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Issue 46 – May, 2025
NAEPC Journal of Estate & Tax Planning
Mavis N. McKenley, CTFA, AEP®, CFP®
AMG National Trust
Virginia Beach, VA 23462
Welcome to the Spring 2025 edition of the NAEPC Journal where we continue to provide valuable information for our multi discipline membership all revolving around our mission to cultivate excellence in estate planning.
We have included in this edition a couple of lengthy articles for your review in hopes you appreciate the varying depth of knowledge from our authors and hope you will continue to use these articles as a resource in your practice. In this edition we also delve into elder abuse, special needs planning, blended family disputes, dealing with beneficiaries with mental health challenges and so many more technical articles that I am sure you will find useful. Please enjoy all the practical information we have compiled for you.
As always, I want to thank our many volunteers on the Publication Committee for all their hard work in producing our latest edition. We are always looking for new committee members interested in serving. I also want to thank our many returning authors and some first-time authors for their original article submissions. We truly appreciate your support.
As a reminder if you are looking to publish, please reach out to editor@naepcjournal.org.
Publish your own original article in the NAEPC Journal!
We are always in search of original articles related to the profession of estate planning and disciplines within and are now collecting content for the next issue. Submissions are invited from estate planning professionals, estate planning council members, and Accredited Estate Planner® designees.
Click on the link above to learn more.
Features
Some Reasonable Estate Planning Steps for the Middle Tier Family
Historically, estate planning has involved using methods to remove assets from the taxable estate of a client through means that result in little or no gift tax, such as using gift tax annual exclusions, the lifetime exemption and other means, such as creating a so-called grantor retained annuity trust (GRAT) described in Section 2702(b). However, because of the current large exemptions (nearly $14 million for transfers in 2025 which are scheduled to be cut in half after 2025, although adjusted for inflation) the focus for individuals whose wealth will not exceed, or not exceed by much, the exemption levels has changed.
Author: Jonathan G. Blattmachr, Esq., AEP® (Distinguished)
Using Financial Modeling to Communicate the Benefits of Estate Planning Techniques to Clients in an Understandable Manner
An estate planning proposal can often be confusing because it involves the integration of several separate factors. Furthermore, the proposal must be flexible because of a future change in circumstances. This article is designed to first address the four primary factors used to shift value to an irrevocable trust that is not exposed to the gift and estate taxes. The next objective is to illustrate how these four factors accomplish the wealth-shifting objective. Rather than verbally explain how these four factors work, it is far easier for the potential client to understand the impact using simple to follow examples that illustrate the fiscal impact each year over the individual’s estimated life expectancy.
Authors: Jerome M. Hesch, MBA, JD, AEP® (Distinguished); Brad Dillon, JD, LL.M.; Brandon L. Ketron, CPA, JD, LL.M.
The 2025 Catch-Up Contribution Changes Financial Advisors Should Know About
In 2025, there is a key change stemming from the SECURE 2.0 ACT that will impact retirement planning for individuals aged 60 to 63. These individuals will be eligible for an enhanced catch-up contribution to their 401(k) or 403(b) plans. In other words, it will enable them to save an additional $10,000 or 150% of the standard age 50+ catch-up limit. This is an opportunity to help those nearing retirement make up for lost savings caused by financial challenges. What is important to keep in mind is that implementation of this new rule is optional for employers. Once individuals turn 64, contributions revert to the standard limit. Financial advisors should be aware of these rules as they guide clients preparing to retire.
Author: Myles J. McHale, AIF®, CRPP®
The Fiduciary Exception to the Attorney-Client Privilege in Delaware and Beyond
A trust’s fiduciaries ordinarily have a duty to provide trust-related information to a beneficiary upon reasonable request. Sometimes, however, a beneficiary will request information that the fiduciary desires to shield because the information relates to communication between the fiduciary and an attorney regarding the fiduciary’s administration of the trust. The fiduciary’s obligation to produce the requested information is often determined by whether the relevant state’s law recognizes the so-called “fiduciary exception” to the attorney-client privilege. This article will describe the fiduciary exception to the attorney-client privilege, summarize how the exception has developed in Delaware, a prominent trust jurisdiction and the state in which the leading case on the fiduciary exception derived, and provide examples of approaches adopted by states that do not recognize the fiduciary exception.
Authors: J. Zachary Haupt, JD, LL.M., and Matthew R. Clark, JD
Elder Financial Exploitation: A Crime Too Often Lurking in the Shadows
This article sheds light on the multi-billion-dollar industry of financial exploitation of the elderly. Examples of common scams and frauds are highlighted below, and emphasis is placed on the need for a multi-agency response focusing on teamwork, education, prevention, investigation, and prosecution.
Author: Paul R. Greenwood, JD, LL.B.
Using Pooled Trusts as as Safety Net When Drafting Estatge Plans
Pooled special needs trusts can provide an essential safety net in estate plans. Attorneys who draft estate plans must anticipate the unexpected, a client’s unforeseen disability, a fiduciary who becomes ill, a contentious relationship between the beneficiary and the fiduciary, or assets that are depleted below the corporate fiduciary’s minimum. By including additional authorities in documents, attorneys-in-fact, executors, and trustees can react to unforeseen circumstances and create and fund pooled special needs trusts for clients and their loved ones without the need for court involvement. This article will give an overview of pooled special needs trusts and will cover powers that should be considered for inclusion in trusts, wills, and powers of attorney to utilize pooled special needs trusts as a safety net.
Author: Rachel Baer, Esq.
The TCJA Sunset: What Will Happen and What To Do
With the November 2024 election of a new US Congress and a new US President, the tax provisions contained within the 2017 Tax Cuts and Jobs Act (“TCJA”) are scheduled to sunset at the end of 2025 and surely will become an issue for Americans to watch. This legislation provided major changes to the Internal Revenue Code. For estate planners it doubled the federal estate, gift, and generation-skipping transfer (GST) tax exemption amounts (collectively, the “Exemption”) from $5,490,000 in 2017 to $11,180,000 in 2018. Since then, the Exemption has increased each year as it is adjusted for inflation. For 2025, the Exemption is $13,990,000 per person. However, on January 1, 2026, the Exemption is scheduled to automatically reset (or sunset) to $5,000,000, indexed to inflation (estimated to be approximately $7,000,000), unless Congress acts prior to this date.
Author: George M. Malis, JD
Call for Adaptive 21st Century Estate Plans
Has the time come for estate plans (not planning, per se) and their underlying state laws to enter the 21st century? Why do estate plans not adapt routinely and systematically with their subject’s life? Surely, the default legislative plans for those that die intestate, regardless of their relationships and possessions at the time of death, are not more adaptive than the tailored formal estate plans of paying clients. If this is indeed the case, then today’s estate plans and laws need to become more transformative based on the 21st century client.
Author: Harvey A. Hutchinson III, JD, LL.M. (taxation), CFP®, AEP®
Estate Planning Lessons from Cinderella: Safeguarding Against Blended Family Inheritance Disputes
The story of Cinderella highlights real-world challenges in estate planning and inheritance disputes, especially among members of blended families. It is important for trust and estate professionals to create a well-structured estate plan that goes beyond asset distribution and considers the complexities of family dynamics. To avoid family rifts, planners should emphasize to clients the importance of open communication with intended beneficiaries and heirs. Families are ever evolving, and it is important to regularly update estate plans after significant life changes, like remarriage or the birth of a child, to address potential challenges from omitted spouses and children. When planning fails and intentions are thwarted, partnering with a trusted probate litigator can ensure clients’ legacies are protected.
Authors: Scott E. Rahn, JD and Meagan A. Paisley, JD
How Trustees Can Effectively Support Beneficiaries with Mental Health Disorders
Managing a trust for a beneficiary with mental health challenges requires a unique combination of empathy, structure, proactive planning, and training for the moments when things start to destabilize or don’t go as planned. Beneficiaries navigating mental health disorders may face periods of instability, impaired decision-making, or heightened emotional needs, which can complicate the trustee-beneficiary relationship. Some beneficiaries have a robust support system while others are estranged from family and solely reliant on paid professionals. To effectively support these individuals while upholding fiduciary responsibilities, trustees should consider creating and implementing thoughtful strategies tailored to the complexities of mental health. This article outlines practical approaches trustees can implement to build trust, maintain boundaries, and safeguard the well-being of both the beneficiary and the trust assets.
Author: Amanda Koplin, LPC
Better Board Composition is a Key to Family Business Succession
Often, the death of the owner-operator of a family business can disrupt business operations (or can even lead to business failure), particularly if there is confusion or discord among the next generation owners. A thoughtfully composed governing board, including independent directors, can mitigate this disruption and help the business maintain its value as it adjusts to new leadership. Therefore, the estate plan for a family business owner should include amendments to governing documents and owners’ agreements to provide for an appropriate governing board to direct the family business when ownership passes to the next generation.
Author: Gregory F. Monday, JD
Federal and Estate Transfer Tax Misalignment: Choose Your Tax Regime, Choose Your Timing Wisely
In light of the federal estate, gift and transfer tax exemptions scheduled to sunset at the end of 2025, many wealthy clients are consulting with their attorneys regarding making gifts that maximize the largest exemption amounts in United States history before this potential sunset. While these exemption amounts have varied over the past two decades, one trend has remained constant: a steady increase in the exemption amount. This noteworthy trend of rising exemption amounts is slated to end and be cut in half in accordance with the expiring provisions of the Tax Cuts and Jobs Act of 2017 (TCJA).
Author: Andrew Manganelli, CFP®, RICP®, M.S.
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