Talking about what happens after you pass is not the most fun topic, but it is arguably the most important topic for securing your legacy. Estate planning ensures your wishes and goals are fulfilled upon your passing. Your goal may be to simply ensure your loved ones are provided for, or you may have other common goals, such as avoiding probate or reducing estate taxes. The process can be as simple as creating a will (the cornerstone of any estate plan) and purchasing life insurance for one reason or another, or as complex as executing trusts and exploring other sophisticated tax and estate planning techniques.
Therefore, estate planning is important whether you are wealthy or whether you have a small estate. Larger estates can be complex and challenging to navigate. Smaller estates can be adversely impacted by final expenses, forcing loved ones to pay the bill. By planning ahead, you can minimize the emotional and/or financial strain on your loved ones. Estate planning is particularly advantageous if any of the following apply to your unique situation:
- You have minor children or children with special needs.
- Your spouse is uncomfortable or unable to handle financial matters.
- You have property in more than one state.
- You have unique assets, such as property, artwork or collectibles, even various mineral interests.
- You have digital assets, such as cryptocurrencies, photos, videos, eBooks, audio files, design files, or any other digital assets stored electronically that can be bought, sold, owned, transferred, or traded.
A trust can offer numerous advantages, but the process can be complex. Before creating and/or implementing a trust, consult with an experienced Arvest trust officer as well as your legal and tax advisors.
Estate Planning is for Everyone
If you're married and have children, both spouses should each consider having wills. Wills are vital because you can name a guardian for your minor children in case both of you pass at the same time. If you fail to name a guardian in your will, a court may appoint someone you might not have chosen.
Furthermore, without a will, some states dictate that upon your passing, some of your property goes to your children and not to your spouse. If minor children inherit directly, the surviving parent will need court permission to manage assets for them. For the unfortunate scenario of both spouses passing simultaneously, consult with a qualified attorney about establishing a trust to manage your children’s assets.
You may also need life insurance. Your surviving spouse may not be able to support the family on their own and may need to replace the passing spouse's earnings to provide for the family. Moreover, you may require estate liquidity due to the illiquidity of your estate, and life insurance can provide this benefit. Depending on the size of your estate, you may need to plan ahead for estate taxes. The Tax Cuts and Jobs Act, signed into law in December 2017, doubled the gift and estate tax basic exclusion amount and the GST tax exemption to $11,180,000 in 2018. For 2025, $13,990,000 is effectively excluded from the federal gift and estate tax. Estates over that amount may be subject to the tax at a top rate of 40%.
Similarly, there is another tax, called the generation-skipping transfer (GST) tax, that is imposed on transfers of wealth made to grandchildren (and lower generations). For 2025, the GST tax exemption is also $13,990,000, and the top tax rate is 40%.In 2026, the federal gift and estate tax exemption will be permanently raised to $15 million and inflation adjusted thereafter due to the passing of the One Big Beautiful Bill Act (OBBBA).
Whether your estate will be subject to state death taxes depends on the size of your estate and the tax laws in the state in which you reside. Estate planning is crucial for individuals wanting to secure their legacy across all financial backgrounds. Creating an estate plan is a personalized process tailored to each individual's needs.
Even the most complicated financial situations can become manageable with a step-by-step approach and in collaboration with an experienced trust professional. Ultimately, a well-crafted estate plan brings peace of mind that considers your family's needs and preferences. Take action today! Consult with a trusted local trust officer from Arvest Wealth Management to develop a personalized estate plan tailored to your needs.
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Arvest and its associates do not provide tax or legal advice.
