By Henry Zupko, MBA, CFP®
An estate plan can easily become outdated without you realizing it. You may have created yours years ago, when your family, finances, or priorities looked very different than they do today. Even changes such as a marriage, divorce, new grandchild, property purchase, or retirement can be a reason to take another look.
A current estate plan gives the people you trust clear direction if you’re unable to make decisions for yourself or after you die. It can spell out who should manage your finances or healthcare, how you want your assets distributed, and who you want responsible for carrying out those wishes. Keep in mind that while financial advisors help align your assets with these goals, we are not attorneys; you will need to work with a qualified estate planning attorney to create or update legally binding documents.
Here are some of the key documents and planning decisions to consider.
Start With the Basic Estate Planning Documents
You don’t need a large estate to benefit from estate planning. Most adults should consider a few foundational documents:
Will
A will outlines how you want certain assets distributed after your death and names the person responsible for handling your estate. If you have minor children, your will can also name the person you would want to serve as their guardian.
Without a valid will, state law generally determines how assets subject to probate are distributed, which may look very different from what you would have chosen.
Advance Medical Directive
An advance directive, sometimes called a living will, allows you to document your wishes for medical care if you become unable to communicate them yourself. Requirements and terminology vary by state, so an estate planning attorney can help you prepare the appropriate documents where you live.
Healthcare Proxy
A healthcare proxy or healthcare power of attorney names someone you trust to make medical decisions on your behalf if you’re unable to do so. Choosing that person ahead of time gives your medical providers someone to turn to and can make a difficult situation easier for the people closest to you.
Financial Power of Attorney
A financial power of attorney allows someone you choose to handle financial matters on your behalf under the circumstances described in the document. That might include paying bills, managing accounts, or handling business matters.
Before naming someone, talk with them about the responsibility and make sure they’re comfortable taking on the role.
Trusts
Trusts can serve a variety of purposes, from managing assets for beneficiaries to helping certain assets pass outside probate. A properly funded revocable living trust, for example, may allow assets held by the trust to avoid probate.
A revocable trust generally does not remove those assets from your taxable estate during your lifetime. Different types of trusts have different legal and tax consequences, so an estate planning attorney can help determine whether one makes sense for your circumstances.
When More Advanced Estate Planning May Make Sense
People with larger estates, closely held businesses, charitable goals, or more complex family circumstances may benefit from additional estate planning strategies.
For 2026, the federal estate and gift tax basic exclusion amount is $15 million per individual, ($30 million for married couples) while the annual gift tax exclusion is $19,000 per recipient. These figures can change over time, which is another reason to review your estate plan periodically.
Here are several strategies you may encounter.
Intentionally Defective Grantor Trust (IDGT)
An IDGT is an irrevocable trust designed so that assets transferred to it may be outside the grantor’s taxable estate while the grantor remains responsible for income taxes generated by the trust.
For some families, that structure can allow future appreciation on transferred assets to occur outside the grantor’s estate. IDGTs are complex, and the tax treatment depends heavily on how the trust is structured and administered.
Irrevocable Life Insurance Trust (ILIT)
An ILIT is an irrevocable trust that can own a life insurance policy. When properly structured and administered, life insurance proceeds owned by the trust may be excluded from the insured person’s taxable estate.
Specific rules apply to ownership, gifts used to pay premiums, and existing policies transferred into the trust. An estate planning attorney and tax professional can help you evaluate whether an ILIT fits your estate plan.
Spousal Lifetime Access Trust (SLAT)
A SLAT is an irrevocable trust created by one spouse for the benefit of the other spouse and, potentially, other beneficiaries such as children.
The grantor spouse transfers assets to the trust, which may remove those assets and future appreciation from the grantor’s taxable estate when properly structured. Because the beneficiary spouse may be able to receive distributions according to the terms of the trust, the family may retain some indirect access to the assets during the marriage.
Divorce, death, trust design, and tax rules can all affect how a SLAT works, so this strategy requires careful legal and tax planning.
Grantor Retained Annuity Trust (GRAT)
A GRAT allows you to transfer assets to an irrevocable trust while retaining the right to receive annuity payments for a specified period. At the end of the term, remaining assets may pass to your beneficiaries.
The IRS Section 7520 rate is used when valuing the transfer. If the assets appreciate faster than the assumed IRS rate, some of that appreciation may pass to beneficiaries with little or no additional gift-tax cost.
The Section 7520 rate changes monthly and is 5.2% for August 2026.
Charitable Remainder Trust (CRT)
A charitable remainder trust is an irrevocable trust that can provide income to you or another beneficiary for life or for a specified period. Once that period ends, the remaining assets pass to one or more qualified charities.
Charitable remainder trusts can provide an income stream and may qualify for a partial charitable deduction, depending on how the trust is structured. The deduction is based on the value of the charitable remainder interest, and distributions to non-charitable beneficiaries may still be taxable.
Buy-Sell Agreement
If you own a business with other people, a buy-sell agreement can establish what happens to an owner’s interest after events such as death, disability, retirement, or departure from the company. The agreement may also address how the ownership interest will be valued and how a purchase can be funded.
Life insurance is sometimes used to fund a buyout after an owner dies, but the structure deserves careful attention. In the 2024 Connelly v. United States decision, the U.S. Supreme Court addressed how company-owned life insurance used in a share-redemption arrangement affected the value of the company for federal estate tax purposes.
If your business has a life-insurance-funded buy-sell agreement, consider having your attorney, tax professional, and financial advisor review how the arrangement is structured.
Keep Your Estate Plan Current
Creating an estate plan is only the beginning. Marriage, divorce, births, deaths, changes in your finances, a business sale, or a move to another state can all be reasons to pull those documents back out.
Beneficiary designations deserve attention too. Retirement accounts and life insurance policies generally pass according to the beneficiary designation on file, so those forms should be reviewed alongside your will and other estate documents.
Even when nothing significant has changed, reviewing your estate plan periodically gives you an opportunity to confirm that the people you’ve named are still the people you trust and that your documents continue to reflect your wishes.
Have Questions About Estate Planning?
Your estate plan impacts several areas of your financial life, which is why coordination is so important. At Tranquility Path Investment Advisors, we can review how your finances fit with the plan you’ve put in place and coordinate with your estate planning attorney and tax professional as questions come up.
Life changes, and your estate plan may need to change with it. Schedule a no-obligation conversation or reach us at (908) 759-6322 and make sure your financial plan still reflects your wishes.
