On this episode of Your Life Simplified, Daniel Sharkey, senior wealth advisor, is joined by Jessica Nelson, senior wealth consultant, to discuss estate planning strategies for different net-worth levels. Estate planning impacts everyone, whether you have a $1 million or $100+ million net worth. They cover different strategies, what you may need to include in your estate plan and why it’s important to create.

Transcript

Daniel Sharkey: Most people think estate planning only applies to those with significant wealth. Today we’re here to tell you that couldn’t be further from the truth and why estate planning impacts everyone. Welcome, everyone. My name is Dan Sharkey, senior wealth advisor and CERTIFIED FINANCIAL PLANNER® here at Mariner. And today on Your Life Simplified, I have an extra special guest. Her name is Jessica Nelson, and she is a key contributor on our wealth strategy team. Jess, welcome to Your Life Simplified.

Jessica Nelson: Thank you for having me, Dan.

Dan: So, we have a lot to talk about today, and we’re going to get into that in just a second. But before we get started, I just want to touch on your background briefly and why you’re such a perfect person to go over these things. So, you started at Ernst and Young and spent time at Deloitte serving ultra-high-net-worth clients before we were lucky enough to have you over here at Mariner. So you really are the perfect person to go through and talk about what we’re here to talk about today, which is estate planning for a variety of wealth levels across our client spectrum. So let me just kind of dive into that right off the jump. As you think about estate planning, let’s define what the backdrop is that we currently face ourselves as we dig deeper into 2025. So, let’s start with: what are clients facing today, what should they be focused on, and what are the key facts that everyone should know about?

Jessica: Yeah, absolutely. So, coming into 2025 — 2025 is just a big year for planning. A lot of people have been anticipating a lot of changes around income tax planning as well as estate tax planning. So, backing up a little bit — with Trump’s first administration, we saw the passing of the Tax Cuts and Jobs Act, and namely with estate planning, we saw the lifetime exemption nearly doubled. The way the Tax Cuts and Jobs Act was written, it wasn’t going to keep that change permanent. In fact, the way that legislation was written, come 2026, everything kind of goes back to the way it was, meaning now that lifetime exemption is going to be cut in half. So now that we have this Republican trifecta, we have Trump back in office, we have a Republican house, we have a Republican senate, many people are anticipating that we’re going to see the Tax Cuts and Jobs Act be extended. It’s important to note that just because we have the Republicans in office, it doesn’t make that extension automatic. We may see it — maybe it does get extended in whole. Maybe it gets extended in part. Maybe it’s not extended at all. But either way, it’s important that we’re proactive and that we’re paying attention to what our clients’ estate planning should be.

Dan: That’s super helpful, and just for everyone who’s listening, I just want to touch on a couple of key terms that you mentioned. So, when you say lifetime exemption, that is the amount that people get to exclude before their wealth is subject to estate tax. So that’s an important point, and as you mentioned, it has now doubled to nearly $27 million in total. So that’s an important point, and thank you for bringing that up. So, let’s start to look at across the wealth spectrum. You have clients who have two or three million dollars of net worth, upwards to $100, $500 [million], a billion and beyond. So when you think about it, do you put these broader groups in place, and how should people really be thinking about their estate plan in 2025?

Jessica: Yeah, so regardless of what your level of wealth is, there is some basic estate planning that’s appropriate for everyone, right? Whether you’re at one million, whether you’re at a hundred million, there’s some things that you need to do. So let’s start by looking at wealth levels in that zero to $15 million net worth. So, with these clients, we may find some people who think that, “Hey, my estate is really not that complicated. All I need is some cookie-cutter estate planning that maybe I can do myself online.” Or you may even find some people who are like, “I’m not worth that much. I don’t need to do anything at all.” The truth is that that’s not the case, right? Like you were saying, estate planning is for everyone, regardless of your level of wealth. So, thinking about that zero to $15 million, these are the people who we really want to make sure that their foundation estate planning documents are there.

Estate planning isn’t just about estate tax mitigation. It’s also about making sure that your loved ones know what your wishes are. What you really don’t want is that your loved ones are dealing with you passing — this is going to be a very difficult time for them, and they’re also confused because they don’t know what your desires are. They’re dealing with the emotional side, and now they’re also dealing with all this administrative work. A gift that you can give the people you love is proper estate planning documents, just you outlining, “Hey, this is what I want to happen.” Also, in addition to just outlining your desired wishes, estate planning allows you to save your estate both money and time. So, let’s say you do no estate planning at all. What’s going to happen is your estate is going to go through the process called probate which, based on what the laws are in your specific state of residency, it’s going to be decided through the courts how your estate is supposed to be divided. This is going to cost money and it’s going to cost time. So by doing estate planning, we can completely avoid probate.

Also, estate planning allows for privacy. So, we’ve all seen these celebrities who didn’t do proper estate planning and now you can all go on Google and see what their estates are worth, who got what. All of this is now public. If you’re doing proper estate planning, you can give yourself privacy. You don’t want people to be able to Google or go through whatever public records are out there, what it is that your heirs got. So, by doing proper estate planning, again, you get to specify your wishes, you get to avoid probate costs and that time and you get to have that privacy.

There are a few other things that you get through estate planning. You get to make sure that guardians are appointed for minor children, whether that be who actually has physical custody of your children as well as who’s appointed to deal with the financial matters. Also, estate planning can offer creditor protection. And this is why it’s important that people don’t say, “Hey, I don’t have that much. I just need cookie-cutter estate planning. I’m just going to draft this will on the back of this envelope.” By working with a professional and doing proper estate planning, you can make sure that the way you’re distributing your assets to your heirs is not going to leave that wealth that you worked so hard to accumulate, regardless of the amount, it’s going to make sure that that’s not opened up to creditors. So these are all the things that we can do by doing proper estate planning.

And then to go back to talk about that tax side. Now again, if you’re at the zero to $15 million mark, maybe you’re thinking with the current exemption, “I don’t have that much subject to federal estate tax. I’ll probably spend some of this down. I don’t really need to worry about that.” Also, maybe you’re assuming that it’s going to be that the current legislation is going to be extended and that these exemptions will grow with inflation, so you’re not really concerned about federal estate taxes. But have you thought about state estate taxes? I think often that gets left out of the equation, and it’s really important that we’re thinking about that, and it’s very easy to deal with state estate taxes. We can do this many different ways, whether we’re looking at lifetime gifting — maybe that’s enough to get your estate to a place where you don’t have to worry about state estate taxes — or if you’re someone who’s charitably inclined and you plan on leaving assets to charity, that’s one way that we can think through of, “Hey, can we leave enough assets to charity so that we’re not in a space where you have state estate taxes. And if we’re leaving assets to charity, what assets are we leaving? Are we appointing the appropriate accounts?”

So just to summarize on a basic level, you should have your power of attorney in place, you should have your living will, you should have your last will and testament, and you want that living trust, that revocable trust as well.

Dan: And let me just — there’s three things that you said that I want to really emphasize because they’re excellent points that I want everyone to understand as they’re listening to this. The first is, I just want to come back to the point about celebrities. I think the most recent case that we’ve seen, Prince, who passed away a couple of years ago [with] an estate valued somewhere [around] $300 million and above, and literally had no, not a single document in place. That case is going to play out in the courts forever. Another point that I think is really critical, and you hit the nail on the head, is that estate planning is not just about the passing of assets from one generation or from one party to another — things like the custodial relationship for your children, and identifying who gets to have healthcare oversight in the event that you can’t speak for yourself. Estate planning is such a broad term that I really want people to understand that these other elements are really crucial and can all be represented in that plan as well. And the last thing, and I think this is probably the most important point, is that it allows a very smooth and private process. Oftentimes that gets lost. People don’t realize that when they pass away and they’re intestate, meaning that they don’t have any documents in place, that matter can be viewed by the general public. So those are all excellent points that I just wanted to reiterate for those listening.

Jessica: Thank you, Dan.

Dan: Now let’s talk a little bit about — as a firm, we’ve kind of bracketed three different kinds of pools of groups of people, zero to 15, which you just touched on, and now we’re in that middle zone between, let’s say, 15 and 30 million dollars of total overall net worth. What special considerations should that subset of clients and others listening be thinking of?

Jessica: So, with the people in that 15 to 30 million, this is really the group that I’m kind of most concerned about, [and] a lot of people at our firm are most concerned about because there’s this idea that many of them have that they really don’t have to do that much. They’re like, “Hey, with TCJ possibly extending, I don’t have anything to worry about. I’m kind of going to sit on my hands and see what happens.” And we really do not want them to do that, right?

Dan: Don’t sit on your hands. If you take anything away from this episode, it is don’t sit on your hands. And I’ll say one more thing. You mentioned it earlier, don’t use the internet to write these documents, but sorry, I didn’t mean to interrupt. Those are two takeaways that are wildly important for anyone who’s listening. If you take nothing else, those two things are incredibly valuable.

Jessica: Yeah, definitely, definitely! Because when we’re looking at TCJ specifically, when we think about when that passed, we saw that being signed in December. [SB1] So if you’re thinking of, “Hey, I’m just going to wait it out and see what happens,” you don’t know when you’re going to see whatever it is that’s going to happen. So if it comes November, December, and you’re calling up your advisor, you’re calling up your attorney, you’re saying, “Hey, the lifetime exemption that’s going to be cut in half, let’s do something,” it’s too late. By the time it’s going to take to sit down with you and really map out what your estate looks like, really map out what your desires are, then draft those documents, get those documents signed, get appropriate accounts open, you’re not going to have enough time. So, these are the people who really want to like, hey, talk to your advisor, call your Mariner advisor up, call your estate planning attorney up and let’s talk about what we can do. So often if we’re thinking — and we’ll get to the people who are 30 million up — often those are the people who are using their lifetime exemption during their lifetime. These clients are like, “Hey, I don’t really want to do that. I don’t want to give up that much wealth right now. I don’t want to give up that much control.” It’s not all or nothing. We can look at ways of how much do we need to use? What is the appropriate amount of your exemption to use for you? If you’re married, maybe we’re using one spouse’s [SB2] and not the other’s. There are so many things that we can do. There are so many options. So it’s important that we are talking through that also with these clients.

Again, they’re often looking at their assets now and they’re saying, “Hey, this is how much I have. I really don’t think I have to do that much planning because of what current legislation is.” One, if we’re talking about what current legislation is, that’s one thing, but what is legislation going to be when you pass, right? If you could tell me that, then we can do perfect planning for you. The fact is we don’t know that part of the equation. The part of the equation we do know is what your net worth is now and also what your level of wealth is projected to grow to. That’s really important. That’s one of the first things that we do when we’re sitting down with clients is we’re not just looking at what your worth is now, but if we’re looking at expected lifetime tables, what is your level of wealth projected to be and how do we deal with that? What are some of the things that we can do now to possibly get some assets out of your estate and really get some growth out of your estate? That’s one of the main things that we’re talking about. Many clients have these assets that continue to benefit from a lot of appreciation. Those are the assets that we want to get out of their estate [and] put it in an appropriate vehicle where it can be preserved and protected for that next generation. We want to protect it from not only taxes, but we want to think about creditor protection. What does that look like? We want to talk through — something that I didn’t mention in the zero- to $15-million client, but really it’s important throughout is how are your heirs inheriting the assets, right? Are we doing age-based distributions? Is that appropriate? So, these are the types of things that we want to think about when we’re thinking about estate planning for our 15-million to 30-million-dollar clients.

Dan: As Wayne Gretzky says, you want to skate to where the puck is going to be, not where the puck is now. Exactly. And I think that’s a perfect metaphor to what you’re suggesting is it’s very easy to look at what your balance sheet says today. If it says $16 or $17 million, you think, “Hey, I’m below the threshold.” But you may live another 30 or 40 years growing at 5, 6, 7, 8%. That number skyrockets pretty quickly. So that’s an excellent point. So, I know I only have you here for a limited period of time, but there’s one last group that we want to touch on because this is really where a level of complexity can really start to take shape, and that is for clients as we roughly define as $30 million and over. What should that group be doing proactively to ensure that they’re taking advantage of the opportunities that exist in 2025 as we go into 2026 and beyond?

Jessica: So that group really wants to do kind of all the things that I just mentioned, but maybe with this group we’re looking at possibly using more of their exemption than we’re thinking about the zero to 15 or the 15 to 30, maybe we’re using all. So I think a great way to talk about this group is to talk about a client that came to us last year, a client worth over a hundred million dollars that hadn’t looked at their estate planning documents in over 25 years. They didn’t use any of their exemptions, right? So when they came over, the first thing that we did was take a look at the documents that they did have, and upon that review, we noticed that they wanted to set up a foundation upon their passing. That was important to them. So what we did was, of course, help them update their foundation estate planning documents, but also we went ahead and established that foundation during their lifetime.

And the reason that we did that is this client, in addition to having that over a hundred million dollars in wealth, they also were at the highest tax bracket. We’re talking an AGI of over $10 million annually. So by establishing that foundation, we were able to help them get that tax break. So we did some income tax planning there. We got assets out of their estate, so that’s that estate planning. And then also by building this foundation, we helped them preserve their legacy. And really just a cherry on top of all of that, they got to work on that foundation with their heir, which is really important to them. So we have tax planning, we have estate planning, and we have legacy planning, all by reviewing their estate planning documents. And that’s why it’s so important to really sit down with your advisor to really make sure that we’re doing what’s appropriate for you.

Dan: I think that’s an excellent point, and I think in a very concise manner, it summarizes all the different ways that this person’s life is interconnected. Everyone always thinks that when you’re talking about estate planning or tax or financial planning, that it’s in a silo. And our point would be, as perfectly illustrated by the example that you just shared, is that these things cross over these verticals many, many times over. One domino falls, and it hits 10 more on the way down. And it’s a crucial point because you not only can do well in terms of savings financially, but also what you end up creating for that legacy that you mentioned, and a way to do so as efficiently as possible. So, Jess, thank you so much for being so generous with your time.

Jessica: Of course. Thank you for having me.

Dan: We have been speaking with Jessica Nelson, part of Mariner’s Wealth Strategy team, and if you enjoyed this conversation, please make sure to subscribe at Apple, Spotify, YouTube, or wherever you get your podcasts. And if you want more information about how estate planning can benefit you and your family, please make sure to check out Mariner’s webinar on February 27th where you can get more information on the topics that we talked about today. Thank you and have a great day.

Disclosure:

The views expressed in this podcast are for informational and educational purposes only and do not consider any individual personal, financial, legal, or tax situation. As such, the information contained herein intended and should not be construed as a specific recommendation, individualized tax, legal, or investment advice. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals regarding their specific circumstances and needs prior to taking any action. Based upon this information, the information provided has been obtained from sources deemed reliable. However, the accuracy, completeness, and reliability cannot be guaranteed. Tax laws are subject to change either prospectively or retroactively. Any opinions expressed are subject to change at any time without notice. There is no assurance that any investment plan or strategy will be successful. Investing involves risk, including the possible loss of principle. Past performance is no guarantee of future results, and any opinion expressed herein should not be viewed as an indicator of future performance.

Mariner is the marketing name for the financial services businesses of Mariner Wealth Advisors, LLC and its subsidiaries. Investment advisory services are provided through the brands Mariner Wealth, Mariner Independent, Mariner Institutional, Mariner Ultra, and Mariner Workplace, each of which is a business name of the registered investment advisory entities of Mariner. For additional information about each of the registered investment advisory entities of Mariner, including fees and services, please contact Mariner or refer to each entity’s Form ADV Part 2A, which is available on the Investment Adviser Public Disclosure website. Registration of an investment adviser does not imply a certain level of skill or training.