Why Estate Planning Matters at Every Stage of Life

When you hear the word estate, what comes to mind? For many people, it’s a million-dollar home, fancy cars, lots of money, land, or any expensive items that they own. The truth is, you don’t have to be wealthy to have an estate. In fact, almost everyone has one, whether they realize it or not.

What’s an estate?

Your estate is simply everything you leave behind when you die. It includes things like your home, any land that you own, retirement accounts, cars, bank accounts, life insurance policies, and any personal belongings. While we spend our lifetime building a legacy, it is important to think about what happens to everything included in your estate. That’s where estate planning comes in. It’s more than deciding who gets what when you’re no longer here: it’s about making your wishes known, providing for your loved ones, reducing costs and taxes, and having a plan in place when you can’t make the important decisions (Clifford, 2022).

What happens if you don’t have a plan in place? 

Well, I’m glad you asked. Without a plan (a will or a trust) in place, state law decides who inherits your assets, and nobody wants that! This is why documents like a will, trust, durable power of attorney, and health care directive exist. They ensure your wishes are followed and provide clear direction for your loved ones when they need it most. However, getting the documents is only half the battle.

What are beneficiaries?

You must also make sure your beneficiaries are explicitly named inside your will, trust, and accounts. A beneficiary is simply the person or organization chosen to receive your assets. 

One of the misconceptions we frequently see is the belief that a will controls everything you own. The fact of the matter is not everything goes through your will, even if you have one. It’s important to know what assets your will covers and what assets bypass your will entirely. Assets such as IRAs and other retirement accounts, Transfer on Death (TOD) accounts, life insurance policies, and annuities (anything with a designated beneficiary) do not go through your will. In fact, your beneficiary designations on these accounts override your will every single time. 

For property controlled strictly by a will, beneficiaries usually receive their inheritance after the probate process ends. For a trust, they can get their assets much faster because a trust bypasses probate completely. You can also name primary or contingent beneficiaries to set the order of who gets what if someone passes away before you. (Link to previous blog post "Beneficiaries: A Blueprint" to learn more.)

Naming beneficiaries on bank accounts, investment accounts, certain homes or vehicles depending on your state, and the accounts mentioned above is a great way to avoid probate1 and cut out the middleman.

While probate can be a lengthy and expensive process, it does have one advantage: it can help protect your estate from creditors after you die. Because of this, probate is not entirely bad, just time consuming.

Which is better, a trust or a will?

Many people wonder whether they need a will or a trust. It really comes down to how complex your situation is. If you do not have many assets or dependents, a simple will can meet your estate planning needs while being less expensive than a trust. Otherwise, a trust may be worth looking into depending on your needs.

There are several advantages to a trust due to its flexibility. If you ever become temporarily or permanently incapacitated, you can name a trustee to step in and manage your finances to handle whatever you cannot. They are also super helpful if you have more complicated assets, like owning property in different states. Plus, if you have young children, grandchildren, or anyone else who might not be ready to handle a large inheritance all at once, a trust lets you set clear rules. You can easily structure distributions, so they receive funds in gradual portions over the years rather than getting everything at once.

While it is important to have a plan, estate planning is not a set-it-and-forget-it task. As your life changes, your plan needs to change right along with it. Major life events like marriage, divorce, growing your family, or losing a loved one are all great reasons to revisit your documents. As a good rule of thumb, we recommend reviewing everything every three years.

What’s our “perspective”?

No matter where you are in life, it is never too late or too early to meet with an estate attorney to create or review your plan. Taking this step protects what matters most and gives you and your loved one’s true peace of mind. Building a legacy takes time, but protecting it takes planning.

References:

Clifford, D. (2022). Plan your estate. Nolo.

For additional resources on creating a simple will and the role of the executor, check out these links below:

• Trust and Will: trustandwill.com
• Legal Zoom: https://www.legalzoom.com
• Estate Exec: https://www.estateexec.com/Docs/Guide
• American Bar Association: https://www.americanbar.org/groups/real_property_trust_estate/resources/estate-planning/guidelines-individual-executors-trustees/

Trump Accounts – What Are They?

Starting July 5^th, 2026, any American child born between 2025 and 2028 qualifies for a free $1,000 from the US government to kick start their financial future. This is the base of the new Trump accounts. What you may not know is that ANY child under the age of 18 can also open a Trump account with funds contributed by parents, grandparents and others. The free money for those new children makes this a no-brainer for parents, but the question is whether they should they be used for older children. And should parents continue to fund the Trump accounts annually? Are there better alternatives? 

At a high level, Trump Accounts were established by the One Big Beautiful Bill[1] as a way for children to begin building wealth. The best way to think about a Trump Account is as an Individual Retirement Accounts (IRA) that parents can open for their children to secure their financial future. They’re “baby bonds,” accounts that are funded early in a child’s life with the goal of compounding over decades, not years, to support financial security and help build generational wealth.

But is this what families want and need? Most savings for children are focused on education, and these accounts can be used for that purpose, but that is not the main goal. Although the accounts are intended to be easy to open (you can fill out IRS Form 4547 to create one), there are still significant unknowns. Currently, Trump Accounts appear to be limited in scope, with only one custodian and one brokerage involved. 

Like all tax-advantaged accounts, there are limits and provisions that must be followed. First, there is an annual limit of $5,000 that can be contributed[2].That can come from anyone. There’s also a provision that allows employers to contribute up to $2,500 of the $5,000 annual limit in a child’s Trump Account annually (so check those employer benefits). Contributions may also be given philanthropically, much like Michael and Susan Dell who are giving $250 for the first 25 million children under the age of 10 that do not qualify for the $1,000 from the federal government.

Investment options for Trump Accounts are limited. Funds must be invested in low-cost mutual funds or exchange-traded funds (ETFs) that are invested in primarily U.S. stock indices such as the S&P 500[3].  While this may keep things simple in investment selection, it might not give you the most diverse options that you may be looking for. 

From a tax perspective, the treatment is mixed. Contributions will generally be made with after-tax dollars, while contributions from your employer, a charity, or the government are made with pre-tax dollars. Withdrawals depend on what part of the account is being withdrawn. Withdrawing the after-tax amounts will be tax free, while any pre-tax amounts will be taxed at the child’s income tax rate. Much like the growth of a Traditional IRA, the growth is tax-deferred, being taxed as income when withdrawn.

Looking ahead, these accounts are clearly designed with retirement in mind. Once the child turns 18, they can fully access their Trump Account. At that time, it will be considered like a Traditional IRA. Meaning that there’s a withdrawal penalty of 10% if taken out before the age of 59 ½ and would be taxed as ordinary income rates. While your child’s retirement allows for many years of compounding, it limits the flexibility and practicality for more immediate financial goals. 

As with a Traditional IRA, there are exceptions to the 10% withdrawal penalty such as with purchasing a first home ($10,000 limit), educational expenses (tuition and fees, not room and board), or the birth of a child ($5,000 limit per child), but the withdrawal amount will still be taxed as income.

As a result, the real-world use case for Trump Accounts is likely smaller than it initially seems. For many families, priorities such as emergency savings, retirement planning for parents, and education funding will be the priority. In that context, placing funds to a long-term, relatively inflexible account would likely not be the most efficient choice. While educational expenses can be used from the Trump Accounts once they change to a Traditional IRA at 18 years old, the 529 plan is more tax friendly with tax-free earnings for qualified educational expenses and the ability to be used for room and board.

For those new babies in the family, you certainly want to take advantage of the initial $1,000 government contribution, but they are probably not the best option for older children or for continuing contributions. In fact, if the overall goal is to cover educational expenses, we prefer the state-sponsored 529 plans.  

Ultimately, Trump Accounts are an interesting addition to the financial field, but as they currently stand, are unlikely to be the first solution for most families. They work best as a supplemental tool, especially when taking advantage of initial funding opportunities, rather than a replacement for more established and flexible strategies.

Savings Plan for Children

Attribute	Trump Accounts	529 Plan	UGMA/UTMA
Tax Treatment	Tax-Deferred Growth	Tax-Free Growth; Tax-Free Withdrawals for Qualified Education Costs	Taxable
Non-Qualified Withdrawal	Taxed at Ordinary Income Rate and 10% Early Withdrawal Penalty	Taxed at Ordinary Income Rate and 10% Early Withdrawal Penalty	Capital gains tax
Investment Options	Low-cost US Equity Index Funds/ETFs	Plan selected mutual funds and index funds	Any investment
Qualified Uses	Retirement; Exceptions for higher education, first home	Higher Education, K-12 Tuition	No restrictions
Account Owner	Owned by Child	Owned by Account Owner	Child takes full control at age 18-21
Best Used For	Long-term retirement wealth building with possible Roth conversion	Tax-Free growth for college and education costs	Maximum Flexibility

 

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[1] https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions

[2] https://trumpaccounts.gov/

[3] https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions

#TBT "Saving, spending rules imperative"

This Thursday's throwback is an article Nancy wrote in her Mississippi Business Journal column in the fall of 1999--back to when we were all stockpiling for Y2K, Nancy was sharing her saving and spending guidelines.
http://www.piggyplanit.com/#!TBT-Saving-spending-rules-imperative/b6954/57c99029c750093bcdbe5ffc

I've had death on my mind. This summer, that particular angel has not taken a vacation.

Last Saturday morning, as we began stirring in our beach rental, we turned on the television set. We were startled to hear of another Kennedy tragedy. I thought of those three people, all in their 30s, who died at the prime of their lives. I thought how death does not discriminate based on social status.

In June, we returned to Clinton from a weekend away to hear of another tragedy. A car load of teenagers was involved in a wreck. A fifteen-year-old girl was killed. She had barely begun to live. I thought of my own teenage daughter, and I thought how death does not discriminate based on age.

Arriving home this past Sunday, we received a phone call. An 88-year-old aunt who had been living in a nursing home had died. She had been living in the home ever since her stroke more than three years ago. One of her last conversations with her sister centered around her desire to die. I thought of the life she led up until her illness. I thought there are worse things than death.

In my business, I tell people to save and invest for the future. Save for that house, that college education, that worry-free retirement. Tuck away some cash for a rainy day. Be prepared for that emergency or that unexpected layoff.

Worse than death is outliving your money. The object of the game is "not to take it with you, but to make it last till you go." I've seen those people who didn't prepare for old age. It's not a pretty sight. Living in a home where you are depending on Medicaid to pay the bills is not what I want to do. I plan on having enough money to pay my own bills so that I have the choice and the kind of care that I need. So what if this sucks up my child's inheritance! I'm not working my whole life just to make things easy for her when she's an adult.

But then I thought of the Kennedys. Old age will never come to them. They didn't need that retirement nest egg. They didn't need life insurance since they had no children. And I thought of my father-in-law who dropped dead of a heart attack at age 56. I remember my mother-in-law talking about how they had pinched pennies for years to save for retirement. She wished they had spent some of that money.

It's difficult to find a middle ground when it comes to saving and spending. For the most part, we Americans err on the side of spending. In May, 1999, personal income rose 0.4% while spending jumped to 0.6%. Most of us are spending more than we make. These are the people who are counting on living hard and dying young. Heaven help them if they make it to age 90.

But there are those (and these are the minority) who are so busy preparing for old age that they can't enjoy today. My own struggle for the middle ground led me to develop a set of criteria for saving and spending.

1. Don't spend money for things that don't give you any value.

That means don't pay interest on your credit cards, if you can help it. Don't bounce checks. You can't eat check charges. Don't get speeding tickets or parking tickets. That's money down the drain. Don't gamble with hard earned money. It's not a fair game.

2. Shop around.

Shop around for cars, houses, clothing, etc. But don't forget to shop around for insurance, loans, bank services, etc. A penny saved really is the same as a penny earned.

3. Share.

Don't spend everything you earn on yourself and your family. It's not healthy. Regularly budget for charity. Every dollar you give to someone else will enhance your character tenfold (notice I said your character).

And last, but not least...

4. Save like you'll live to be 100, but live like there's no tomorrow.

--Nancy Lottridge Anderson, Mississippi Business Journal, July 26-August 1, 1999

Quick Savings Tips!

We all know that saving more is good and important. Saving more is the key to meeting our financial goals and having security in the future. The problem is getting started saving. Even the best-designed budget is worthless if you can't stick to it. Try these little tricks to make saving a bit easier!

• Automate it. This is especially easy if you can get your employer on board. If you have a retirement plan at work, raise your contribution to it by 1% every now and then. If you need to build up savings elsewhere (like an online savings account or investment account) see if they will pay part of your paycheck directly to that account so that you don't have to be involved in the process at all! Otherwise, just set up a regular transfer from your checking to your savings account.
• Take a holiday! No, don't book plane tickets just yet, take a spending holiday. Try one day a week, or one weekend a month, where you don't spend any money at all. This takes a bit of planning if you don't always keep your fridge stocked with food, but shouldn't be hard to do. Remember to pack some leftovers for lunch and have an idea for cooking dinner and your needs are taken care of. If you are tempted to go shopping or are invited out, you only have to put it one pause for a day. If you can control a spending impulse for a day, you can make better decisions about spending in other situations too!
• Get your priorities straight. Think deeply about what you want your money to do for you and what you value enough to spend money on. It is not healthy to think of a particular spending habit as a "vice" or a "splurge" if eating out or buying vintage clothes is something you value enough to spend on, budget for it and understand that prioritizing that will mean sacrifice in other areas. When confronted with something to spend money on, ask yourself how much you really value it.
• Comparison shop - for everything. Comparison shopping is not just looking for a cheaper cereal in the grocery store or looking at two websites for prices on a gadget. Comparison shopping can extend to anything you spend money on. Consider real alternatives to expensive outings or meals. If you want to try out a new restaurant, instead of spending on a full meal for yourself, gather a few friends and make it clear you want to sample the menu and keep the price low. If you are planning a date night, look at the cost of the activities you have planned and come up with a cheaper alternative to one of them.
• Be realistic. Don't plan on a drastic cut in your spending if you don't actually think you can do it. Keep yourself appraised of your spending on a regular (I recommend weekly) basis and if something is not working out, you may need to change things up.

Saving money requires saying NO to a lot of spending. This can be hard if we want to keep up with our friends or maintain a certain lifestyle. Ultimately you will need to figure out what you value, and understand the true value of future financial success that comes with good habits now.