Estate Planning in 3 Phases

Every family is unique with their own specific goals and objectives, but most couples come in with at least these general, similar goals:

• Provide for the surviving spouse

• Keep things easy to administer

• Dodge family fights

• Minimize taxes

• Avoid probate

Once we’ve addressed those, we dig into the family-specific goals. Maybe they want to give $100K to a church. Maybe they have farmland they want to keep in the family. Maybe there’s a child with special needs. Estate planning is personal by nature—so we build the plan around them.

Side note—from the attorney’s perspective, it’s a more productive meeting when the family has an idea of who gets what and when. You asking, “here’s what we want to have happen, can you do this?” is more effective than, “What should we do?”

But the overall structure we use is consistent. I walk them through three phases:

Phase 1: While Both Spouses Are Alive

This phase is about making sure life can continue smoothly. The goal here is to keep things flexible, manageable, and protected. Essentially, ‘business as usual.’

A. Manageability

We want the couple to manage their assets just like they always have. That usually means holding property either in their names or in a joint revocable living trust. This setup keeps things simple. It doesn’t restrict them, and it avoids unnecessary legal or financial headaches when a triggering event—such as incapacity or a death—happen.

B. Flexibility

Two things we can be sure of: laws change; so do family dynamics. Maybe it’s a change in tax law. Maybe it’s a birth, death, marriage, divorce, or a shift in net worth. Whatever the case, flexibility matters. We design plans that can be adjusted down the road. We want the family to be able to adapt without needing to tear everything up and start from scratch.

C. Incapacity

What happens if one spouse doesn’t die, but becomes mentally or physically incapacitated?

This is where Powers of Attorney and Living Wills become critical. They appoint trusted individuals to handle financial and medical decisions. They lay out clear healthcare directives. Without these documents, a court may need to step in—and that means time, cost, and stress. We avoid that with proactive planning.

Phase 2: One Spouse Dies

This is the phase that activates when the first spouse passes away. The surviving spouse is still alive, and we need to make sure they’re taken care of—while also beginning to carry out some of the long-term wishes of the couple.

There are a few ways to structure this.

A. All to Spouse

This is the simplest option. Everything goes outright to the surviving spouse. No strings attached. They own everything.

It’s clean. It’s fast. But it has some risks.

For one, it could increase the surviving spouse’s taxable estate. That might mean estate taxes when they pass. Another concern is remarriage. If the surviving spouse remarries, the new spouse might gain control of the assets—either accidentally or intentionally disinheriting the original couple’s kids.

B. Specific Distributions, Then Remainder to Spouse

This method carves off certain gifts before the rest goes to the surviving spouse. It might look like this:

• $10,000 to a favorite charity

• $1,000 to each grandchild

• Farm equipment to a son

• Jewelry to a daughter

Once those gifts are taken off the top, everything else goes to the surviving spouse.

C. A/B Split

This is a more advanced option. Upon the first spouse’s death, the estate is divided into two (or more) shares—commonly called Trust A and Trust B.

Trust A typically holds the surviving spouse’s share and remains revocable. Trust B holds the deceased spouse’s share and becomes irrevocable.

Why do this?

Tax planning is a big reason. It can help shield part of the estate from estate taxes when the second spouse dies.

Another reason is to protect the children’s inheritance. If the surviving spouse remarries or has a falling out with the kids, the assets in Trust B can’t be redirected. They’re locked in for the next generation.

I’ll do an entire post just on A/B splits in an upcoming lesson, so just stay tuned.

Phase 3: Surviving Spouse Dies

Now the estate plan shifts fully into legacy mode. This is where the family’s long-term wishes get carried out.

There are almost unlimited ways to structure this, but here are the three most common approaches:

A. Even Split Between Heirs

This is the classic route. After debts, taxes, and expenses are paid, the remainder of the estate is split equally. If there are three kids, each gets one-third.

Simple. Fair. But not perfect.

Equal isn’t always equitable. One child might have helped more with caregiving. Another might have gotten a loan years ago that was never repaid. Two might have stayed on the farm and earned “sweat equity” while the others left for the big city life. Sometimes, treating kids exactly the same leads to resentment.

B. Specific Distributions, Then Even Split

This allows more nuance.

• $100K to a church

• Machinery to a daughter who farms

• Land parcel 1 to one son, land parcel 2 to another

• ½ to a child when they are 25, the other ½ when they’re 30

• etc. etc. etc.

After those gifts are made, the remainder is divided evenly among the heirs.

It’s more detailed, but also more customized. It lets families be intentional about who gets what.

C. Legacy Trust

Rather than giving assets outright, the estate is held in trust for the heirs. This setup is especially useful in cases involving farmland, family businesses, or young beneficiaries.

The trust can generate income for the heirs, while keeping the underlying assets protected. This kind of planning can:

• Allow on-farm kids to access the land base but share the income with all heirs

• Ensure long-term control and stewardship of family assets

• Own the family business so it doesn’t get sold off

• Benefit heirs during their life and leave the rest to charity

• Provide for young children’s needs then staggered distribution

These trusts get created & funded after the second spouse dies, and can be tailored in nearly unlimited ways to meet a family’s goals.

In South Dakota, these trusts (called “Dynasty Trusts”) can last forever…but most states put a time limit on how long they can exist.

Bonus: How Can Kids Inherit?

Here’s a key decision: should the children inherit outright, or through their own trust?

Outright Inheritance

Simple. The asset becomes theirs. They can sell it, gift it, invest it, or blow it all in Vegas.

Sentry Trust Inheritance

This is a form of protective trust that shields the inheritance from divorces, creditors, and lawsuits. It can also be designed to skip estate taxes when the kids pass it on to their own children.

Bottom line: it offers control, protection, and long-term planning advantages.

I’ll also write an upcoming post just on how kids can inherit, so stay tuned for that as well.

The Big Picture

Estate planning isn’t about documents. It’s about people. And you get to decide what your legacy looks like.

It’s not called "will making" or "trust making" for a reason. We call it estate planning because it’s a strategic, flexible, and deeply personal process. It's about crafting a plan that evolves with your life, protects your loved ones, and reflects your values.

Most families can achieve their goals by adopting this three-phase approach:

1. While both spouses are alive

2. After the first spouse dies

3. After the surviving spouse dies

The right plan makes these transitions smoother, more certain, and less stressful for everyone involved.

And no matter how creative or specific your goals may be, chances are a plan can be built that makes it happen.

Because, LEGACY MATTERS.

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DISCLAIMER: What you just read is not legal advice. It is not an offer to represent you or perform legal services. Reading this doesn’t enter us into an attorney-client relationship. It’s just informational and hopefully a bit entertaining—take it as that and nothing more. When in doubt, talk to your own lawyer.