Introduction to Modern Estate Planning Essentials

Michael Thompson

Welcome back to Radio Pete’s Wealth Talk. Today, we’re pulling back the curtain on something every one of us needs but, let’s be honest, few of us actually spend enough time thinking about: modern estate planning. We spend so much energy talking about building wealth, tracking the S&P, or worrying about taxes—but we often spend too little time keeping that wealth protected should something happen to us.

Michael Thompson

And, that "something" could be death or incapacity to put it bluntly. The I'll do it tomorrow excuse does not help as we never know what tomorrow brings. The But-I-Have-A-Will excuse does not help if you are very much alive but cannot sign your name for any number of reasons. Wills are only effective on death. Honestly, it all starts with a solid, up-to-date estate plan. In later episodes, we will take each of the elements separately, but for now let's take a look at the Big Picture.

Michael Thompson

So, what’s a contemporary estate plan actually look like? Today’s effective estate plan usually includes key documents—your will, a trust, a durable power of attorney over assets, maybe even a living will or a health care proxy. But, more importantly, it comes down to personal considerations. Have your circumstances changed? Do you have a new spouse? Maybe you’re part of a blended family or you’ve welcomed new dependents—stepchildren, grandchildren, heck, sometimes people get surprised with late-in-life guardianships.

Michael Thompson

A quick word about the difference between Wills and Trusts. In a nutshell, a Will handles assets in a court-supervised process call Probate. Assets in trust can usually avoid probate and transfers are done privately under the supervision of the person or entity that you designate as your Successor Trustee. Hold that thought, we will dive into this in depth in the future.

Michael Thompson

And often a business owner or a family member may suddenly realize that their “estate plan”, however well-crafted originally, hasn’t kept up with their life. A classic case is of a modern family in which spouses have divorced and have remarried. They had kids from the first marriage, and now stepchildren are in the mix. Such a client needs to take some extra steps, making sure trusts and beneficiary designations were ironclad so there won't be confusion—or worse, disputes—down the road. Mind you, you can leave assets to whomever you like. It is your wealth after all. But, unless you write it down, it may be passed in a way you did not intend and, worse, in a way you specifically did not want at all.

Michael Thompson

Pete had a case years ago involving an elderly married couple. The husband was 90 and his wife was 70. They declined to have an extensive estate plan and merely put assets in joint tenancy. Their thinking was that when husband died, all assets would go to the wife; and, then, when the wife died, asset would go to her children of a previous marriage. They assumed that the husband, age 90, would die first. Guess what happened? The wife died first. All assets went to the husband per the joint tenancy and when he died, the assets went to his children. Exactly opposite of what they wanted.

Michael Thompson

And you know, I might be repeating myself from an earlier episode, but just like with a diversified portfolio, you’ve got to review and rebalance. Life moves, and so should your estate plan. And, as the above story indicates, NEVER ASSUME! Always plan for unexpected contingencies. Life can throw curves.

Michael Thompson

Alright, so now that we’re thinking about the structure, let’s talk taxes, because no estate plan is complete without considering Uncle Sam. It’s funny—well, not really funny—how many people don’t realize that taxes at death can take a real bite out of what you leave behind. There are income tax considerations, Federal estate taxes, state inheritance taxes depending where you live and Federal gift taxes. Yes, believe it or not, Uncle Sam can tax you on gifts you make during your life as well as at death.

Michael Thompson

There are some tried-and-true ways folks tackle these taxes. Let's take gift tax first. This is a tax on transfers, that is gifts, between people - related or not. There is, however, some major relief for most of us. In 2026, you can give up to $19,000 per person per year without triggering gift tax reporting. And, even if you exceed that amount, there are reporting requirements before you even pay a tax. Each year, you report the excess above $19,000 which is subtracted from your $15Million lifetime exclusion. Sorry, over $15,019,000, there's a gift tax in many cases. Each state has different rules and may also take a tax on gifts during life and at death. Another bit of good news - there is no tax on gifts between spouses as long as the recipient is a citizen. But, when you think about it, marital gifts can just mean a possible postponement as assets accumulate in a survivor's estate.

Michael Thompson

And don’t forget charitable giving—if you’re charitably inclined. Gifts to charities can chip away at your taxable estate while creating real impact. Charitable giving can also help lower income taxes. More on tax planning in later episodes.

Michael Thompson

Now, on to one of the trickiest but most important pieces—making sure what you leave behind actually lands where you want it to go, especially for the modern family. I mean, families today are way more complex than some advisor’s textbook scenario—stepfamilies, LGBTQ+ couples, three or even four generations under one roof. There’s no one-size-fits-all, and misunderstanding this can turn an inheritance into a battleground.

Michael Thompson

The big key here? Clear, written instructions. You do not necessarily have to tell beneficiaries what, if anything, they will inherit - after all, things might change in the future; but the number one cause of fights among heirs is not greed. It is lack of clarity in your plan. Spell it out. If you want the lake house to go to all the kids equally, say so. Is someone getting a sentimental item? Make sure it’s in writing. The fewer gray areas, the better.

Michael Thompson

A living trust can spell out how you want assets handled during your life, on incapacity and at death often without the need to go to court. A will can spell out how you want assets handled at death and the court can make sure your wishes are followed. A power of attorney over assets can spell out how you want non-trust assets handled on incapacity.

Michael Thompson

Sometimes, even with the best documents, you’ve got to revisit the plan as families evolve. Kids get older, relationships shift. It’s just like with your investments—review, rebalance. Actually, maybe that’s my theme for this episode! But seriously, for diverse families, leaving room for flexibility while making things explicit can save a ton of heartache.

Michael Thompson

Alright, that’s gonna do it for today’s show. If you’ve been following along since our last market deep dive, I hope you’re seeing how all these pieces—investments, taxes, estate planning—they fit together. Keep your questions coming, keep reviewing your strategy, and join me next time when we’ll dig into trusts and advanced strategies for complex estates. Until then, I’m Michael Thompson, wishing you clarity, good planning, and a little peace of mind.