressing this need only when a client happens to ask, firms can formalize the experience as a Family Milestones Program.

The experience can include a brief educational meeting, completion of the document, and clear instructions for signing, storing, and sharing it.

The service can be offered as an included benefit of the family’s relationship with the firm.

That distinction matters. A named program is easier to explain, easier to operationalize, and easier for clients to remember. It can appear on the firm’s website, in onboarding materials, during annual reviews, and in client benefit summaries. Instead of simply saying the firm serves the whole family, the advisor can point to a specific way it does so.

The best time to meet the next generation is before there is anything to sell them

Many firms first focus on the next generation when a wealth transfer becomes imminent. By then, the adult children may already have their own financial relationships, preferences, and perceptions of their parents’ advisor.

A Family Milestones Program starts much earlier.

The objective is not to gather assets this quarter. In many cases, there will be no account to open and no immediate revenue opportunity. That is precisely what makes the interaction meaningful. The advisor is showing up at an important moment without attaching a sales pitch to it.

The young adult receives something useful. The client sees the firm investing in someone they love. The advisor earns an introduction based on service rather than solicitation.

Over time, that first conversation can become the foundation for future ones. The same young adult may eventually need help with workplace benefits, a first investment account, marriage, a home purchase, children, business ownership, or an estate plan of their own. There is no guarantee that the relationship will develop that way, but the firm will have earned something more valuable than a cold lead: familiarity, trust, and a history of being helpful.

This is a long-term relationship strategy, and it should be measured like one.

Why the program creates value now

The strategic payoff may take years, but the client value is immediate.

It makes multigenerational planning tangible

Advisors often talk about serving the whole family. This program turns that promise into a specific experience clients can see and use.

It gives clients another reason to value the relationship

Clients do not experience their financial lives as a collection of investment accounts. Helping them prepare a child or grandchild for adulthood demonstrates that the firm is paying attention to the people and transitions surrounding the wealth.

It creates a natural, permission-based introduction

The milestone gives the advisor a legitimate reason to meet the next generation. The conversation begins with the young adult’s needs and choices, not the firm’s services.

It differentiates the firm’s client experience

Plenty of firms say they offer comprehensive planning. Far fewer can name a repeatable benefit designed specifically for the families of their clients.

It gives estate planning an ongoing role

Estate planning should not be treated as a project that happens once and disappears from view. A milestone-based program helps make planning a continuing part of the relationship.

How to launch a Family Milestones Program

The strongest version of this program is simple, consistent, and easy for the advisory team to explain.

Step 01

Define the benefit

Start with one clear milestone and one clear outcome. For example:

When a client’s child or grandchild turns 18, the firm offers a short planning session and access to an advance health care directive through Wealth.com at no additional cost.

Specify who is eligible, what is included, and whether the benefit extends to children, grandchildren, or both. Review the design and all client-facing language with the firm’s legal and compliance teams.

Step 02

Give the program a name

“Family Milestones Program” is broad enough to grow with the firm while remaining easy to understand. A formal name helps advisors introduce it consistently and makes it feel like a genuine component of the client experience, not an occasional favor.

Step 03

Capture the right family information

During onboarding and annual reviews, ask clients whether they would like the firm to recognize upcoming family milestones. Record the names and relevant timing for children and grandchildren in the firm’s CRM, consistent with its privacy and data-handling policies.

The firm does not need to wait for perfect data. It can begin with interested clients and expand participation over time.

Step 04

Build a simple workflow

Create a CRM reminder 60 to 90 days before the young adult’s 18th birthday. The workflow might include:

  1. An advisor note to the client explaining the benefit
  2. An invitation for the young adult to participate
  3. A short educational meeting centered on the young adult’s choices
  4. Completion of the appropriate document through Wealth.com
  5. Instructions for execution, storage, and sharing
  6. A brief follow-up after the process is complete

The young adult should be treated as the decision-maker throughout the experience. The parent’s role is to make the introduction, not to make choices on the new adult’s behalf.

Step 05

Make the experience feel like a milestone

The program should feel warmer than an administrative task. Congratulate the young adult. Explain why the document matters in plain language. Give them a concise checklist of what to do with the completed document. If appropriate, follow up with a handwritten note or a small welcome gift from the firm.

The details do not need to be expensive. They need to feel intentional.

Step 06

Measure relationships, not immediate revenue

Traditional campaign metrics will miss the point. Better early indicators include:

  • Eligible family members identified
  • Invitations sent
  • Young adults who participate
  • Documents completed
  • Next-generation relationships established
  • Client feedback and referrals connected to the program
  • Follow-up planning conversations over time

Assets may eventually follow, but they should not be the program’s first test of success.

Client-facing copy firms can use

Advisors can include language like this on a website, client benefit page, or service overview:

Website or service overviewFamily Milestones Program

New planning needs often arrive before financial complexity. When your child or grandchild turns 18, we will help them understand and establish a foundational health care directive through Wealth.com. This benefit is included as part of your family’s relationship with our firm.

An advisor can also introduce it during a review with a simple question:

Annual review conversation“Do you have any children or grandchildren turning 18 in the next year? We offer a Family Milestones Program that helps them put a foundational health care directive in place. It is included as part of our work with your family.”

That question is specific, helpful, and easy for a client to act on.

Start with 18, then build around the family’s life

The 18th birthday is an ideal place to begin because it combines a clear trigger with an immediate planning need. Once the workflow is working well, firms can decide whether the broader program should recognize other transitions, such as a first job, marriage, the birth of a child, a home purchase, or the launch of a business.

Each milestone can prompt a different planning conversation. Together, they can create a client experience that follows the family across generations.

The value of a Family Milestones Program is not that every 18-year-old becomes a profitable client. The value is that the firm helps at a moment that matters, demonstrates what multigenerational service actually looks like, and begins a relationship with no immediate expectation in return.

Clients remember the firms that help them care for the people they love. The next generation will, too.

Document names, legal requirements, age-of-majority rules, and execution formalities vary by state and individual circumstances. Firms should use applicable state-specific workflows and review the program and its communications with legal and compliance professionals.

The College Health Care Conversation Most Advisors Skip

Your client just wrote a tuition check, co-signed a housing form, and paid the first health insurance premium of the year. In the eyes of the law, none of that gives them the right to make a single phone call to their child’s doctor.

The day a child turns 18, the default access a parent relied on for eighteen years quietly disappears. Without the right documents, that parent may not be able to receive medical information, speak with a treating physician, or step in when their adult child cannot speak for themselves.

Your expertise isn’t measured by your ability to define estate planning documents. It’s measured by your ability to identify planning opportunities, navigate client questions with confidence, and use each conversation to strengthen the client’s overall plan. This playbook focuses on those conversations because that’s where advisors create the most value.

The college health care documents, in one screen

This is the part you can hand a client or summarize in thirty seconds. Three instruments, with three different jobs:

1

HIPAA authorization

Governs access to information. It lets a provider or health plan share protected health information with the people named in it. It does not grant decision-making power.

2

Health care proxy or power of attorney

Governs decisions. It names someone to make health care decisions when the student cannot make or communicate them. When in effect, that agent generally becomes the HIPAA personal representative as well.

3

Advance health care directive

Usually the broadest instrument, often combining the proxy appointment, living will language, end-of-life instructions, and organ donation provisions in one state form.

The part that is actually hard: it changes by state

HIPAA is federal. Health care decision-making documents are not. The same family need produces a different document structure depending on where the client lives. This is nuance no advisor can reliably hold in their head, and it is also where preparation matters most.

Arizona recognizes a dedicated Mental Health Care Power of Attorney, offered as a separate form, that lets an adult name someone to make mental health treatment decisions if they are later found incapable. Without that document, an agent under a standard health care power of attorney may make those decisions, subject to statutory exceptions. Connecticut addresses the same need within a combined advance directive covering both physical and mental conditions, with no standalone mental health form.

Advisor takeawayNever assume a client’s home state and school state work the same way, and never assume a Mental Health POA exists in the same form everywhere. Evaluate the client’s state and the actual document set in front of you.

Handling the three objections you will hear

“My kid would never sign that.”

Reframe it from surveillance to access in an emergency. The student chooses who is named, and the authorization can be narrow. Most 18-year-olds will sign a form that says, “If I am in a hospital and cannot speak, my parent can find out what is happening,” especially when the alternative is a parent locked out at a registration desk during a crisis.

“We already have a will, so we are covered.”

A will is a death document. It does nothing during a living medical emergency, which is exactly the scenario at issue here. This is a different instrument for a different moment. Pointing that out is often the first time a client realizes their existing plan has a gap.

“Isn’t the form the college gave us enough?”

Usually not. Campus health forms and the school’s FERPA waiver cover educational records and on-campus treatment, not decision-making authority at an off-campus hospital where a real emergency may land. A form that never leaves the student health center will not help in an ICU two states away.

How to raise it without practicing law

You do not need to give legal advice to create value. You need to surface the gap and route the family to the right execution. Two questions do most of the work:

  1. “Your child is turning 18. If there were a medical emergency tonight, who would legally be allowed to receive information?”
  2. “If your child could not make a health care decision, who would be authorized to step in?”

The silence after those questions is the planning gap, and naming it is not legal advice.

That framing keeps you on the right side of the line while still owning the relationship.

Turn a form into a full plan

The HIPAA gap is the smallest possible entry point, which is exactly what makes it a good one. A family that just learned their access to medical decisions evaporated at 18 will immediately grasp that their access to financial decisions did too.

That opens the natural sequence. A durable financial power of attorney lets a parent handle banking, tuition disputes, and tax matters when an adult child is abroad or hospitalized. A FERPA authorization closes the educational-records gap. Once a household is thinking about the documents their child needs, they are one step from confronting the documents they themselves are missing.

One college conversation becomes a full estate review, and a single form becomes an expanded relationship.

The cross-sell logicYou are not selling a HIPAA form. You are using it as the lowest-friction reason to open the whole plan.

Advisor checklist

  1. Confirm age and both states.

    The conversation sharpens at 18. Note the student’s legal residence and the school’s state, since law and local practice can differ.

  2. Identify who should receive information.

    This could be one parent, both parents, a guardian, or another trusted person.

  3. Locate the HIPAA language.

    Determine whether it is a standalone authorization or embedded in another document. Read the authority and disclosure sections, not simply the title.

  4. Name a decision-maker.

    Address the health care proxy, health care power of attorney, or advance directive.

  5. Address mental health authority.

    Some states use a dedicated Mental Health POA. Others address it within the standard health care document.

  6. Pre-empt the objections.

    Have the “not surveillance,” “a will is not enough,” and “the campus form is not enough” responses ready.

  7. Add the financial POA and FERPA waiver.

    Complete the adult-transition document set, then bridge the conversation to the household’s own plan.

  8. Execute, store, and review annually.

    Witnessing and notarization rules vary by state. Named individuals and school locations can also change.

Bring the college conversation to your next client review

Wealth.com generates state-correct health care documents, with HIPAA authority built into the appropriate instrument for every jurisdiction, so you can raise the conversation and let the platform support execution.


Book a demo

When Is Probate Required? What to Know About the Probate Process

What Is Probate?

Probate is the court-supervised legal process through which a person’s estate is
administered and distributed after they have passed away.

There are a few functions of a probate proceeding:

  • It validates the deceased person’s Will, if they have one
  • It appoints a person responsible for administering the estate (called a personal representative, executor, or administrator)
  • It identifies and inventories the assets of an estate, and establishes and confirms valid debts, taxes due, and expenses of the decedent’s estate
  • It ultimately distributes the balance of the estate’s assets to the beneficiaries or heirs

When Is Probate Required?

Generally, probate is required when a person dies owning assets solely in their
individual name, such as real property or bank and investment accounts,
without a designated beneficiary or survivorship feature.

Probate is generally not required for assets that pass outside of the estate by operation
of law. This includes jointly held property with rights of survivorship, assets funded during
lifetime to a revocable trust, life insurance proceeds and retirement accounts with a
beneficiary designation on file, and payable-on-death or transfer-on-death accounts.

Small Estate Procedures

Many states offer streamlined versions of probate that require little or no court
involvement. If the “probate” estate falls below a certain dollar value and/or
excludes real property, assets can be collected and distributed through a
small estate affidavit or summary administration process instead of formal probate.

$10K-$150K+

Typical small-estate dollar thresholds vary widely by state. Some also exclude
assets like homestead property or vehicles from the calculation.

Independent vs. Supervised Administration

Some states bifurcate their formal probate procedures into two forms of administration.

Independent Administration

The personal representative manages and distributes assets with minimal court
oversight, selling property, paying claims, and making distributions without prior
court approval. Less expensive and faster; more common where available.

Supervised Administration

The personal representative must obtain court approval for most significant actions,
selling real property, paying claims, issuing final distributions. More protective,
but more time-consuming and expensive.

Some states only provide for supervised administration, while others require it for estates
with disputes among beneficiaries, concerns about the representative’s fitness to serve,
or when the will or state law requires it.

How Can I Avoid Probate?

The most common approach to avoiding probate entirely is to create a
revocable trust and fully fund it with all of the assets that would otherwise pass
through your probate estate, for example, bank accounts, investment accounts,
and real property. IRA and life insurance accounts avoid probate separately,
through beneficiary designations.

Is a Revocable Trust the Only Way to Avoid Probate?

No. You may also be able to avoid probate in a Will-based plan by naming
beneficiaries on accounts like retirement plans or life insurance, or by titling
property jointly with someone else.

However, there are two things to keep in mind:

01
Any account with a beneficiary designation, or any asset you retitle during your
lifetime, will pass outside your Will. It won’t follow the instructions in your Will.
02
Adding a joint owner can cause that asset to lose its “step-up in basis” at your death,
a tax benefit it would otherwise get if it stayed solely in your name or your
revocable trust.

Because of these tradeoffs, if you want to avoid probate with a Will-based plan using
beneficiary designations or joint ownership, we strongly recommend talking to an attorney
first to make sure it fits your situation.

What Makes a State’s Probate Process More Cumbersome?

A state’s probate process is considered more burdensome when it has:

  • High court filing fees
  • Attorney and executor fees set by a fixed schedule or the estate’s total value, rather than actual time spent
  • Long waiting periods for creditors to make claims, delaying distributions
  • Complex or unclear local court rules and procedures
  • A generally slow administration process
  • Heavy court oversight of each step

Together, these factors can make probate slower and more expensive, meaning your
beneficiaries wait longer to receive their inheritance, and fees can eat into a larger
share of what’s ultimately passed on to them.

The Great Wealth Transfer Is Becoming a Great Complexity Transfer

The Great Wealth Transfer is usually framed as a story about scale. Cerulli Associates projects that $124 trillion will transfer through 2048, including approximately $105 trillion passing to heirs and $18 trillion going to charitable organizations. Nearly $100 trillion is expected to originate with Baby Boomers and older generations.

But the amount of money changing hands is only part of the story.

The next generation is unlikely to invest all of that wealth in the same way as the generation transferring it. Younger investors are showing greater interest in private equity, venture capital, private credit, cryptocurrency, direct real estate, commodities, collectibles, and other assets outside the traditional mix of publicly traded stocks and bonds.

As reported by The Daily Upside, 88% of Gen Z and millennial investors surveyed by Bank of America expect to increase their allocations to alternatives in the coming years. Younger respondents already allocate approximately 15% of their portfolios to alternatives, and 58% report owning digital assets.

These findings reflect a specific high-net-worth population, not Gen Z and millennials broadly. Bank of America’s 2026 Study of Wealthy Americans surveyed 1,431 U.S. respondents who were at least 21 years old and had at least $3 million in investable assets, excluding their primary residence.

The shift is not hypothetical. In July 2026, Cerulli estimated that U.S. financial advisors already allocate approximately $2.2 trillion to less-than-fully-liquid private capital. Cerulli expects advisor-intermediated ownership of those investments to grow by another $2 trillion over the next five years.

As these trends converge, the Great Wealth Transfer will become more than a transfer of money. It will become a transfer of assets that may be harder to identify, value, access, sell, divide, and manage.

A transfer of investment philosophy

Traditional discussions about generational wealth often focus on asset retention.

Will the children continue working with their parents’ financial advisor? Will the assets remain at the same firm? Will the next generation maintain the portfolio that created and preserved the family’s wealth?

Those are important questions, but they can overlook a more fundamental change. Many younger investors are not simply inheriting their parents’ assets. They are bringing a different philosophy to how wealth should be invested.

Bank of America’s research found that 77% of ultra-high-net-worth respondents, defined as those with more than $25 million in investable assets, believe that private markets offer greater investment opportunities than public markets.

Some heirs will receive alternative assets directly, including family businesses, private-company interests, investment properties, mineral rights, art, or collectibles. Others will inherit portfolios of traditional investments and then redirect part of that wealth into alternatives.

Either path can change the estate-planning equation.

A plan built primarily around brokerage accounts, retirement assets, life insurance, and a family residence may not fully address a balance sheet that also includes private funds, multiple business entities, cryptocurrency wallets, illiquid real estate, or valuable physical assets.

Why alternatives create a different estate-planning challenge

Alternative investments are not inherently better or worse for an estate plan. They are simply different.

Many publicly traded investments have observable market prices, established custody systems, and active secondary markets. Alternative assets may depend on private agreements, specialized valuation methods, restricted transfer processes, physical possession, or unique forms of digital access.

FINRA warns that alternative and complex products can be difficult to understand, may provide less information to investors than publicly offered investments, and can have limited secondary markets. In some cases, an owner may be unable to sell an investment when desired or may only be able to sell at a meaningful loss.

Those characteristics have implications that extend well beyond portfolio construction.

The asset may be missing from the financial picture

The first challenge is often visibility.

Traditional investments are generally reflected on account statements from financial institutions. Alternative holdings may be distributed across LLCs, partnerships, private funds, online platforms, digital wallets, physical storage facilities, and separately maintained legal agreements.

A client may own a minority interest in a private company, cryptocurrency on multiple exchanges, a direct blockchain wallet, shares in a venture fund, a vacation property, mineral rights, or a valuable collection. Some of those assets may not appear on the advisor’s portfolio-management system or the client’s most recent estate-planning summary.

That creates a basic but serious problem: an estate plan cannot effectively address an asset that no one has identified.

For advisors, maintaining a reliable inventory of alternative holdings is not merely an administrative task. It is foundational to understanding the client’s complete financial and estate-planning picture.

The ownership structure may determine the transfer

Alternative assets are frequently owned through entities or governed by private agreements.

A private-company interest might be held individually, through an LLC or other entity, or in a trust. A family business may be subject to a shareholder agreement or buy-sell agreement. A private fund may restrict who can receive an interest or require the manager’s consent before ownership changes.

These agreements may contain rights of first refusal, eligibility requirements, valuation provisions, purchase options, or restrictions on transferring an interest to a beneficiary.

The IRS itself directs estate-tax examiners reviewing closely held business interests to examine governing entity documents, rights of first refusal, buy-sell agreements, ownership records, and the valuation methods applied to the interest.

A will or trust may state who should receive an asset, but the asset’s governing agreement can affect whether that transfer is permitted and what process must be followed.

That makes coordination critical. The client’s estate documents, entity agreements, ownership records, beneficiary designations, and stated intentions must tell a consistent story.

Valuation becomes more complicated

Publicly traded securities generally have an observable market value. Alternative assets may not.

The value of a private business, limited partnership interest, investment property, art collection, carried interest, or other specialized holding may depend on appraisals, financial statements, market comparisons, contractual rights, and professional judgment.

For federal estate-tax purposes, the IRS generally requires property to be reported at fair market value. It also expects supporting information such as appraisals and specifically identifies closely held businesses, partnership interests, jewelry, antiques, automobiles, collectibles, and art as assets that may require additional valuation work.

Valuation affects more than a potential estate-tax calculation. It can influence insurance planning, charitable strategies, asset sales, business succession, and how property is divided among heirs.

It can also create family tension.

One beneficiary might receive a private-business interest with a high estimated value but no clear path to liquidity. Another might receive publicly traded investments that can be accessed and diversified immediately. The assets may appear equal on paper while carrying very different levels of risk, control, income, and flexibility.

A thoughtful estate plan should account for those economic differences, not simply compare estimated dollar values.

Liquidity may not arrive when the family needs it

An estate can be wealthy on paper and still lack usable cash.

Private funds may have multiyear holding periods. Investment properties can take months to sell. Family businesses may produce income but have no active market. Some private investments may also involve future capital calls or other continuing obligations.

At the same time, an estate may need cash to pay debts, taxes, administrative expenses, property costs, professional fees, or distributions to beneficiaries.

FINRA notes that many alternative and complex investments have limited secondary trading and may not be sellable when an investor wants to exit.

Without adequate liquidity planning, a family may be forced to sell an asset at an unfavorable time, borrow against other property, or use liquid assets intended for another beneficiary.

The relevant question is therefore not only, “What is the estate worth?” It is also, “How much of that value will be available when the family actually needs it?”

Digital assets require both authority and access

Cryptocurrency and other digital assets introduce an especially modern planning challenge.

A traditional financial institution has procedures for identifying a deceased account owner and working with an authorized representative. Direct blockchain assets can operate differently. Control may depend entirely on possession of a private key.

ACTEC’s 2025 guidance distinguishes between cryptocurrency held through an exchange and cryptocurrency held directly on a blockchain. With direct holdings, loss of the private key can make the asset inaccessible, with no conventional password-recovery process or centralized help desk.

Legal authority is another component.

The Revised Uniform Fiduciary Access to Digital Assets Act was developed to govern fiduciary access to digital property when an owner dies or becomes unable to manage it. The act extends traditional fiduciary authority to digital property, including virtual currency, while imposing additional requirements for access to certain electronic communications.

That means a digital-asset plan must address several questions:

  1. What assets exist?
  2. Where and how are they held?
  3. Who has legal authority to manage them?
  4. Where are access instructions stored?
  5. How will the owner protect those instructions during life?
  6. How will an authorized person gain access after death or incapacity?

A provision in a will or trust is not enough if the fiduciary cannot locate or access the asset. At the same time, casually sharing private keys can create serious security risks while the owner is alive.

The legal plan, custody approach, security process, and practical succession instructions must work together.

Equal treatment may not produce an equitable result

Alternative assets can also challenge the assumption that an estate should be divided by giving each beneficiary an identical percentage of every asset.

A brokerage account can usually be divided with relative ease. A family business, investment property, private-fund interest, or collection may not be divisible in the same way.

Family members may also want different things.

One child may want to operate the family business, while another wants liquidity. One beneficiary may feel an emotional connection to a family property, while another sees taxes, maintenance, and financial risk. One heir may understand cryptocurrency or private markets, while another may be uncomfortable taking responsibility for those assets.

Equal and equitable are not always synonymous.

Planning should consider who wants each asset, who is prepared to manage it, what obligations come with ownership, how other beneficiaries will be treated, and what process should apply when family members disagree.

Preparing heirs is as important as preparing assets

The increasing complexity of family portfolios arrives at a time when many wealthy families already question whether the next generation is prepared.

Among ultra-high-net-worth respondents in Bank of America’s study, 79% involve their advisors in estate-planning conversations with their heirs. Yet only 36% believe their heirs are very prepared to receive an inheritance.

The broader estate-planning foundation is also uneven. Bank of America found that only 46% of wealthy respondents had a will, living will or advance directive, and durable power of attorney. Although 55% had a trust, only 33% said they understood trusts well.

Alternative assets can make this preparedness gap more consequential.

An heir may inherit a concentrated private-company position without understanding the company’s governance or financial condition. A beneficiary may receive an interest in an illiquid fund with continuing capital obligations. A family member may become responsible for real estate with significant debt, taxes, or maintenance costs.

Preparing the assets is only half the work. Families must also prepare the people who will receive or manage them.

That preparation requires more than disclosing a future inheritance amount. It should help the next generation understand:

  • What the family owns
  • How the assets are structured
  • Why the family holds them
  • What risks and responsibilities accompany ownership
  • Who will have decision-making authority
  • Which professionals can provide guidance
  • What the family ultimately hopes its wealth will accomplish

Those conversations are more effective when they are intentional.

A Merrill Center for Family Wealth study of individuals from families with at least $50 million in assets found that 78% of recent family wealth discussions arose spontaneously, and 26% of those who participated later regretted the conversation. When families co-managed assets, 54% identified limited governance, including unclear roles and decision-making authority, as a major challenge.

Estate planning can create the structure those conversations often lack.

The advisor’s role is becoming more central

Financial advisors do not need to become attorneys, private-business appraisers, cryptocurrency custodians, art specialists, or real estate operators.

They do need to recognize when those capabilities are required.

The advisor often has the broadest view of the client’s portfolio, goals, family relationships, cash-flow needs, risk profile, and professional team. That perspective makes the advisor well positioned to identify gaps and coordinate the right specialists.

The advisor can help connect decisions that are often made separately:

  • The investment strategy
  • The ownership structure
  • The estate documents
  • The tax plan
  • The liquidity plan
  • The succession strategy
  • The family’s expectations

A sophisticated trust cannot solve for an asset that was never identified. A business valuation does not solve a liquidity shortage. A carefully selected investment is not fully planned for when no one knows who will manage it after the owner’s death or incapacity.

The advisor’s value is in helping turn those separate decisions into a coherent strategy.

A five-part framework for advisors

As alternative investments become a larger part of client portfolios, advisors can incorporate five practices into the estate-planning relationship.

1. Build a complete ownership map

Identify the client’s traditional and alternative holdings.

For every significant asset, document what it is, where it is held, who legally owns it, how it is titled, who currently manages it, and where the relevant agreements or access instructions can be found.

The goal is not merely a list of estimated values. It is a map of the client’s ownership and control.

2. Match each asset to its transfer path

Determine what governs the disposition of each asset.

That might be a will, trust, beneficiary designation, deed, operating agreement, partnership agreement, buy-sell agreement, transfer-on-death registration, or platform-specific process.

Any inconsistencies should prompt coordination with the client’s estate-planning attorney, tax professional, or other relevant specialist.

3. Stress-test liquidity and concentration

Evaluate how much of the estate could realistically be converted to cash, how quickly that could occur, and what costs or restrictions might apply.

Model potential taxes, debts, administrative expenses, capital obligations, property costs, and beneficiary distributions. Consider how the plan would function if markets were weak or a significant asset could not be sold on schedule.

4. Prepare heirs and fiduciaries

Help the client decide when and how to involve children, beneficiaries, trustees, executors, business successors, and other decision-makers.

The goal is not necessarily to reveal every financial detail immediately. The goal is to ensure that the people who will eventually inherit or manage the assets understand their future roles and know where to seek help.

5. Treat the estate plan as a living strategy

Alternative portfolios can change rapidly.

A new private investment, business transaction, property acquisition, cryptocurrency wallet, marriage, birth, relocation, or liquidity event can alter the client’s estate-planning needs.

Establish a regular review cadence and identify the events that should trigger an earlier conversation. Estate planning should evolve alongside the portfolio, not trail it by several years.

The Great Wealth Transfer will reward coordinated advice

The Great Wealth Transfer will not be a passive movement of assets from one generation to another.

It will also transfer investment philosophies, ownership responsibilities, family expectations, and portfolios that are likely to contain a broader variety of private, illiquid, physical, and digital assets.

The central challenge will not be choosing between traditional and alternative investments. It will be ensuring that every asset, regardless of form, is visible, properly owned, accessible, manageable, and aligned with the family’s intentions.

That work sits at the intersection of investment management, estate planning, tax strategy, liquidity planning, family governance, and financial education.

For advisors, this creates an opportunity to deepen relationships across generations. Firms that help families prepare both their assets and their heirs will be better positioned to preserve wealth, reduce conflict, and remain relevant as responsibility moves from one generation to the next.

The Great Wealth Transfer may help fuel a historic expansion in alternative investing.

It will also produce a Great Complexity Transfer. The advisors who recognize that early will be best equipped to guide families through it.

Turning complexity into a clearer picture

Technology can help advisors bring this growing complexity into view. Wealth.com integrates with more than 20 trusted platforms and enables clients to connect alternative assets such as cryptocurrency through Coinbase, private-company equity data through Carta, real estate information through Zillow, alternative investment data through Arch, and external financial accounts through Yodlee.

Wealth.com’s estate visualizations can then help advisors and clients understand what is owned, how it is owned, and how those assets may transfer across generations.

To learn more, visit wealth.com/integrations.

Sources

  1. Cerulli Associates, “Cerulli Anticipates $124 Trillion in Wealth Will Transfer Through 2048.”
  2. Bank of America Private Bank, “2026 Study of Wealthy Americans.”
  3. The Daily Upside, “The Great Wealth Transfer May Become the Great Alts Boom.”
  4. Cerulli Associates, “Private Markets Set to Add $2 Trillion in Advisor-Intermediated Assets Over Next Five Years.”
  5. FINRA, “Alternative and Emerging Products.”
  6. Internal Revenue Service, estate-tax valuation guidance.
  7. Uniform Law Commission and ACTEC digital-asset guidance.
  8. Merrill Center for Family Wealth, family wealth conversation research.

This material is provided for informational purposes only and should not be construed as legal, tax, or investment advice. Individuals should consult their own legal, tax, and financial professionals regarding their specific circumstances.

1 2 3 4 5 … 14