Estate Planning: A Practical Advisory Guide for Individuals and Families
Introduction: Why Estate Planning Matters
Estate planning is one of the most important—and most misunderstood—areas of personal financial and family planning. Many people believe estate planning is only for the ultra-wealthy. This is a serious mistake.
Everyone should engage in estate planning, regardless of current wealth or income level.
Estate planning is not only about taxes. It is about:
- Protecting your family
- Preserving your wishes
- Avoiding chaos and conflict
- Ensuring continuity of care and financial stability
- Providing clarity in moments of crisis
- And protecting what you have built over a lifetime
I strongly recommend beginning estate planning in your forties and reviewing your plan every ten years, or immediately after any major life event such as:
- Marriage or divorce
- Birth of children or grandchildren
- Sale of a business
- Major increase or decrease in wealth
- Death or illness in the family
- Relocation to another state
The laws continuously change. No one can predict future tax laws or political outcomes. Therefore, it is wise to plan conservatively and prepare for extreme scenarios rather than optimistic ones.
The Role of a Competent Estate Planning Lawyer
Estate planning documents can be:
- Difficult to draft properly
- Easy to get wrong
- And in some cases, impossible to reverse once executed
Some instruments are fully revocable. Others are permanent and irreversible.
Therefore:
- You must think carefully before signing anything
- You must understand why you are doing what you are doing
- You should work with a highly competent estate planning lawyer, not a general practitioner or “budget” lawyer
The cost of proper planning is small compared to the cost of mistakes.
Also important:
The lawyer will give you options, but you must make the decisions.
Do your own research. Understand your goals. Decide what you want. Then use the lawyer to implement it correctly.
Two Categories of People: Estate Tax vs. No Estate Tax
From a planning perspective, there are two broad categories:
- Those not likely to be subject to federal estate tax
- Those likely or potentially subject to federal estate tax
Before doing anything, you must determine which category you fall into.
Federal and State Estate Taxes: A Brief Overview
All U.S. residents are subject to federal estate tax law.
Some states also impose:
- State estate tax (paid by the estate), or
- Inheritance tax (paid by the beneficiaries)
This paper does not analyze state taxes, because they apply only in certain states and vary widely. You should check whether your state of residence has such taxes.
Federal Estate Tax Threshold (Current Reality and Future Risk)
Currently:
- If an individual’s taxable estate is below approximately $15 million, no federal estate tax is due (but a return may still need to be filed).
- For a married couple, the combined exemption is approximately $30 million.
- No estate tax is due when the first spouse dies (with proper planning).
However:
These limits can change.
It is very possible that in a future political environment, the exemption could be reduced to $5–10 million per couple.
Conservative Planning Recommendation
If your net worth is above $10 million, you should plan knowing that you may be subject to estate tax in the future.
This is prudent, defensive planning.
Minimum Documents Everyone Should Have (Even If No Estate Tax Is Expected)
Even if you believe you will never be subject to estate tax, you should have at least:
- Last Will and Testament
- Durable Power of Attorney (Property / Financial)
- Revocable Living Trust
- Healthcare Power of Attorney / Advance Directive
- HIPAA Authorization
These documents:
- Protect you during incapacity
- Prevent court intervention
- Avoid confusion and family conflict
- Ensure your wishes are followed
- Simplify administration for your loved ones
Additional Tools for Those Who May Be Subject to Estate Tax
If your estate may exceed the exemption, additional tools may include:
- Irrevocable Trusts
- Irrevocable Life Insurance Trust (ILIT)
- Qualified Personal Residence Trust (QPRT)
- Spousal Lifetime Access Trust (SLAT)
- Charitable Remainder Trust (CRT)
- Irrevocable Trusts for Grandchildren (GST planning)
There are many more structures, depending on:
- Asset types
- Family dynamics
- Business interests
- Philanthropic goals
- Risk tolerance
- Control preferences
Each has advantages, disadvantages, and long-term consequences.
Critical Warning: Do Not Give Away Too Much
One of the most common and dangerous mistakes in estate planning is:
Giving away too much too early.
You must always ensure:
- Your own financial security
- Your spouse’s security
- Your ability to maintain your lifestyle
- Your ability to respond to medical or economic surprises
Estate planning should never jeopardize your independence or dignity.
Irreversibility: Think Before You Sign
Some trusts and transfers:
- Cannot be changed
- Cannot be undone
- Cannot be recovered
Once signed and funded, the assets are gone forever.
Therefore:
Think deeply before executing any irreversible strategy.
A Disciplined Planning Process
A wise approach:
- Define your goals
- Understand your assets and risks
- Study the tools available
- Decide what you want to accomplish
- Then retain a top-quality estate planning lawyer
- Implement carefully
- Review every 10 years or after major life events
Conclusion
Estate planning is not about death.
It is about:
- Responsibility
- Foresight
- Love for your family
- Wisdom in preserving what you built
- And clarity in protecting your wishes
Whether your estate is modest or substantial, proper planning is one of the most important gifts you can give to your family.
Important Disclaimer
This paper provides general educational guidance only.
It is not legal or tax advice.
Every individual must consult qualified professionals to design and implement a plan appropriate to their specific situation.
— Dr. Mohan Ananda
Founder, DRAI Health
Scientist • Entrepreneur • Policy Innovator