Estate Planning
The core documents
Will, revocable living trust, durable power of attorney, health care directive, beneficiary designations. Understand probate avoidance versus control, and that titling and beneficiary forms override the will.
Transfer tax structure
Grasp the unified credit, the annual exclusion ($19,000 per donee in 2025), the basic exclusion ($13,990,000 in 2025), portability of the deceased spousal unused exclusion via a timely Form 706, GST exemption and its separate allocation, and the difference between a credit shelter (bypass) trust and a marital deduction disposition. Know that portability does not port GST exemption.
Advanced tools
ILITs (three-year lookback; incidents of ownership under §2042), SLATs, GRATs (Section 7520 hurdle), IDGTs and installment sales, family limited partnerships with legitimate nontax purposes, 529 plans, and disclaimer trusts. Valuation discounts require a real business purpose and adequate documentation.
Traps
- Using an outdated exclusion amount; check the year in the fact pattern.
- Assuming portability solves GST planning for grandchildren.
- Ignoring state estate or inheritance tax in decoupled states.
- Naming a minor directly as beneficiary with no trust or custodian.
- Forgetting that life insurance death benefit is included in the estate if the decedent held incidents of ownership.
Rule of thumb
If an estate is comfortably under the federal exclusion but the client lives in a decoupled state, plan for the state threshold first; a state-only estate tax bill is a common exam twist. For a married couple, always ask whether a Form 706 was filed - the answer changes the survivor's available exclusion.