The Family Guide to Estate Planning: Helping To Protect What You’ve Built Across Generations

You’ve worked hard to build financial stability for your family. You’ve diversified your portfolio, coordinated your tax strategy, and thought carefully about retirement. But there’s one area that you may have overlooked: estate planning.

• In the U.S., 56% of adults don’t have any estate planning documents — no will, no trust, no powers of attorney, and no healthcare directive.¹ That figure has barely moved from year to year, even as awareness grows.
• Among people with an estate plan, trusts rose to 14% in 2026, up from 11% in 2025, while wills fell from 31% to 26% over the same period.²

Estate planning is not solely a concern for the those with an ultra-high net worth or the elderly. If you own a home, hold retirement accounts, run a business, or have people who depend on you financially, the decisions you defer today could cost your family time, money, and stress.

At Mercer Advisors, we take an integrated approach to estate planning. Our estate strategists partner with your wealth advisor, tax professionals, trust specialists, and financial planners to ensure every aspect of your financial life works together toward the same goal: protecting your family and the wealth you’ve built. We believe estate planning is too important to be treated as an add-on, which is why it’s included as part of our investment advisory fee.

The will

A will is a legal document that:

• Specifies how your assets should be distributed after your death.
• Names guardians for minor children.
• Designates an executor to manage your estate.

The main drawback: A will must pass through probate, which is a court-supervised process that can take months or years, incur legal fees, and become part of the public record.

The revocable living trust

With a revocable living trust, you transfer ownership of your assets into a trust during your lifetime. You retain full control as the trustee and designate a successor trustee to take over seamlessly at your incapacity or death, without court involvement.

Trusts avoid probate, maintain privacy, and provide continuity of management.

A will is still necessary even if you have a trust. It serves as a “pour-over” document designed to capture assets that aren’t formally retitled into the trust. Depending on your state of residence, it can also remain the only vehicle for naming guardians for minor children.

Choosing between them

A will alone may be adequate if your assets are simple and your beneficiary designations are current.

A revocable living trust becomes essential if you own real estate in multiple states, desire privacy, want to minimize probate costs or bypass the lengthy probate process, need to provide managed distributions for beneficiaries not ready to receive assets outright, or have a blended family with competing inheritance interests.

For most families protecting and growing established wealth, a coordinated plan that includes both a will and a living trust can provide the strongest foundation.

One of the most underestimated risks in estate planning is the beneficiary designation. Retirement accounts, life insurance policies, annuities, and some bank accounts transfer at death by contract. They don’t follow the instructions in your will or trust.

Traps to avoid

Naming a minor child directly

Minors cannot legally own significant assets. A court may need to appoint a guardian of the property to manage the funds until the child reaches adulthood. This could result in a public and costly process outside your control. A better approach is to name a trust for the benefit of the minor.

Forgetting to update beneficiaries after divorce

In many states, divorce does not automatically revoke a beneficiary designation on a retirement account or insurance policy. If you fail to update a beneficiary after a divorce, your ex-spouse may legally inherit assets intended for your current family.

Naming the estate as beneficiary

Designating “my estate” as a beneficiary pulls retirement accounts into probate, triggering accelerated distribution requirements and exposing the proceeds to creditors and legal fees.

Overlooking contingent beneficiaries

If your primary beneficiary predeceases you and no contingent beneficiary is named, the account may default to your estate and lose its tax-advantaged treatment. A regular beneficiary audit — coordinated with your overall estate plan — helps ensure your contract-based transfers align with your broader wishes.

A complete estate plan extends beyond what happens after you die. It also addresses what happens if you’re alive but unable to communicate your wishes.

Mercer Advisors can provide estate planning guidance as well as draft and complete your estate planning documents for you to sign.

Financial power of attorney

A financial power of attorney (POA) authorizes a trusted person to act as your agent and manage your financial affairs if you become incapacitated. They would be responsible for paying bills, managing investments, filing taxes, and managing real estate transactions. Without the POA, your family may need to seek a court-appointed conservatorship.

Healthcare power of attorney

A healthcare power of attorney designates someone to make medical decisions on your behalf. Consider choosing someone who can advocate clearly under pressure and who understands your values.

Living will and advance healthcare directive

A living will documents your specific preferences about end-of-life medical care.

Only 31% of U.S. adults have created a living will or advance directive.³ Creating this document can provide a sense of clarity and relief for loved ones making the decisions down the line.

HIPAA authorization

A HIPAA authorization allows your designated representatives to access your medical records. It’s an often-overlooked but essential document, giving loved ones access to information they may not otherwise have.

These four documents together form a critical protective layer for incapacity planning.

The lifetime estate, gift, and generation-skipping transfer (GST) tax exemption (indexed annually for inflation) is the amount of an individual’s estate that can be transferred to heirs without incurring federal estate taxes. Estates valued below this threshold are not subject to federal estate tax. Estates exceeding the limit may face a top tax rate of 40% on the taxable portion (excess amount) of the estate.

Effective Jan. 1, 2026, the federal estate tax exemption is $15 million per individual and $30 million for married couples using portability.⁴

What this means for your planning

The “use it or lose it” urgency that may have driven families to accelerate gifting in the past doesn’t apply in the same way it did when the threshold was much lower. However, these large estates still face a 40% rate making additional estate planning strategies meaningful, such as irrevocable trusts, including GRATs or SLATs, and charitable vehicles.

In 2026, the annual gift tax exclusion is $19,000 per donee.⁵ Gifts up to this amount can be made to any number of individuals each year without reducing your lifetime exemption.

Irrevocable trusts: An irrevocable trust is a trust that generally cannot be changed after it is established. By transferring assets into the trust, you can remove them from your taxable estate, help protect them from creditors, and create a structured plan for transferring wealth to future generations.

GRATs (grantor retained annuity trusts): A GRAT is an irrevocable trust that allows you to transfer appreciating assets to a beneficiary while retaining an income stream for a set period. Growth above a certain IRS-established rate can pass to beneficiaries with minimal tax burden.

SLATs (spousal lifetime access trusts): A SLAT is an irrevocable trust that allows one spouse to move assets out of their taxable estate while preserving indirect access to those assets through the beneficiary spouse. It can provide estate tax benefits while maintaining financial flexibility for the family.

Charitable vehicles: Charitable vehicles, such as donor-advised funds and charitable remainder trusts, are planning tools that help individuals support charitable causes while potentially receiving tax benefits, generating income, or enhancing wealth transfer strategies.

Revocable trusts

A revocable living trust can be modified, amended, or dissolved by you, as the grantor, at any time. You retain complete control and assets in a revocable trust remain part of your taxable estate. Therefore, this structure offers no estate tax advantage. Its primary benefits are probate avoidance, privacy, and continuity of management.

Irrevocable trusts

An irrevocable trust generally cannot be changed after it is established. When you transfer assets into an irrevocable trust, those assets legally leave your estate. Properly structured, an irrevocable trust can reduce estate tax exposure, shield assets from creditors, and facilitate multigenerational wealth transfer.

Structures include the:

• Irrevocable life insurance trust (ILIT)
• Spousal lifetime access trust (SLAT)
• Grantor retained annuity trust (GRAT)
• Intentionally defective grantor trust (IDGT)
• Charitable remainder trust (CRT)
• Charitable lead trust (CLT)

Each involves trade-offs among tax efficiency, control, and liquidity.

At Mercer Advisors, you can work with an estate planning specialist along with your wealth advisor to model any implications carefully before funding a trust.

The SECURE Act of 2019, followed by SECURE 2.0 in 2022, fundamentally changed the rules governing inherited IRAs for most nonspouse beneficiaries. The “stretch IRA,” which had allowed nonspouse beneficiaries to take distributions over their own life expectancy across decades, is largely gone for accounts inherited from owners who died after Dec. 31, 2019, with some limited exceptions.

The 10-year rule

Most nonspouse beneficiaries must fully distribute the inherited IRA by Dec. 31 of the 10th year following the year of the original owner’s death. The distribution schedule in that window depends on whether the original account owner had begun taking required minimum distributions (RMDs) before death.

Two distribution tracks

1. If the owner died before their required beginning date (RBD), then no annual distributions are required in years 1-9. The beneficiary has full flexibility to time their withdrawals strategically across the decade.
2. If the owner died on or after their RBD, then annual distributions are required in years 1-9, calculated using the beneficiary’s life expectancy, and the full balance must still be distributed by year 10.

Missing a required annual distribution now carries a 25% excise tax, reduced to 10% with prompt correction.

Planning implications

The compressed tax window can push a beneficiary into a higher income tax bracket if the beneficiary takes distributions without a strategy. Families with substantial IRA balances may benefit from proactive Roth conversion planning during the account owner’s lifetime, charitable beneficiary designations, or life insurance-funded trust strategies.

Lifetime gifting is one of the most flexible and tax efficient tools available for transferring wealth. The current environment provides meaningful incentives to use it intentionally.

Annual gift exclusion

In 2026, you may give up to $19,000 per person per year to as many recipients as you choose without reducing your lifetime estate and gift tax exemption. A married couple can transfer a total of $38,000 per recipient annually, free of gift tax.

Direct payments for education and medical expenses

Payments made directly to an educational institution for tuition or directly to a healthcare provider for medical expenses are exempt from gift tax with no dollar limit. This exclusion is separate from the annual exclusion and can be used simultaneously.

529 plan superfunding

529 contributions can be accelerated through “superfunding,” contributing up to five years’ worth of annual exclusion amounts in a single year and electing to treat the contributions as ratable over five years for gift tax purposes. In 2026, the amounts are $95,000 per individual and $190,000 for a married couple.

Lifetime exemption gifting

Transferring appreciating assets out of your estate while their values are lower locks in today’s valuation for estate tax purposes, removing all future appreciation from your taxable estate. IRS anti-clawback regulations ensure the transfers are protected even if exemption amounts change in the future.

If you have a family member with a disability or chronic illness who receives means-tested government benefits such as Supplemental Security Income (SSI) or Medicaid, leaving assets directly to them may disqualify them from those programs. A Supplemental Needs Trust (SNT) holds assets for the benefit of a person without affecting eligibility for government benefits.

Additional planning tools

Beyond the trust itself, consider life insurance structured to fund the SNT at the parents’ death or ABLE accounts (Achieving a Better Life Experience) for tax-advantaged savings. Also, a letter of intent is a nonbinding but invaluable document describing the beneficiary’s daily needs, medical history, and life goals for future caregivers and trustees.

Estate planning documents are only part of the equation. Family conflict over estates is less often about money and more often about surprise, perceived favoritism, or feeling excluded from decisions. A proactive conversation while you’re healthy and can explain your reasoning could prevent years of misunderstanding.

What to share

You don’t need to disclose specific dollar amounts. Sharing the broad structure of your plan gives your family the needed context. Share who serves as executor or trustee, who serves as healthcare agent, and why certain assets are distributed in certain ways.

Key topics to cover

Include the location of key documents, including a will, trust, financial and healthcare powers of attorney, life insurance policies, and account statements. Also identify the names and contact information for important individuals, including your financial and tax planning professionals. Finally, include information regarding your healthcare wishes around end-of-life care, any specific bequests or charitable intentions, and plans for business succession, if applicable.

Timing and facilitation

The best time for this conversation is not during a crisis. Consider scheduling a family meeting as part of an annual financial review or in connection with a major life event.

Mercer Advisors wealth advisors regularly facilitate these family meetings as part of our comprehensive financial planning process.

Estate planning is one of the most profound acts of financial stewardship you can undertake. It reflects the wealth you’ve built as well as the relationships you value, the values you want to carry forward, and the care you have for the people who depend on you.

The decisions in this guide don’t require perfection. They require a start.