When people hear the phrase estate planning, they often think about ultra-high-net-worth families trying to avoid federal estate taxes. But for many households with a net worth between $2 million and $5 million, the biggest planning risks have little to do with federal estate taxes at all.

That was one of the central themes of Estate Planning Masterclass Session #3, where estate planning attorneys Alan Gassman and Scott Levin explored practical strategies designed specifically for clients who have accumulated meaningful wealth but may not consider themselves wealthy enough for advanced planning.

The discussion covered everything from trusts and asset protection to Medicaid planning, beneficiary-controlled trusts, long-term care concerns, charitable planning, and helping the next generation inherit responsibly.

The overarching message was simple: estate planning is about far more than taxes. It's about maintaining control, protecting assets, and preserving family wealth for future generations.

Why the $2–$5 Million Client Deserves More Attention

Many families in this wealth range mistakenly assume they don't need sophisticated planning because their estates are below the current federal estate tax exemption amount.

However, Alan and Scott pointed out that these families often face substantial exposure to:

• Lawsuits and liability claims
• Long-term care expenses
• Probate costs
• State estate taxes
• Divorce and creditor risks affecting heirs
• Poor beneficiary decisions
• Improper asset titling
• Outdated beneficiary designations

In many cases, these risks can be more damaging than estate taxes.

As a result, advisors should think beyond tax reduction and focus on protecting family wealth from a variety of threats.

The Foundation: Revocable Living Trusts and Proper Titling

One of the most common planning failures discussed during the webinar involves assets that were never properly titled.

Clients often spend thousands of dollars establishing a revocable living trust only to leave key assets outside the trust. When that happens, probate may still be required despite the client's intentions.

The presenters emphasized that every estate plan should include a comprehensive review of:

• Real estate ownership
• Brokerage accounts
• Bank accounts
• Business interests
• Beneficiary designations

A trust is only as effective as the assets that are actually transferred into it.

At the same time, advisors should remember that revocable trusts do not provide creditor protection. While they can help avoid probate and simplify administration, they generally do not shield assets from lawsuits or creditors during the grantor's lifetime.

Why AB Trusts and Clayton Elections Still Matter

Many advisors have stopped discussing AB trust planning since the introduction of portability.

Scott Levin explained why that may be a mistake.

For married couples, credit shelter trusts can still provide valuable benefits, including:

• State estate tax planning
• Creditor protection
• Remarriage protection
• Preservation of family wealth for children

The presenters highlighted the flexibility provided by a Clayton Election approach.

Rather than locking a family into a rigid formula, the Clayton structure allows decisions to be made after the first spouse dies. This flexibility can be extremely valuable when tax laws change or asset values differ from expectations.

For advisors working with clients in states such as New York, Massachusetts, Oregon, or Washington, state estate tax planning remains highly relevant.

Asset Protection Is Not Just for Doctors and Business Owners

One of the more eye-opening discussions focused on liability exposure.

Many clients believe they are unlikely to be sued. The presenters challenged that assumption.

Automobile accidents, property claims, rental real estate issues, and unexpected lawsuits can create substantial financial exposure.

The speakers strongly encouraged advisors to review:

• Umbrella liability insurance
• Homeowners coverage
• Auto coverage
• Rental property ownership structures

For families with rental properties, LLCs can play an important role in isolating liability and protecting personal assets.

The webinar also explored situations where irrevocable trusts may be used alongside LLC structures to enhance protection and preserve family wealth.

Planning for Long-Term Care Before a Crisis Occurs

Another major theme was long-term care planning.

Many families delay planning until a health crisis occurs, which can dramatically limit available options.

The presenters discussed the importance of evaluating:

• Long-term care insurance
• Hybrid insurance products
• Medicaid planning strategies
• Medicaid Asset Protection Trusts (MAPTs)

A properly designed Medicaid Asset Protection Trust may allow a family to protect assets while beginning the Medicaid lookback period.

However, timing is critical.

Waiting until nursing home care becomes imminent often eliminates some of the most effective planning opportunities.

For advisors, this serves as an important reminder that long-term care planning should be part of every retirement and estate planning conversation.

Beneficiary-Controlled Trusts: Protecting Children Without Restricting Them

One of the most practical planning ideas discussed was the use of beneficiary-controlled trusts.

Many parents struggle with the decision of whether to leave assets outright to children or keep those assets in trust.

The presenters argued that trusts often provide superior protection without significantly limiting flexibility.

Potential benefits include protection from:

• Divorce
• Lawsuits
• Creditors
• Bankruptcy
• Poor financial decisions

In many cases, children can serve as trustees of their own trusts while still preserving significant protection.

This approach allows beneficiaries to maintain a degree of control while keeping inherited assets protected from outside risks.

The SECURE Act Changed IRA Planning

Inherited IRA planning continues to evolve following the SECURE Act.

The presenters discussed the growing importance of trust design for retirement accounts.

While accumulation trusts can provide valuable creditor and divorce protection, advisors must also consider the income tax consequences of retaining distributions inside a trust.

The discussion included advanced trust concepts designed to address compressed trust tax brackets and improve tax efficiency for beneficiaries.

The key takeaway for advisors was clear: inherited IRA beneficiary designations deserve the same level of attention as wills and trusts.

Helping Children Buy Homes Without Creating New Problems

Many parents want to help their children purchase homes.

The webinar explored several possible approaches:

• Gifts
• Intra-family loans
• Shared equity arrangements
• Trust ownership structures

While generosity is admirable, the presenters cautioned against informal arrangements.

Without proper documentation, families can unintentionally create disputes, gift tax issues, creditor concerns, and confusion regarding ownership rights.

Advisors can add tremendous value by helping families structure these transactions thoughtfully.

Charitable Planning Opportunities with CRTs

For clients holding highly appreciated assets, charitable remainder trusts (CRTs) can offer significant planning opportunities.

The presenters discussed how CRTs may help clients:

• Diversify concentrated positions
• Defer recognition of capital gains
• Create a lifetime income stream
• Support charitable causes

For the right client, a CRT can serve as both a tax-planning and philanthropic planning tool.

The Advisor's Role Is More Important Than Ever

Perhaps the most important lesson from the session was that great estate planning rarely happens in isolation.

Successful outcomes often require coordination among:

• Financial advisors
• Estate planning attorneys
• CPAs
• Insurance professionals
• Trustees
• Family members

The advisor frequently serves as the coordinator who helps ensure that beneficiary designations, trust structures, insurance coverage, asset titling, and tax strategies all work together.

As the presenters emphasized throughout the webinar, estate planning is not simply about documents. It is about helping families protect what they have built and ensuring that their wishes are carried out when it matters most.

Frequently Asked Questions

Q1: If a client has less than the federal estate tax exemption, do they still need sophisticated estate planning?

Absolutely. Many clients with $2–$5 million face greater risks from long-term care costs, lawsuits, probate, divorce, and state estate taxes than from federal estate taxes. Proper planning can help address all of these concerns.

Q2: Does a revocable living trust protect assets from creditors?

Generally, no. A revocable trust can help avoid probate and simplify administration, but assets inside the trust typically remain available to the grantor's creditors.

Q3: Why are beneficiary designations so important?

Beneficiary designations often override instructions contained in wills and trusts. Outdated beneficiary forms can unintentionally derail an otherwise well-designed estate plan.

Q4: When should clients begin Medicaid planning?

Earlier is almost always better. Medicaid planning strategies often rely on lookback periods, meaning that waiting until a health crisis occurs can significantly reduce available options.

Q5: Why leave assets in trust instead of distributing them outright to children?

Trusts can provide protection from creditors, lawsuits, divorce, and financial mismanagement while still allowing beneficiaries significant access and flexibility. For many families, trusts offer a more effective way to preserve wealth across generations.