In recognition of National Estate Planning Awareness Week, we sat down with Lindsey Paige Markus, a principal with Chuhak & Tecson law firm in Chicago to discuss the top estate planning challenges and considerations that her clients face. Markus oversees Chuhak & Tecson’s 24-attorney estate planning and asset protection group, and focuses her practice on counseling business owners and families in planning their estates, minimizing taxation and transferring wealth. 

Read on to learn more about Markus’ key tips for successful estate planning, and how clients can tailor their estate plans for any stage of their lives.

The NLR: Estate planning needs can change throughout a person’s lifetime. How do you counsel clients to navigate these changes, whether it be marriage, having children or divorce?

Markus: Over time, assets and relationships may change. You might not have the same relationship with the individuals you selected to act as executor or trustee. You may also disagree on how the couple you identified to care for minor children have parented their own children at the last family gathering. Asset holdings, values and priorities change. When your children were young, you may have been very concerned with there being sufficient resources to provide for their everyday needs and help fund a college education. If they are now successful adults living on their own, you might wish to prioritize leaving a philanthropic legacy to your community. Similarly, laws and tax exemptions change over time. For these reasons, I often recommend that clients revisit their estate plan every three years to confirm that the individuals they have identified to carry out their wishes are still appropriate, in addition to the division of assets. 

The following image from my book, “A Gift for the Future – Conversations About Estate Planning,” helps highlight life events impacting estate planning, including the following:

-         Engagement

-         Marriage

-         Buying a home or property

-         Starting and building a family

-         Welcoming grandchildren

-         Starting a business

-         Rapid estate growth

-         Charitable interests grow

-         Divorce

The NLR: How can clients prepare to handle probate and guardianship issues?

Markus: Ideally, clients will take the time to get documents in place so that their loved ones can avoid probate and guardianship proceedings. Often a revocable living trust is the most efficient vehicle to ensure that the court system is avoided during one’s life (guardianship proceedings) and upon death (probate). When properly drafted, the trust can also help to leverage estate tax savings, provide asset protection for beneficiaries and ensure that the maximum amount can pass estate-tax free from generation to generation. But it is not enough to simply have an estate plan with a revocable living trust. Rather, clients need to go through the process of funding their trust – retitling assets into the name of the trust, transferring real estate interests, business interests and making certain that beneficiary designations on life insurance and retirement plan assets comport with the overall plan.

 
The NLR: What do you think are some of the biggest or most common misconceptions people have about estate planning?

Markus: People think that “estate planning is for the rich and famous,” or comment, “I will make an estate plan…when I have an estate to plan!” In reality, everyone should have an estate plan in place to document their wishes and make the process more manageable for their loved ones. Estate tax savings are just one aspect. But anyone who has had the displeasure of going through the probate process appreciates the importance of avoiding it. Too often clients are overwhelmed by the process. In reality, like any project, actually engaging in the planning and getting it done is far easier than procrastinating. And once you find an estate planning attorney that you feel comfortable working with, the attorney should be able to help guide you seamlessly through the process. Clients are often surprised by how empowering the estate planning process can be. 

The NLR: Estate taxes owed to federal and state governments can be difficult to deal with for many people. How can clients best navigate challenging estate tax situations?

Markus: Estate tax liabilities at the federal and state levels can easily reach a tax rate of 50%. FIFTY PERCENT! As challenging as it is to consider, those with taxable gross estates can’t afford to avoid planning. In contrast, by engaging in thoughtful estate planning, these estate tax liabilities can be minimized and sometimes completely eliminated. The best advice I have for clients is to engage in planning early. Once you see projections of your future net worth based on your life expectancy, you quickly appreciate the size of the potential tax liability. You will need to provide feedback on your goals of planning. And, from there, your estate planning attorney, working in tandem with your wealth advisor and CPA, can help advise you on proactive steps you can take now to help minimize or avoid those tax liabilities. Maybe it is through implementing an annual gifting program where you use the annual gift exclusion of $17,000 per person per year by making a gift outright or to a trust for the benefit of a loved one. Perhaps you are in a position to use your $12.92 million lifetime exemption before it cuts in half in 2026. The real benefit of gifting is that we can move the current value of the gift and all future appreciation outside of your taxable gross estate. Or, some clients elect to engage in life insurance as an estate tax replacement vehicle – they purchase life insurance to provide the family with liquidity to cover the estate tax in the future. 

The NLR: What are some of the most common mistakes you see people make when it comes to estate planning, and how can they avoid them? 

Markus: Start early! None of us know what the future has in store. Get your plan in place this year – and make modifications in the future. Fund your trust! Don’t just get an estate plan. Make sure you retitle assets into your trust and update beneficiary designations to leverage the benefits of the plan. Don’t forget about charitable intentions! It is so easy to leave a lasting legacy to a cause you are passionate about. In doing so, follow your estate planning attorney’s advice and consider leaving taxable retirement plan assets directly to the charity. That allows the funds to pass estate-tax free and income-tax free, sometimes saving more than 70% in estate and income tax consequences. Revisit your plan every three years. Review the summary of your plan, make certain your assets were properly moved into your trust and follow-up with your attorney to find out if any changes have taken place in the law which would warrant an update.