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IRS Provides Gift Tax Reporting Relief for Sec. 530A Account Contributions
Section 530A accounts, also known as “Trump accounts,” are available for contributions as of July 4, 2026. Created by last year’s One Big Beautiful Bill Act, they’re custodial, tax-advantaged accounts opened by a parent or guardian for an eligible child under age 18. In late June, the IRS issued Revenue Procedure 2026-25, which, among other things, allows qualifying 530A account contributions to be treated as completed gifts rather than gifts of a future interest. The upside is that your contributions can qualify for the gift tax annual exclusion and you may not have to file a gift tax return (Form 709) — but only if certain requirements are met.
How do 530A accounts work?
A 530A account can be set up for anyone who’ll be under age 18 at the end of the tax year and who has a Social Security number. Annual contributions of up to $5,000 can be made until the year the beneficiary turns age 18. In addition, U.S. citizen children born from Jan. 1, 2025, through Dec. 31, 2028, can potentially qualify for an initial $1,000 government-funded deposit.
530A account contributions aren’t deductible, but earnings grow tax-deferred as long as they’re in the account. The account generally must be invested in exchange-traded funds or mutual funds that track the return of a qualified index and meet certain other requirements. Withdrawals generally can’t be taken until the child turns age 18, when the account becomes a traditional IRA, subject to traditional IRA rules. Distributions will generally be at least partially taxable, and IRA early withdrawal penalties could also apply.
What’s in the IRS guidance?
Under safe harbor rules included in the June IRS guidance, 530A account contributions will be eligible for the gift tax annual exclusion and you won’t be required to file a gift tax return if all these requirements are met:
Your cash contributions to a 530A account for a beneficiary under age 18 are your only taxable gifts for the calendar year,
The total amount of each beneficiary’s gift (including contributions to the 530A account) doesn’t exceed the gift tax annual exclusion amount ($19,000 per recipient for 2026) or your available lifetime gift and estate tax exemption ($15 million for 2026, less any exemption you’ve already used during your life), and
A gift tax return for the year isn’t otherwise required to be filed by you.
When these conditions are met, the IRS will generally treat the contributions as completed gifts rather than future interests in property. But if just one of the conditions isn’t met, your contributions will be treated as gifts of a future interest, which means they won’t be eligible for the annual exclusion and you must file a gift tax return for every account beneficiary who receives a contribution. The gifts can still be tax-free, but you’ll have to apply your lifetime gift tax exemption — and your generation-skipping transfer (GST) tax exemption if the GST tax also applies (generally when a gift is made to a grandchild or someone else two generations or more below you).
Should you file a gift tax return?
If you’re planning to contribute to your children’s or grandchildren’s 530A accounts, the new IRS rules can potentially ease the tax-filing burden next year. However, there are situations where it’s advantageous to file a gift tax return even if one isn’t required. And if your 530A account contributions are only part of your overall gifting program, you’ll likely still be required to file a gift tax return — and you’ll need to factor the tax consequences of the contributions into your planning. If you’re unsure whether you must (or should) file a gift tax return, or you need clarification on the recent IRS guidance on 530A accounts, contact us.
Is a Joint Trust Better Than Separate Trusts? Not Necessarily
A single joint living trust with your spouse can simplify the management of shared assets, but separate trusts may offer enhanced asset protection and tax planning opportunities. Which option is right for your estate plan depends on a variety of factors, including your and your spouse’s combined assets, financial goals, family circumstances and applicable state law.
Living trust benefits
There are many benefits of including a living trust (also known as a “revocable” trust) in your estate plan. This trust type allows you to minimize probate expenses, keep your financial affairs private and provide for the management of your assets in the event you become incapacitated.
Importantly, a living trust also offers flexibility: You’re free to amend the terms of the trust or even revoke it altogether at any time.
A single joint trust
If you’re comfortable with your spouse inheriting your combined assets (and vice versa), a joint trust can be a good choice because of its simplicity. It avoids the need to divide assets between two separate trusts, and funding the trust is a simple matter of transferring your combined assets into it.
In addition, during your lifetimes, you and your spouse have equal control over the trust’s assets. This can make it easier to manage and conduct transactions involving the assets. But it can be a negative for spouses who aren’t comfortable sharing control of their combined assets.
Separate trusts
Not wanting to share control of assets is one reason to set up separate trusts. Another is asset protection. If shielding assets from creditors is a concern, separate trusts can offer greater protection. With a joint trust, if a creditor obtains a judgment against one spouse, all trust assets may be at risk. But a spouse’s separate trust is generally protected from the other spouse’s creditors.
Also, when one spouse dies, his or her separate trust becomes irrevocable, making it more difficult for creditors of either spouse to reach the trust assets. Keep in mind that the degree of asset protection a trust provides depends on the type of debt involved, applicable state law and the existence of a prenuptial agreement.
Don’t forget to consider taxes
For most married couples today, federal gift and estate taxes aren’t a concern. This is because they enjoy a combined gift and estate tax exemption of $30 million in 2026 (adjusted annually for inflation ).
However, if your family’s wealth exceeds the exemption amount, or if you live in a state where an estate or similar “death” tax kicks in at lower asset levels, separate trusts offer greater opportunities to avoid or minimize these taxes. For example, some states have exemption amounts as low as $1 million or $2 million. In these states, separate trusts can be used to maximize each spouse’s exemption amount and minimize exposure to state death taxes.
It’s also important to consider income tax. As previously mentioned, when one spouse dies, his or her separate trust becomes irrevocable. That means filing tax returns for the trust each year and, to the extent trust income is accumulated in the trust, paying tax at significantly higher trust tax rates.
A joint trust remains revocable after the first spouse’s death — it doesn’t become irrevocable until both spouses have died. In this case, income is taxed to the surviving spouse at his or her individual tax rate.
Arriving at a decision
There’s no one-size-fits-all answer when deciding between a joint living trust and separate trusts. What works well for one married couple may not be the best choice for another, especially as family dynamics, wealth and tax laws evolve over time. If you’re unsure whether having one or two trusts better fits your needs, FMD can help. Contact us today.
Proper Planning can Ease the Pain of the Probate Process
When a loved one passes away, settling his or her financial affairs can be an emotional and complex task. One legal process that often comes into play is probate. Understanding how probate works — and implementing strategies to minimize or avoid it — can help you protect your assets and simplify matters for your family after your death.
Downsides (and upsides) of probate
Probate is a legal procedure in which a court establishes the validity of your will, determines the value of your estate, resolves creditors’ claims, provides for the payment of taxes and other debts, and transfers assets to your heirs. Depending on applicable state laws, the probate process can be expensive and time consuming. Not only can probate reduce the value of your estate due to executor and attorney fees, but it can also force your family to wait through weeks or months of court hearings. In addition, probate is a public process, so you can forget about keeping your financial affairs private.
However, there are instances where the probate process can work in your favor. Under certain circumstances, for example, you might feel more comfortable having a court resolve issues involving your heirs and creditors. Another possible advantage is that probate places strict time limits on creditor claims and settles claims quickly.
Simple strategies to avoid probate
The simplest ways to avoid probate involve designating beneficiaries or titling assets so they can be transferred directly to beneficiaries outside of your will. So, for example, have appropriate, valid beneficiary designations for assets such as life insurance policies, annuities, IRAs and other retirement plans.
For assets such as bank and brokerage accounts, consider the availability of pay on death (POD) or transfer on death (TOD) designations, which allow these assets to avoid probate and pass directly to your designated beneficiaries. Keep in mind that while the POD or TOD designation is permitted in most states, not all financial institutions offer this option.
Strategies for homes and other real estate
Some people avoid probate on their homes or other real estate (as well as bank and brokerage accounts and other assets) by holding title with a spouse or child as “joint tenants with rights of survivorship” or as “tenants by the entirety.” But joint ownership has several significant drawbacks.
First, unlike with beneficiary designations, once you retitle property you can’t change your mind. Second, holding title jointly gives your spouse or child some control over the asset and exposes it to his or her creditors. Finally, adding someone to the title may be considered a taxable gift of half the asset’s value.
A handful of states permit TOD deeds, which allow you to designate a beneficiary who’ll succeed to ownership of your real estate after you die. TOD deeds allow you to avoid probate without making an irrevocable gift or exposing the property to your beneficiary’s creditors.
Strategies using trusts
For larger, more complicated estates, a living trust (sometimes called a revocable trust) is generally the most effective tool for avoiding probate. It involves setup costs but allows you to manage the disposition of your wealth in a single document while retaining control and reserving the right to modify the trust’s terms. Assets in the trust will be distributed to your heirs according to the trust’s provisions, without having to go through probate.
Other types of trusts can be beneficial for specific situations. For example, placing life insurance policies in an irrevocable life insurance trust (ILIT) can provide significant tax benefits.
Making it easy for your family
Avoiding probate isn’t appropriate for every situation, but thoughtful estate planning can reduce costs, delays and administrative burdens for your surviving family members. FMD can help you develop strategies to minimize probate costs, reduce taxes and achieve your other estate planning goals. Contact us today.
Qualified Disclaimers Help Your Estate Plan Change with the Times
Estate planning is intended to help ensure that your assets are distributed according to your wishes. But circumstances can change in ways that are difficult to predict. A qualified disclaimer allows disclaimed assets to pass from a primary beneficiary to a contingent beneficiary without negative tax consequences. This flexibility can be beneficial in a variety of situations.
Planning for disclaimers
A disclaimer is an irrevocable, unqualified refusal by a beneficiary to accept a bequest, allowing the property to pass to another beneficiary. Normally, using a disclaimer to direct property to someone else would be considered a taxable gift. But there’s an exception for “qualified” disclaimers.
To qualify, a disclaimer must:
Be in writing,
Be delivered to the estate’s representative within nine months after the transfer is made (or, if the disclaimant is a minor, within nine months after the disclaimant turns 21),
Be delivered before the disclaimant accepts the property or any of its benefits, and
Cause the property to pass to the deceased’s surviving spouse or to someone other than the disclaimant, without any direction from the disclaimant.
This last point is critical and requires some planning on your part. To ensure that the disclaimant doesn’t direct the property’s disposition, the property must pass automatically to a contingent beneficiary according to the terms of your will or trust.
Disclaimers in action
Here are a couple of examples of situations when qualified disclaimers can provide estate planning flexibility:
Scenario 1. Suppose your will leaves a significant inheritance to your daughter, naming a trust for her children’s (your grandchildren’s) benefit as the contingent beneficiary. By the time you die, your daughter has built a substantial estate of her own. If she accepts the inheritance, it will ultimately be taxed as part of her estate.
Your daughter can disclaim the inheritance and allow it to pass directly to the trust for her children’s benefit, avoiding double taxation. Before making a disclaimer, however, she should check that it won’t trigger the generation-skipping transfer tax.
Scenario 2. Suppose your son is the primary beneficiary of your traditional IRA and your favorite charity is the contingent beneficiary. Your son will have to pay income tax on the distributions, and the account will have to be depleted within 10 years. The distributions could even push him into a higher income tax bracket. And, if your estate’s value exceeds the exemption amount, some or all of the IRA also may be subject to estate tax.
If your son is financially secure at the time of your death, he might want to disclaim the IRA and allow it to pass directly to the charity. By doing so, he eliminates his income tax liability while creating a charitable deduction that reduces the size of your taxable estate.
Turn to us for help
Qualified disclaimers can provide estate planning flexibility after death, helping families adapt to changing tax laws, financial needs and other personal circumstances. But disclaimers generally will be effective only if you’ve named appropriate contingent beneficiaries.
If you’re reviewing your estate plan or considering ways to provide greater flexibility for your heirs, contact FMD. We can help you determine whether qualified disclaimers should be factored into your overall estate planning strategy.
A Trust Protector can help Ensure that Your Trust will Fulfill Your Goals
Your estate plan should be flexible enough to adapt to changing laws, family circumstances and financial situations. If it includes an irrevocable trust, there’s a risk that the trustee will be unwilling (or unable) to make appropriate moves in response to changes. A trust protector can provide the needed flexibility and mitigate other risks that could derail your wishes.
What powers can you bestow?
A trust protector is to a trustee what a corporate board of directors is to a CEO. A trustee manages the trust on a day-to-day basis. The protector oversees the trustee and weighs in on critical decisions, such as the sale of closely held business interests or investment transactions involving large dollar amounts.
There’s virtually no limit to the powers you can confer on a trust protector. For example, you can enable a trust protector to:
Replace a trustee,
Appoint a successor trustee or successor trust protector,
Approve or veto investment or beneficiary distribution decisions, and
Resolve disputes between trustees and beneficiaries.
More specifically, a protector with the power to remove and replace the trustee can do so if the trustee develops a conflict of interest or fails to manage the trust assets in the beneficiaries’ best interests. A protector with the power to modify the trust’s terms can correct mistakes in the trust document or clarify ambiguous language. Or a protector with the power to change how trust assets are distributed, if necessary to achieve your original objectives, can help ensure your loved ones are provided for as you would have desired.
A word of warning: Although it may be tempting to provide a protector with a broad range of powers, this can hamper the trustee’s ability to manage the trust efficiently. Keep in mind that the idea is to protect the integrity of the trust, not to appoint a co-trustee.
What are the qualifications?
Choosing the right trust protector is critical. Given the power he or she has over your family’s wealth, you’ll want to choose someone whom you trust and who’s qualified to make investment and other financial decisions. Many people appoint a trusted advisor — such as an accountant, attorney or investment advisor — who may not be able or willing to serve as trustee, but who can provide an extra layer of protection by monitoring the trustee’s performance.
Appointing a family member as protector is also possible, but it can be risky. If the protector is a beneficiary or has the power to direct the trust assets to him- or herself (or for his or her benefit), this power could be treated as a general power of appointment, potentially triggering negative tax consequences.
The right decision for your family
Bear in mind that a trust protector isn’t essential. In most circumstances, well-established irrevocable trusts function according to their original owners’ intentions without a protector’s intervention. But if you decide to mitigate any lingering risk by naming a protector, work with experienced legal and estate planning advisors to draw up the paperwork that specifies your protector’s powers. Contact FMD for additional details.
Transfer Assets Tax Efficiently with a GRAT
A properly structured grantor retained annuity trust (GRAT) can be a powerful tool for those with estates large enough that gift and estate taxes are a concern. It allows you to transfer wealth to your loved ones at little or no tax cost while continuing to enjoy an income stream for a period of years. However, there are some drawbacks to a GRAT.
GRAT benefits
A GRAT is an irrevocable trust that allows you, as the grantor, to transfer appreciating assets to beneficiaries while retaining the right to receive fixed annuity payments for a specified term. At the end of the term, any remaining assets pass to the beneficiaries you’ve named, such as your children.
The projected value of what will remain in the trust for the beneficiaries after the annuity is paid is generally a taxable gift for federal purposes. This is calculated by assuming the GRAT assets will grow at the Section 7520 rate, regardless of the specific assets’ projected or actual growth rate.
For taxpayers with estates that currently exceed the federal gift and estate tax exemption (or that might grow to exceed it in the future), one of the most attractive features of a GRAT is its ability to reduce gift and estate taxes. GRATs are commonly funded with assets that are expected to increase significantly in value, such as closely held business interests, stocks or investment portfolios. Any appreciation of the trust assets above the Sec. 7520 rate, also known as the “hurdle” rate, can pass to beneficiaries free of additional gift or estate tax.
Many GRATs are structured as “zeroed-out” GRATs, meaning the present value of the annuity is nearly equal to the value of the assets contributed to the trust. As a result, the taxable gift is minimal or even close to zero.
GRAT drawbacks
One of the most significant risks of using a GRAT is that the grantor must survive the trust term. If you die before the GRAT expires, some or all of the trust assets may be included in your taxable estate, potentially eliminating the anticipated tax benefits. For this reason, shorter-term GRATs are often preferred, particularly for older individuals or those with health concerns.
Also, the investment performance of a GRAT’s assets matters. A GRAT succeeds only if the trust assets appreciate at a rate greater than the hurdle rate. If the assets underperform or decline in value, the GRAT may produce little or no wealth-transfer benefit. While you, as the grantor, generally will still receive the annuity payments, the effort and costs associated with establishing the trust may be wasted.
Bear in mind, too, that because a GRAT is irrevocable, you can’t simply change the terms or reclaim the transferred assets once the trust has been established. This lack of flexibility requires careful planning and consideration of future financial needs.
Right for you?
A GRAT can be a powerful estate planning tool for individuals with large estates and a desire to transfer wealth tax efficiently to future generations. However, it isn’t right for everyone. Factors such as life expectancy, asset performance expectations, cash flow needs and overall estate planning objectives should all be carefully evaluated. FMD can help you determine if a GRAT is right for you.
Does Your College-age Child Need an Estate Plan?
Many parents assume an estate plan is only necessary for older adults or those with substantial wealth. However, once your child turns 18, he or she legally becomes an adult, and that change can create unexpected complications for your family. Without basic estate planning documents in place, you may be unable to help your child during an emergency when he or she is away at school. If your child recently graduated from high school and is planning to attend college in the fall, consider these estate planning documents before he or she leaves home.
Health-care-related documents
Perhaps the most critical estate planning document for a college-age child is a health care power of attorney. Because children age 18 or older are usually treated as adults, without a health care power of attorney, you might have no say in your child’s medical treatment should he or she become incapacitated. This document (sometimes referred to as a “health care proxy” or “durable medical power of attorney”) allows your child to appoint someone, such as you, to make health care decisions on his or her behalf.
Your child’s health care power of attorney should provide guidance on how to make medical decisions. Although it’s impossible to anticipate every potential scenario, the document can provide guiding principles.
Another important health-care-related document for college students is a HIPAA release form. Federal privacy laws, including those under the Health Insurance Portability and Accountability Act, prevent doctors and hospitals from sharing medical information with parents once a child reaches adulthood.
If your child is injured in an accident or becomes seriously ill, you may not be able to access information about his or her condition or treatment options. A HIPAA authorization form signed by your child allows you to communicate with his or her health care providers and stay informed during a medical crisis.
Financial power of attorney
Financial matters are another important consideration. College-age students typically have bank accounts and credit cards, and they may also have car loans, apartments or part-time jobs. If an illness or accident prevents your child from handling financial responsibilities, you may not automatically have the legal authority to step in.
A financial power of attorney appoints an individual, such as you, to make financial decisions or execute transactions on your child’s behalf under certain circumstances. For example, a power of attorney might authorize you to handle your child’s affairs while he or she is studying abroad or, in the case of a “durable” power of attorney, incapacitated.
Will
Speaking of financial matters, it isn’t too early to have a will drawn up for your college-age child. It allows your child to specify how personal belongings, financial accounts and digital assets should be distributed in the event of his or her untimely death. It also gives your child the opportunity to express personal wishes.
Without a will, state laws determine how assets are handled. This can create unnecessary complications for your family during an already difficult time.
Peace of mind while away from home
A simple estate plan for your college-age child can help ensure you can provide support when it matters most. If you have questions about any of the documents discussed, don’t hesitate to contact FMD.
Add Flexibility to Your Estate Plan with Powers of Appointment
Powers of appointment allow a trusted individual (the “holder”) to adjust how assets are distributed after your death, based on changing circumstances. These might include marriages, births, financial needs, tax laws or evolving family dynamics. By incorporating powers of appointment into your trusts and other planning strategies, you can create an estate plan that balances long-term control with the ability to adapt over time.
Forms of powers of appointment
Powers of appointment come in a few forms. A testamentary power of appointment allows the holder to direct the distribution of your assets at his or her death through his or her own will or trust. (See “Postponing distribution decisions” below for an example.) An inter vivos power of appointment allows the holder to determine the disposition of your assets during his or her lifetime.
In addition, powers may be general or limited. A general power of appointment allows the holder to distribute assets to anyone, including him- or herself.
A limited power of appointment has one or more restrictions. In most cases, it doesn’t allow a holder to distribute assets for his or her own benefit (unless distributions are strictly based on “ascertainable standards” related to the holder’s health, education or support).
Typically, limited powers authorize the holder to distribute assets among a specific class of people. For example, you might give your daughter a limited power of appointment to distribute your assets among her children.
The distinction between general and limited powers has significant tax implications. Assets subject to a general power are included in the holder’s taxable estate — even if the holder doesn’t execute the power. Limited powers generally don’t expose the holder to gift or estate tax liability.
Postponing distribution decisions
Powers of appointment provide flexibility by allowing you to postpone the determination of how your wealth will be distributed until the holder has all the relevant facts. For example, let’s say that you and your spouse have three young children. Your plan calls for your wealth to be placed in a trust that benefits your spouse for life and then divides your assets equally among your children.
But it’s impossible to predict your children’s financial future, so you give your spouse a limited, testamentary power of appointment that allows him or her to distribute the trust assets according to the children’s needs. This way, if one child is financially independent, your spouse can reduce that child’s inheritance. Or if one child has developed a substance abuse or gambling problem, your spouse might direct that child’s inheritance into a trust that restricts his or her access to the funds.
Need more information?
If you’re interested in incorporating powers of appointment into your estate plan, contact FMD. We can review your plan and help determine which type is best for your situation.
Estate Planning for Foreign Assets Requires Extra Attention
Do you hold assets such as overseas real estate, foreign bank accounts or investments in international markets? Properly addressing foreign assets in your estate plan is essential to avoid unexpected tax consequences, legal complications and asset transfer delays for heirs.
Double taxation
If you’re a U.S. citizen, all your worldwide assets, regardless of where you live or where the assets are located, are potentially subject to federal gift and estate taxes to the extent they exceed your lifetime gift and estate tax exemption. So, if you own assets that are subject to estate, inheritance or other death taxes in those countries, there’s a risk of double taxation.
You may be entitled to a foreign death tax credit against your U.S. gift or estate tax liability — particularly in countries that have tax treaties with the United States. But in some cases, those credits aren’t available.
Even if you’re not a U.S. citizen, you may be subject to U.S. gift and estate taxes on your worldwide assets if you’re domiciled in the United States. Domicile is a somewhat subjective concept — essentially, it means you reside in a place with the intent to stay indefinitely and return to whenever you’re away. Once the United States becomes your domicile, its gift and estate taxes apply to your foreign assets, even if you leave the country, unless you take steps to change your domicile.
You might not feel concerned about federal gift and estate taxes if your estate is well within the 2026 $15 million gift and estate tax exemption (annually indexed for inflation going forward). But keep in mind that lawmakers could reduce the exemption in the future. So, it can still be a good idea to plan for a potential estate tax bill down the road. Further, for married couples, the rules are different — and potentially much more complex — if one spouse is neither a U.S. citizen nor considered domiciled in the United States for gift and estate tax purposes.
Consider drafting two wills
If you own foreign assets, your will must be drafted and executed in a manner that will be accepted in the United States and in the country or countries where those assets are located. Otherwise, your foreign assets may not be distributed according to your wishes.
Often, it’s possible to prepare a single will that meets the requirements of each jurisdiction. But it may be preferable to have separate wills for foreign assets. One advantage is that a separate will, written in the foreign country’s language (if not English), may help streamline the probate process.
If you prepare two or more wills, work with local counsel in each foreign jurisdiction to ensure the will meets that country’s requirements. And it’s critical for your U.S. and foreign advisors to coordinate their efforts so that one will doesn’t nullify the other.
Plan proactively
If you own foreign assets, proactive planning can help preserve your wealth and reduce the burden on heirs. FMD can explain the steps to help ensure all your assets are distributed in accordance with your wishes and in the most tax-efficient manner possible.
What’s the Meaning of that Estate Planning Term?
Estate planning can be overwhelming. One reason is that it has a language all its own. While you may be familiar with common terms such as “will” or “executor,” you may not be as certain about others. This uncertainty can make it difficult to make informed decisions about protecting your assets, providing for your family and ensuring your wishes are carried out.
For quick reference, here’s a glossary of key terms you may come across when planning your estate:
Administrator. An individual or fiduciary appointed by a court to manage an estate if no executor or personal representative has been appointed or the appointee is unable or unwilling to serve.
Ascertainable standard. The legal standard, typically relating to an individual’s health, education, maintenance and support, which is used to determine what distributions are permitted from a trust.
Attorney-in-fact. The individual named under a power of attorney (POA) as the agent to handle the financial and/or health affairs of another person.
Codicil. A legally binding document that makes minor modifications to an existing will without requiring a complete rewrite of the will.
Community property. A form of ownership in certain states in which property acquired during a marriage is presumed to be jointly owned regardless of who earned it or paid for it. (There are exceptions, such as inherited property, as long as it’s not commingled with community property.)
Credit shelter trust. A trust established to bypass the surviving spouse’s estate to take full advantage of each spouse’s federal estate tax exemption. It’s also known as a bypass trust or A-B trust.
Fiduciary. An individual or entity, such as an executor or trustee, designated to manage assets or funds for beneficiaries and legally required to exercise an established standard of care.
Grantor trust. A trust in which the grantor retains certain control so that it’s disregarded for income tax purposes and the trust’s assets are included in the grantor’s taxable estate.
Inter vivos. The legal phrase used to describe various actions (such as transfers to a trust) made by an individual during his or her lifetime.
Intestacy. This occurs when a person dies without a legally valid will and the deceased’s estate is distributed through a court-supervised probate process in accordance with the applicable state’s intestacy laws.
Joint tenancy. An ownership right in which two or more individuals (such as a married couple) own assets equally, often with rights of survivorship.
Living trust. A trust that’s established during an individual’s lifetime to hold and manage assets for the benefit of that individual and, ultimately, for his or her beneficiaries. Also commonly referred to as a “revocable trust” or “inter vivos” trust. The individual creating the trust often serves as the trustee, retaining control over the assets while alive. One of the primary advantages of a living trust is that it allows assets to pass to beneficiaries without going through probate, helping to save time, reduce costs and maintain privacy.
No-contest clause. A provision in a will or trust stating that an individual who pursues a legal challenge to assets will forfeit his or her inheritance or interest.
Pour-over will. A will used upon death to pass to a living trust the ownership of assets that weren’t transferred to the trust during life.
Power of appointment. The power granted to an individual under a trust that authorizes him or her to distribute assets on the termination of his or her interest in the trust or in certain other circumstances.
Power of attorney. A legal document authorizing someone to act as attorney-in-fact for another person, relating to financial and/or health matters. A “durable” POA continues if the person is incapacitated.
Probate. The legal process of settling an estate in which the validity of the will is proven, the deceased’s assets and debts are identified, all debts and taxes are paid, and the remaining assets are distributed.
Qualified disclaimer. The formal refusal by a beneficiary to accept an inheritance or gift, which allows the inheritance or gift to pass to the successor beneficiary.
Spendthrift clause. A clause in a will or trust restricting the ability of a beneficiary (such as a child under a specified age) to transfer or distribute assets.
Tenancy by the entirety. An ownership right between two spouses in which property automatically passes to the surviving spouse on the death of the first spouse.
Tenancy in common. An ownership right in which each person possesses rights and ownership of an undivided interest in the property.
If you have questions about the meanings of these terms, contact FMD. We’d be pleased to provide context for any estate planning term you’re unfamiliar with.
If You’re Charitably Inclined, Your Estate Plan Can Benefit from a Donor-Advised Fund
Donor-advised funds (DAFs) have become increasingly popular among individuals and families who want to simplify their charitable giving while maximizing tax efficiency. According to the 2025 Annual DAF Report produced by the Donor Advised Fund Research Collaborative, in 2024, the total number of DAF accounts reached a record high of 3.56 million. Total assets in DAFs increased 27.5%, with total invested funds reaching $326.5 billion. Here’s how a DAF might fit into your charitable giving strategy and estate plan.
DAFs in action
A DAF is a charitable investment account that generally requires an initial contribution of at least $5,000. It’s typically managed by a financial institution or an independent sponsoring organization, which charges an administrative fee based on a percentage of the deposit.
From a tax perspective, DAFs offer significant benefits. Contributions are generally deductible in the year they’re made (assuming you itemize deductions), even if the funds are distributed to charities in future years. This is particularly valuable in high-income years when you may want to offset income with a sizable charitable deduction but don’t know exactly which charities you’d like to benefit.
Additionally, donating appreciated assets, such as publicly traded stock, allows you to avoid the capital gains tax liability you’d incur if you sold the assets. Yet you can still deduct their fair market value. (Be aware that some DAFs only allow contributions of cash or cash equivalents.)
Another DAF advantage is administrative simplicity. Unlike private foundations, DAFs don’t require the donor to manage compliance, file separate tax returns or oversee grant administration. The sponsoring organization handles recordkeeping, due diligence and distribution logistics, allowing you to focus on your charitable intent rather than administrative burdens.
DAFs can also enhance strategic giving. Funds within a DAF can be invested and potentially grow tax-free, increasing the amount ultimately available for charitable purposes. You can take time to thoughtfully select the charities, involve family members in philanthropic decisions and create a more intentional giving strategy rather than making rushed year-end donations.
Estate planning benefits
Integrating a DAF into an overall estate plan can amplify its benefits. It can serve as a centralized vehicle for a family’s charitable legacy, helping to align philanthropic goals across generations. You can name successor advisors — such as children or other heirs — who can recommend grants from your DAF after your lifetime, fostering continued family engagement in charitable giving.
From an estate tax standpoint, DAFs are also beneficial. Assets contributed to a DAF — whether during your life or at death — are removed from your taxable estate. This can be particularly advantageous for high-net-worth individuals seeking to reduce estate tax exposure while supporting causes they care about.
Additionally, you can designate a DAF as a beneficiary of retirement accounts, such as IRAs. Because these accounts are typically subject to income tax when an individual beneficiary takes distributions, leaving them to a charitable vehicle, such as a DAF, can be tax-efficient. (But think twice before naming a DAF as the beneficiary of a Roth account, because distributions would generally be tax-free to an individual beneficiary.)
Coordination is key
It’s important to coordinate a DAF with your other estate planning strategies. For example, ensure that your charitable intentions are clearly documented and aligned with your overall distribution strategy. FMD can help structure your DAF contributions and beneficiary designations to maximize both tax savings and philanthropic impact.
More Than Just 0s and 1s: Accounting for Digital Assets in Your Estate Plan
In today’s digital world, estate planning goes beyond physical property and financial accounts — it must also address your digital assets. From online banking and investment accounts to social media profiles, cloud storage and even cryptocurrency, these assets can hold both financial and sentimental value.
Without proper planning, your loved ones may face significant legal and logistical challenges in accessing or managing them. By taking steps now to inventory your digital assets and incorporate them into your estate plan, you can help ensure a smoother transition and protect your legacy in the digital age.
What digital assets do you possess?
The first step in planning for digital assets is to identify all online accounts and digital property you own. Financial accounts, such as online bank and brokerage accounts, should be listed alongside nonfinancial assets like email accounts, social media profiles, subscription services and cloud storage. Don’t forget emerging asset classes such as cryptocurrencies or monetized digital content.
For each asset, detail how to access it, including usernames, passwords and any multi-factor authentication methods. This sensitive information should be stored in a secure location, such as a password manager or encrypted document, rather than directly in your will.
How do you want the assets to be handled?
You may want certain accounts memorialized, deactivated or deleted altogether. Many platforms, including Facebook and Google, allow users to designate legacy contacts or set instructions for account management after death. Taking advantage of these tools can simplify the process for your loved ones.
Also consider designating a family member or friend to manage your digital assets. You can give this person, sometimes referred to as a “digital executor,” the authority through your will or a separate legal document, depending on your state’s laws. His or her role is to carry out your instructions, access accounts and ensure that digital property is handled appropriately. Be sure to discuss your wishes with this individual in advance so he or she understands the responsibilities.
Any legal considerations?
Laws governing access to digital assets vary by state, and service providers often have their own policies that limit what can be shared. Fortunately, there are laws that govern access to digital assets in the event of your death or incapacity. Most states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which provides a three-tier framework for accessing and managing your digital assets:
The act gives priority to providers’ online tools for managing the accounts of customers who die or become incapacitated. For example, Google offers an “inactive account manager,” which allows you to designate someone to access and manage your account. Similarly, Facebook allows users to determine whether their accounts will be deleted or memorialized when they die and to designate a “legacy contact” to maintain their memorial pages.
If the online provider doesn’t offer such tools, or if you don’t use them, access to digital assets is governed by provisions in your will, trust, power of attorney or other estate planning document.
If you don’t grant authority to your representatives in your estate plan, then access to digital assets is governed by the provider’s Terms of Service Agreement.
To ensure that your loved ones have access to your digital assets, use providers’ online tools or include explicit authority in your estate plan.
More questions?
By taking a proactive approach to digital asset planning, you can reduce uncertainty, avoid unnecessary complications and provide clear guidance for your loved ones. A well-structured plan can protect the financial value of your digital property and help ensure that your personal legacy is handled according to your wishes.
We can answer your questions on properly addressing digital assets in your estate plan. Contact FMD today to learn more.
An ILIT has many Benefits, but Options are Available to Undo It
Life insurance can provide peace of mind. But if your estate is large enough that estate taxes are a concern, it’s important not to own the policy at death. Why? The policy’s proceeds will be included in your taxable estate. To avoid this result, a common estate planning strategy is to set up an irrevocable life insurance trust (ILIT) to hold the policy.
However, there may come a time when you no longer need the ILIT. Does its irrevocable nature mean you’re stuck with it forever? Maybe not. Depending on the ILIT’s terms and applicable state law, you might have the option of pulling a life insurance policy out of an ILIT or even unwinding the ILIT entirely.
How does an ILIT work?
An ILIT shields life insurance proceeds from estate tax because the trust, rather than the insured, owns the policy. (Note, however, that under the “three-year rule,” if you transfer an existing policy to an ILIT and then die within three years, the proceeds remain taxable. That’s why it’s preferable to have the ILIT purchase a new policy, if possible, rather than transferring an existing policy to the trust.)
The key to removing the policy from your taxable estate is to relinquish all “incidents of ownership.” This means, for example, that you can’t retain the power to change beneficiaries; assign, surrender or cancel the policy; borrow against the policy’s cash value; or pledge the policy as security for a loan (though the trustee may have the power to do these things).
What are the options for undoing an ILIT?
Generally, there are two reasons you might want to undo an ILIT:
You no longer need life insurance, or
You still need life insurance, but your estate isn’t large enough to trigger estate tax, and you’d like to eliminate the restrictions and expense associated with the ILIT structure.
Although your ability to undo an ILIT depends on the ILIT’s terms and applicable state law, potential options include:
Allowing the insurance to lapse. This may be a viable option if the ILIT holds a term life insurance policy that you no longer need (and no other assets). You simply stop making contributions to the trust to cover premium payments. Technically, the ILIT continues to exist. But once the policy lapses, the ILIT owns no assets. It’s also possible to allow a permanent life insurance policy to lapse, but other options may be preferable — especially if the policy has a significant cash value.
Swapping the policy for cash or other assets. Many ILITs permit the grantor to retrieve a policy from an ILIT by substituting cash or other assets of equivalent value. If you have illiquid assets but need cash, you may be able to gain access to a policy’s cash value by swapping the policy for illiquid assets of equivalent value.
Surrendering or selling the policy. If your ILIT holds a permanent insurance policy, the trust might surrender it, which will preserve its cash value but avoid the need to continue paying premiums. Alternatively, if you’re eligible, the trust could sell the policy in a life settlement transaction.
Distributing the trust assets. Some ILITs give the trustee the discretion to distribute trust funds (including the policy’s cash value, other trust assets or possibly the policy itself) to your beneficiaries, such as your spouse or children. Typically, these distributions are limited to funds needed for “health, education, maintenance and support.”
Going to court. If the ILIT’s terms don’t permit the trustee to unwind the trust, it may be possible to obtain a court order to terminate it. For example, state law may permit a court to modify or terminate an ILIT if unanticipated circumstances require changes to achieve the trust’s purposes or if the grantor and all beneficiaries consent.
We’re here to help
These are some, but by no means all, of the strategies that may be available to unwind an ILIT. Bear in mind that some of these solutions can have tax implications for you or your beneficiaries. Contact FMD to learn more about ILITs.
How can an FLP Fit into Your Overall Estate Planning Strategy?
A family limited partnership (FLP) allows you to manage and protect your wealth while gradually transferring it to your children or other heirs. Additional benefits include potential tax savings and protection from creditors. And you don’t have to own a business to have an FLP.
FLPs in a nutshell
To take advantage of an FLP, you form a limited partnership to transfer a family business, real estate, investments or other assets. Initially, you receive a general partnership interest of 1% or 2% and limited partnership interests totaling 99% or 98%. You then sell or gift the limited partnership interests to your children or other family members.
As a general partner, you retain management control over the partnership assets, even after you’ve transferred most of the assets’ value to other family members. The significant benefit here is that an FLP removes wealth from your estate while the federal gift and estate tax exemption is at a record high without you immediately parting with control over that wealth. For 2026, the exemption amount is $15 million ($30 million on a combined basis for married couples). (Although there’s no longer an expiration date for the high exemption, lawmakers could still reduce the amount in the future.)
Limited partners, on the other hand, have minimal control over the partnership, and their ability to sell their interests to nonfamily members is generally highly restricted by terms of the partnership agreement. This allows the older generation to consolidate management of family assets and keep them in the family.
Reduce your taxable estate
Transferring FLP interests to family members removes the value of the underlying assets from your taxable estate. Although interests that are gifted rather than sold (or sold for less than fair market value) are taxable gifts, they can be shielded (in whole or in part) from federal gift tax by your gift and estate tax exemption.
In addition, because limited partnership interests possess little control over the partnership and are challenging to sell, their value for gift tax purposes is generally discounted substantially. This allows the older generation to give away even more wealth tax-free.
Shift income to a lower tax bracket
A properly structured and operated FLP allows you to shift income to your children or other family members who may be in lower tax brackets. An FLP is a pass-through entity for income tax purposes. In other words, there’s no entity-level federal tax. Instead, the FLP’s income (as well as its deductions, credits and other items) is passed through to the individual partner, who reports his or her share on a personal income tax return.
So, for example, if you’re in the 35% tax bracket and transfer FLP interests to family members in the 10% or 12% bracket, the tax savings can be substantial. However, your ability to shift income to children may be limited because of the “kiddie” tax, which can apply to children as old as 23, depending on the circumstances.
Increase asset protection
Transferring assets to an FLP can place them beyond the reach of certain creditors. Generally, an FLP’s assets are protected against claims by the limited partners’ personal creditors. In most cases, those creditors are limited to obtaining rights to distributions, if any, received by a limited partner. In addition, limited partners’ personal assets held outside the FLP are generally shielded against claims by the FLP’s creditors.
General partners don’t enjoy the same protections. Still, they may be able to limit their personal liability by forming a corporation or limited liability company to hold their general partnership interests.
Seek professional guidance
A potential downside to consider is that establishing and maintaining an FLP requires legal and tax expertise, ongoing administrative oversight and strict adherence to partnership formalities to withstand IRS scrutiny. Contact FMD for help determining whether an FLP would be beneficial for your family.
Accounting for Intellectual Property in Your Estate Plan
When most people think about estate planning, they focus primarily on tangible assets, such as real estate, investments and personal property. However, in some cases, intellectual property (IP) can make up a substantial portion of an individual’s wealth. Proper planning can help ensure that these assets are preserved, accurately valued and transferred according to your wishes.
Defining IP
IP generally falls into four main categories: patents, copyrights, trademarks and trade secrets. We’ll focus here only on patents and copyrights. They’re protected by federal law to promote scientific and creative endeavors by providing inventors and artists exclusive rights to benefit economically from their work for a certain period.
Patents protect inventions, and the two most common are utility and design patents. Under federal law, utility patents protect an invention for 20 years from the patent application filing date. (It typically takes at least a year to a year and a half from the date of filing to the date of issue.) Design patents last 15 years from the patent issue date.
Copyrights protect the original expression of ideas that are fixed in a “tangible medium of expression,” typically in the form of written works, music, paintings, film and photographs. Unlike patents, which must be approved by the U.S. Patent and Trademark Office, copyright protection kicks in as soon as a work is fixed in a tangible medium. And copyrights last much longer than patents. The specific term depends on various factors.
Valuing and transferring IP
Valuing IP is a complex process. Unlike physical assets, the value of IP often depends on future income potential. Valuation may consider factors such as licensing agreements, royalty streams, market demand, brand recognition and comparable sales. Often, a professional appraiser is needed to determine fair market value. Accurate valuation is particularly important for estate tax reporting and equitable distribution among heirs.
After you know the IP’s value, it’s time to decide whether to transfer the IP to family members, colleagues, charities or others through lifetime gifts or bequests after your death. The gift and estate tax consequences will likely affect your decision. But you also should consider your income needs, as well as who’s in the best position to monitor your IP rights and take advantage of their benefits.
If you’ll continue to depend on the IP for your livelihood, hold on to it at least until you’re ready to retire or you no longer need the income. You also might want to retain ownership of the IP if you feel that your children or other beneficiaries lack the desire or wherewithal to take advantage of its economic potential and monitor and protect it against infringers.
Whichever strategy you choose, it’s important to plan the transaction carefully to ensure your objectives are achieved. There’s a common misconception that when you transfer ownership of the tangible medium on which IP is recorded, you also transfer the IP rights. But IP rights are separate from the work itself and are retained by the creator.
Working with us
If you hold intangible assets, such as a patent or copyright, contact FMD. We can help ensure that these potentially valuable assets are properly accounted for in your estate plan.
Your Health Savings Account and Your Estate Plan: What You Need to Know
A Health Savings Account (HSA) can be a valuable asset in your estate. Contributions to an HSA are pretax or tax-deductible, the funds grow on a tax-deferred basis, and withdrawals for qualified medical expenses are tax-free.
HSA balances may be carried over from year to year, continuing to grow on a tax-deferred basis indefinitely. Over time, this can allow HSAs to accumulate substantial value (if significant withdrawals aren’t taken to pay medical expenses). But there can be major tax consequences for the designated beneficiary who inherits an HSA. So, if you have an HSA, it’s important to carefully factor it into your estate planning.
Breaking down the numbers
If you’re covered by a qualified high-deductible health plan (HDHP), you can contribute pretax income to an employer-sponsored HSA — or make deductible contributions to an HSA that you open for yourself — up to applicable limits.
For 2026, an HDHP is a plan with a minimum deductible of $1,700 ($3,400 for family coverage) and maximum out-of-pocket expenses of $8,500 ($17,000 for family coverage). Under the One Big Beautiful Bill Act, signed into law July 4, 2025, the definition of HDHP is expanded beginning in 2026 to include bronze and catastrophic plans.
You can’t contribute to an HSA if you’re covered by any non-HDHP insurance or enrolled in Medicare. However, if you already have an HSA from a time when you were eligible to contribute, you can continue to withdraw funds tax-free to pay for qualified expenses.
For 2026, the annual contribution limit for HSAs is $4,400 for individuals with self-only coverage and $8,750 for individuals with family coverage. If you’re 55 or older, you can add another $1,000. Typically, contributions are made by individuals, but some employers contribute to employees’ accounts.
An HSA can bear interest or be invested, growing tax-deferred, similar to a traditional IRA. After age 65, you can take penalty-free distributions to use for nonmedical expenses, but they’ll be taxable.
Estate planning implications
Because an HSA’s account balance (less any funds used to pay qualified medical expenses) continues to grow on a tax-deferred basis indefinitely, an HSA can provide significant additional assets for your heirs. However, the tax implications of inheriting an HSA differ substantially depending on who receives it. So it’s important to carefully consider your beneficiary designation.
If you name your spouse as a beneficiary, the inherited HSA will be treated as his or her own HSA. That means your spouse can allow the account to continue growing tax-deferred and withdraw funds tax-free for his or her own qualified medical expenses.
If you name your child or someone other than your spouse as a beneficiary, the HSA terminates, and your beneficiary is taxed on the account’s fair market value. Note, however, that any of your qualified medical expenses paid with HSA funds within one year after death aren’t taxable to the HSA beneficiary.
What if your estate is the beneficiary of the HSA? The full amount of the HSA is taxed to you in the year of death. In some situations (for instance, if you’re in a low tax bracket and the beneficiary is in a high tax bracket), this may be a good tax planning strategy. But in others (if you’re in a high tax bracket and your beneficiary is in a low tax bracket), it could be a bad idea tax-wise. As with most tax planning issues, be sure to consider the tax consequences and other relevant factors when making a beneficiary designation.
Also, keep in mind that, if you do have qualified medical expenses during your life, it generally will be more tax efficient for you to use tax-free HSA distributions to pay them. You won’t have to tap non-HSA funds for medical expenses, leaving you with more non-HSA assets to pass on to your nonspouse heirs. For those heirs, the income tax treatment of non-HSA assets will typically be more favorable.
Have questions?
An HSA is a tax-efficient way to fund your health care expenses during your life while helping you build more assets to pass on to your heirs. However, careful planning is critical, especially regarding HSA beneficiary designation. Contact FMD to discuss how to incorporate an HSA into your estate plan.
Does Your Estate Plan include a Living Will?
A comprehensive estate plan does more than simply distribute your assets after your death — it also protects your voice, your values and your loved ones during a difficult moment. One critical yet often overlooked component of an estate plan is a living will.
Living will vs. last will and testament
Many people confuse a living will with a last will and testament, but they aren’t the same. These separate documents serve different but vital purposes.
A last will and testament is what you probably think of when you hear the term “will.” This document details how your assets will be distributed upon your death. A living will (sometimes referred to as a “health care directive”) details your preferences for how life-sustaining medical treatment decisions should be made if you become incapacitated and unable to communicate them yourself.
While many people focus on wills and trusts to manage property after death, a living will addresses critical decisions during your lifetime. Including one as part of your estate plan offers significant personal and financial benefits, such as:
Easing emotional stress on family members. Few situations are more emotionally taxing than making end-of-life medical decisions for a family member. When loved ones are forced to make choices without clear guidance, feelings of guilt and doubt can arise.
A living will can provide clarity and reassurance. It relieves your family of the burden of guessing what you would have wanted. Instead of debating difficult choices, they can focus on supporting one another.
Helping to avoid family disputes. Unfortunately, disagreements over medical treatment can strain even the closest families. Different personal beliefs, religious views or interpretations of “quality of life” can lead to conflict.
By documenting your wishes in advance, you reduce the risk of disputes. Health care providers and family members can rely on a legally recognized document rather than differing opinions. This can help preserve family harmony.
Reducing unnecessary medical costs. End-of-life medical care can be expensive. While financial considerations shouldn’t drive medical decisions, unwanted or prolonged treatments can significantly impact your estate and your family’s financial security.
A living will helps ensure that you receive only the type of care you want — no more and no less. This clarity can prevent costly interventions that don’t align with your preferences, helping to protect the assets you’ve worked hard to build.
Don’t forget powers of attorney
Often, a living will is drafted in conjunction with two other documents: a durable power of attorney for property and a health care power of attorney. In the State of Michigan, the Living Will language is included in the Designation of Patient Advocate which is also referred to as the Health Care Power of Attorney, thus requiring only one document. Many states will separate the two, requiring two documents for health care.
A durable power of attorney identifies someone who can handle your financial affairs, such as paying bills and undertaking other routine tasks, should you become incapacitated. A health care power of attorney becomes effective if you’re incapacitated but not terminal or in a vegetative state. Your designee can make medical decisions on your behalf — for example, agreeing to a surgical procedure recommended by your physician — if you’re unable to do so. But this person can’t officially make life-sustaining choices. That requires a living will, except in a state like Michigan which combines the Living Will and Health Care Power into one.
Seek professional help
Because laws governing living wills vary by state, it’s important to work with qualified professionals in your area to ensure your documents are properly drafted and integrated into your broader estate planning strategy. FMD can explain how a living will fits within your overall financial and legacy goals. Be sure to turn to your attorney to draft your living will.
April 15 isn’t only the Income Tax Return Filing Deadline, it’s also the Gift Tax Return Filing Deadline
If you made large gifts to family members or heirs last year, you may need to file a 2025 gift return by April 15. So, it’s important to understand whether you’re required to file a federal gift tax return — and when it might be beneficial to file one even if not required.
When filing a return is required
Generally, you must file a gift tax return (Form 709) if, during the 2025 tax year, you made gifts (other than to your U.S. citizen spouse) that exceeded the $19,000-per-recipient annual gift tax exclusion. If you split gifts with your spouse to take advantage of your combined $38,000 annual exclusion, both you and your spouse must file separate gift tax returns.
You also need to file a gift tax return if you made gifts to a Section 529 college savings plan and wish to accelerate up to five years’ worth of annual exclusions ($95,000) into 2025. Other times filing is required include when you made gifts:
That exceeded the $190,000 annual exclusion amount (for 2025) for gifts to a noncitizen spouse,
Of future interests (such as remainder interests in a trust), regardless of the amount, or
Of community property.
Keep in mind that you’ll owe gift tax only to the extent that an exclusion doesn’t apply and you’ve used up your lifetime gift and estate tax exemption ($13.99 million for 2025). As you can see, some gifts require filing a return even if you don’t owe tax.
When filing a return isn’t required
Generally, no gift tax return is required if you:
Paid qualifying education or medical expenses on behalf of someone else directly to the educational institution or health care provider,
Made gifts of present interests that fell within the annual exclusion amount,
Made outright gifts, in any amount, to a spouse who’s a U.S. citizen, including gifts to marital trusts that meet certain requirements, or
Made charitable gifts and aren’t otherwise required to file Form 709 — if a return is required, charitable gifts should also be reported.
If you gifted hard-to-value property, such as artwork or interests in a family-owned business, consider filing a gift tax return even if you’re not required to. Adequate disclosure of the gift on a return triggers the statute of limitations, generally preventing the IRS from challenging your valuation more than three years after you file.
In some cases, it’s even advisable to file a gift tax return to report nongifts. For example, suppose you sold assets to a family member or a trust. Again, filing a return triggers the statute of limitations and prevents the IRS from claiming, more than three years after you filed the return, that the assets were undervalued and, therefore, are partially taxable.
Questions? We can help
Gift and estate tax rules are complex. Determining whether you must file a gift return (or whether you should file one even if not required) isn’t always easy. If you need help, please contact FMD.
Play it Smart by Naming Co-executors
Choosing an executor is one of the most important decisions in the estate planning process. This person (or institution) will be responsible for carrying out your wishes, managing assets, paying debts and taxes, distributing property to beneficiaries and more.
Your first instinct may be to name your spouse, adult child or other close family member as executor. While that decision may feel natural, it’s not always the best choice. Co-appointing a professional advisor alongside a trusted family member can provide a more effective and balanced solution.
An executor’s duties
Your executor has a variety of important duties, including:
Arranging for probate of your will and obtaining court approval to administer your estate (if necessary),
Taking inventory of — and collecting, recovering or maintaining — your assets, including life insurance proceeds and retirement plan benefits,
Obtaining valuations of your assets where required,
Preparing a schedule of assets and liabilities,
Arranging for the safekeeping of personal property,
Contacting your beneficiaries to advise them of their entitlements under your will,
Paying any debts incurred by you or your estate and handling creditors’ claims,
Defending your will in the event of litigation,
Filing tax returns on behalf of your estate, and
Distributing your assets among your beneficiaries according to the terms of your will.
For someone without financial, legal or tax expertise, these responsibilities can feel overwhelming — especially while grieving. Even highly capable family members may lack the time or experience needed to administer an estate efficiently.
Mistakes can result in delays, disputes or even personal liability. Executors are legally responsible for acting in the best interests of the estate and its beneficiaries. If errors occur — such as missed tax deadlines or improper distributions — the executor may be held accountable.
Emotional dynamics can complicate matters
When a family member serves as sole executor, emotional tensions can arise. Sibling rivalries, blended family dynamics or disagreements about asset values can quickly escalate.
Even when everyone has good intentions, beneficiaries may question decisions about timing, asset sales or expense payments. The executor may feel caught between honoring the deceased’s wishes and preserving family harmony. Needless to say, these situations can strain relationships, sometimes permanently.
Two can be better than one
A practical alternative is to name both a trusted family member and a professional advisor, such as a CPA, estate planning attorney or corporate fiduciary, as co-executors. This structure can offer several key benefits, such as:
Technical expertise. A professional advisor can bring knowledge of tax law, probate procedures, accounting requirements and regulatory compliance. This reduces the risk of costly mistakes and helps ensure deadlines are met.
Objectivity. A neutral third party can help mediate disagreements and make decisions based on fiduciary standards rather than emotions. This can protect family relationships and minimize conflict.
Shared responsibility. Administering an estate can be time consuming. Dividing responsibilities allows the family member to focus on personal matters while the professional handles technical and administrative tasks.
Continuity and stability. If a family member becomes overwhelmed, ill or otherwise unavailable, a professional co-executor can provide continuity. Estates often take months — or even years — to settle.
A balanced approach
Co-appointing a professional doesn’t mean excluding family involvement. In fact, it often enhances it. The family member remains involved in decision-making and ensures that your personal wishes and family values are honored. Meanwhile, the professional ensures that legal and financial matters are handled efficiently and correctly.
For larger or more complex estates — such as those involving business ownership, multiple properties or significant investments — this collaborative model can be especially valuable. Contact FMD if you have questions about having co-executors or choosing them.
When Should You Update Your Estate Plan?
Many people think of estate planning as a “one-and-done” task — something you complete and file away. But an estate plan should evolve as your life and finances and relevant laws change. An outdated plan can create confusion, unintended tax consequences or outcomes that no longer reflect your wishes.
The higher federal gift and estate tax exemption that was made permanent by last year’s One Big Beautiful Bill Act is one reason to review your estate plan now. But you should also review your plan whenever something significant changes in your life. Let’s take a look at common situations that signal the need to revisit your will, trusts, powers of attorney or other estate planning documents.
Major life events
Life transitions are the most common reasons estate plans need attention. Marriage or remarriage is a big one, especially if you have children from a prior relationship. Divorce is equally important. Failing to update your documents could leave an ex-spouse in control of your assets or medical decisions.
The birth or adoption of a child or grandchild should also trigger a review. You’ll want to name a guardian or adjust beneficiary designations to reflect your growing family. Similarly, the death or incapacity of a spouse, beneficiary, trustee or executor means your plan may no longer function as intended.
Financial changes matter, too
Your estate plan should reflect your current financial situation. If your net worth has increased significantly — through business growth, inheritance, real estate appreciation or investment success — your existing plan may not adequately address tax planning or asset protection.
Starting, buying or selling a business is another major reason to update your estate plan. Business ownership often requires specific provisions for succession planning, valuation and continuity. Retirement also can prompt changes, as income sources shift and distribution strategies evolve.
Don’t forget supporting documents
Updating an estate plan isn’t just about your will or trusts. Beneficiary designations on retirement accounts and life insurance policies should be reviewed regularly, as they generally override what’s stated in your will.
Powers of attorney and health care directives are also critical to review. Make sure they continue to reflect your wishes and that those you’re providing with decision-making authority are still people you trust and who are able to serve.
The bottom line
An estate plan is only effective if it reflects your current wishes and circumstances, as well as current law. Regular reviews help ensure your assets are distributed as intended, your loved ones are protected, and unnecessary taxes or legal complications are avoided.
Because estate planning intersects with taxes, financial planning and your long-term goals, it’s wise to review your plan with qualified professionals. FMD can help you identify when updates may be needed and coordinate with your legal and financial advisors to keep your plan on track.