“By failing to prepare, you are preparing to fail.” – Benjamin Franklin
Gentlemen may prefer blondes, but Marilyn Monroe should have preferred estate planning. It is reported that Marilyn’s estate took about 40 years to settle following her death in 1962. Having worked in the financial world for over 30 years, I can attest to the pain bad planning imparts. Talk with an Estate Planning attorney and you will see the process is much more than drafting a will. There are a wide range of legal and financial strategies that can ensure your assets are managed and distributed according to your wishes. Now that we are in 2025, let’s look at some trends, pitfalls and concerns you should understand. Caveat: We are not attorneys, and this information is pulled together from various sources.
At its core, estate planning involves creating instructions for the distribution of your assets after your death. This process includes drafting legal documents such as wills, trusts, and powers of attorney. A well-crafted estate plan not only ensures your wishes are honored but also helps minimize taxes and legal complications for your heirs.
Key Components of Estate Planning:
- Wills: A legal document that outlines how your assets will be distributed upon your death.
- Trusts: Arrangements that allow a trustee to manage your assets on behalf of your beneficiaries.
- Powers of Attorney: Legal authorizations that allow someone to make decisions on your behalf if you become incapacitated.
- Healthcare Directives: Documents that specify your wishes regarding medical treatment if you are unable to communicate them yourself.
Trends in Estate Planning for 2025:
Digital Assets
With the increasing digitization of our lives, estate planning now includes managing digital assets. This encompasses online accounts, cryptocurrencies, and digital photos or videos. It’s crucial to outline how these assets should be accessed and managed after your death. It is also suggested that you utilize a password manager. Many of these programs allow you to set up an emergency contact who can gain access upon your death. You may also want to utilize a password manager for cell phone passwords and safe combinations.
Inherited Retirement Accounts
Retirement accounts have seen tremendous growth over the years. As of January 1, 2025, beneficiaries (non-spouse) must withdraw the entire account within 10 years of the death of the account owner. If the deceased owner was required to take annual distributions, the inheritor must take the distributions annually. If the deceased owner was not subject to required distributions, the inheritor can take the proceeds at any point as long as the account is liquidated within 10 years.
Changes in Tax Laws:
Tax laws are continually evolving, and 2025 is no exception. Keeping abreast of the latest changes can help you minimize the tax burden on your estate. For instance, the 2025 lifetime gift/estate exemption is $13,990,000 per person. However, that limit is set to “sunset” (go away) after 2025. It will take an act of Congress to extend this exemption beyond 2025. Also, the annual gift amount is $19,000. Meaning you can give anyone $19,000 in 2025 without using any of your gift exemption.
Common Pitfalls to Avoid:
One of the biggest mistakes is delaying the process. They say it is never too early to start planning for the future. Luck favors the prepared. As stated earlier, in our digitized world, make sure you have clear instructions to access and manage these assets. Finally, know the tax implications of your estate. Heavy in retirement plans, look at options to reduce that potential burden.
Another big pitfall can be avoided by carefully reviewing your asset titling. Make sure your assets are correctly titled in the name of your trust. You can have only $184,500 in cumulative assets (not including real property) outside of your trust to avoid probate. If you have refinanced your real property, check the recent deed to make sure it is titled in your trust (even if you haven’t refinanced, it is worth a look).
Goals for 2025
If you haven’t created your estate documents, you should. If you have completed them, it may be time to have them review. Changes such as marriages, divorces, births, and deaths could necessitate an update.
Regarding your retirement plans and insurance (anything with a beneficiary), take 2025 to review your beneficiary designations. You may be surprised who you have listed as a beneficiary.
Depending on the age of your children, it may be wise to hold a family meeting. You can discuss family values and intentions on your estate. This is also a good time to discuss where your beneficiaries can access documents and any password managers.
Conclusion
When Marilyn died in August of 1962, she had been divorced three times and did not have any children. From what I can ascertain, she did not create a trust while she was alive, so her assets passed according to a short will. There were small bequests, but roughly 75% of her assets, including intellectual property assets, went to Lee Strasberg, an acting coach. When Strasberg died in 1982, his assets passed to his third wife Anna. Marilyn met Anna once in her life. In the era of NIL (name, image and likeness), ironically Anna made more off Marilyns likeness that Marilyn ever did herself. A lack of planning led to some unintended consequences for Marilyn.
As stated from the beginning, we are not attorneys and do not handle estate documents. But we can help you plan during the financial planning process. Spinnaker Investments Group is much more than just an asset manager, if you haven’t completed your financial plan, please reach out. We look forward to hearing from you.
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