The Practical Planner – "Top Client Questions"

Episode Date: September 22, 2025
Hosts: Thomas Kopelman & Dave Haughton
Produced by: wealth.com

Episode Overview

This episode dives into the complexities of estate planning from a state-specific perspective, equipping advisors with actionable insights to better serve clients across differing legal landscapes. Hosts Thomas Kopelman and Dave Haughton focus on key distinctions in state laws, such as probate, homestead exemptions, Medicaid/Medicare planning, and state estate/inheritance taxes. They stress the importance of nuanced, location-specific guidance rather than broad, generic strategies.

Key Discussion Points & Insights

1. The Crucial Role of State Law in Estate Planning

• Estate planning is not one-size-fits-all. The state a client lives in dramatically impacts the effectiveness of their plan.
• Many advisors and clients default to federal estate tax concerns, but state-level taxes, probate rules, homestead protection, and Medicaid eligibility can be just as, or even more, relevant for many clients.
• “Sometimes gets missed because people think of about estate planning in a really generic way, thinking avoid probate. And my estate's not necessarily big enough to worry about federal estate taxes. Therefore, I can keep it really simple. It's not necessarily the case. Depending on where they live.” — Dave Haughton (02:09)

2. Probate Nuances by State ([03:26]–[06:30])

• States where probate is less onerous:
  • Washington and Texas are cited as locations where probate is relatively straightforward—not necessarily requiring a trust to avoid the courts.
• States where probate can be a nightmare:
  • Massachusetts, Florida, New York, Georgia, Tennessee, and surprisingly Alaska are mentioned as states where probate can be costly, time-consuming, and fraught with bureaucratic hurdles.
• The COVID pandemic exacerbated court backlogs everywhere, making probate riskier and more drawn out—a reminder to over-prepare even in “easier” states.
• Notable quote:
  • “In Massachusetts … you just witness an insensitivity to people who are dealing with really difficult times, that they could have avoided all that if they had just avoided probate…” — Dave Haughton [04:36]

3. Homestead Exemption Variability ([06:32]–[11:14])

• Homestead helps protect the value of the home from unsecured creditors (but not from the mortgage itself).
• The amount protected varies dramatically:
  • Unlimited protection: Florida, Texas, Iowa, Kansas, Oklahoma, South Dakota.
  • High but capped: California ($300–600k), Nevada ($605k), Minnesota ($450k+), Massachusetts ($500k), Arizona ($400k).
  • None or minimal: New Jersey, Pennsylvania, Maryland, Virginia.
• State homestead rules can dictate required trust provisions or paperwork when transferring the home into a trust.
• Practical insight: The level of homestead protection should factor into asset protection strategies and umbrella insurance needs.
• Memorable moment:
  • “Some people get advice, like I talked to a business owner who said...he was always told by other lawyers you should always buy as many houses and as much house as you can in Texas because at least that's protected.” — Thomas Kopelman [07:24]
  • Dave pushes back: “That's when the tail wags the dog … you don't know that something's going to happen and nothing should ever happen.” [07:57]
• Practical tip: Knowing your state’s rules is essential before moving forward with estate planning decisions involving real estate, trusts, or liability insurance.

4. Medicaid (Long-term Care) vs Medicare ([11:17]–[16:31])

• Medicare is federal (health insurance); Medicaid is state-administered (nursing home/long-term care benefits).
• Medicaid eligibility and asset protection opportunities (via irrevocable trusts, for example) are subject to highly variable state rules and nuanced legal interpretations.
• There are strict “look-back” periods (commonly 3–5 years) to prevent abuse, and trusts must be carefully structured to avoid disqualifying the applicant.
• Over-planning can compromise quality of life in later years if assets are too aggressively sheltered.
• Key insight:
  • “If you set up one of these Medicaid trusts in a state and you put in some provisions that are not permitted...when it was too late ... you find out that there was some flaws in the trust.” — Dave Haughton [12:28]
• Ethical concern: As a planner or child, pushing parents to impoverish themselves solely to preserve inheritance may not be in the client’s best interests.
  • “Hopefully you're like a little bit better of a kid than the person to be like, yes, mom and dad, hide all of your assets so I can get your money.” — Thomas Kopelman [15:35]

5. State Estate and Inheritance Taxes ([16:39]–[23:07])

• Estate taxes: Many states have separate estate tax systems, typically with lower exemption amounts than the federal government ($2M–$7M is common).
  • Most states do not allow “portability” of exemption between spouses. Planning is required to capitalize on each spouse’s exemption, often via credit shelter trusts.
• Inheritance taxes: Fewer states have these, and rates/exemptions can depend on the relationship to the decedent (children usually pay less than more distant heirs).
  • Highlighted states: Pennsylvania (varies by beneficiary class), Kentucky, Nebraska, New Jersey, Iowa, Maryland.
• Importance of trust planning to avoid unnecessary taxes, especially since state rules often are not as flexible as the federal system.
• Practical example:
  • “If the first spouse had passed away and they put that $2 million into a credit shelter trust...theoretically there's no tax.” — Dave Haughton [18:54]
• Timing and relationship matter: Some states require verification that inheritance taxes have been paid before assets (like IRAs) can be distributed—even those passing by beneficiary designation.

6. Multi-State Family Planning Considerations ([21:52]–[23:31])

• The location of both the client and their heirs can matter—a child inheriting in a high-tax state faces different planning needs than one in a no-tax state.
• Thoughtful beneficiary designation (who gets which assets) can meaningfully reduce future tax burdens across generations.
• Example:
  • “If they live in California and I have another child that lives in Florida, maybe it's going to make a little bit more sense to allocate those beneficiary designations a little bit differently.” — Dave Haughton [23:07]

Notable Quotes & Memorable Moments

• “It's such an important topic to raise, not just for the client, ... but also for the children.” — Dave Haughton [21:52]
• “You should always be a little bit concerned if the kids are driving the planning decisions towards their parents giving up control to protect it for their own benefit.” — Dave Haughton [16:21]
• “Avoiding probate isn't that critical [in some states]. … You have to remember that COVID ... shut down every court. And even now that's reverberated... avoiding probate, if you're in a state that ... isn't that burdensome, you have to remember that things like COVID can happen.” — Dave Haughton [05:23]
• “Knowing your state's rules is essential before moving forward with estate planning decisions involving real estate, trusts, or liability insurance.” — Paraphrased from Thomas & Dave [11:14]

Key Takeaways for Advisors

• Always anchor estate planning conversations in the client's state of residence—with follow-up consideration for where heirs reside.
• Regularly review the probate processes, tax exemptions, and asset protection statutes in your client’s state(s) to adjust strategies accordingly.
• Use specific, state-optimized language in planning documents and educate clients thoroughly about their unique risks and opportunities.
• Don't overlook the implications of changing domiciles for aging parents or migrating beneficiaries.
• Stay vigilant about the interplay between asset titling, beneficiary designations, homestead laws, and state-specific trust provisions.

[End of Summary]

This episode is essential listening for any advisor seeking to deliver nuanced, customized estate planning while sidestepping the pitfalls of generic guidance.