A Conversation With ... Emily Kembell

I’ve read asset protection is becoming more common in estate planning. What is it and what changes have you seen with your clients?
It is a question that comes up more frequently than it used to. There are several different techniques and strategies to protect a client’s assets from creditor claims. There are limited liability companies and other types of limited liability entities that we set up for clients to, for example, hold their rental real estate or other property that they want to make sure their personal property is protected from claims associated with that rental real estate. We also help some clients with what’s called an irrevocable trust agreement. Those also help to protect and isolate the liability to other assets that are held outside of that trust.

We’re doing more online and storing more of our personal property online these days. How do we protect our digital assets?
We have some very stringent laws on who can legally have access to our digital information. In order for you to authorize someone else to access that information on your behalf, say if you become incapacitated or upon your death, you do have to sign a legal document specifically authorizing that. That type of document is a part of an estate plan that a lot of times people overlook. In addition, it’s important for loved ones to know how to access the password and log-on information if something were to happen so that they can close down email accounts and take control of those digital assets.

What are the essential elements of estate planning?
An estate plan helps with primarily two things that happen, one is incapacity and the other is death. We have powers of attorney, wills, trusts – there’s a whole variety of legal documents that all together put a structure in place to make sure that your affairs are handled in the way that you’re envisioning.

When does someone need to start organizing these documents?
Yesterday. Typically, people wait until their children are out of the home to start to really think about an estate plan, perhaps when they’ve accumulated more wealth. However, truly they need those documents to be in place long before that. For example, to name guardians for minor children, that can only be done in a last will and testament. I always tell clients: If you don’t have a will, the state of Missouri has a will for you.

The federal estate tax exemption sunset is coming in 2026. What is the change in the rule and what do clients need to do now to prepare?
On Jan. 1, 2026, we have a sunset in our current estate tax and gift tax exemption. It reverts back to the law that was in place before the (2017 Tax Cuts and Jobs Act), meaning that the exemption for those transfer taxes will be $5 million, subject to inflation. Our best guess is it will give everyone about a $6-$7 million estate tax exemption at that point, which is effectively half of what it is currently. When assets exceed that exemption amount, the estate tax rate is 40%. It is a hefty tax. There is a lot of planning that people can do prior to the change in the exemption amount. Estate planning attorneys are already gearing up for that. Clients who wait until say, fall of 2025, it will be very difficult, if not impossible, to find estate planning attorneys with availability to help them with that type of planning.

Millions of baby boomers are retiring each year. For those who own businesses, what does that planning look like and what are the most common exit strategies you see?
A lot of that planning should happen years before the eventual exodus of the key man or business owner. If we have enough time to plan, we sit down with a client to understand what their goals are. Do they have a family member who is interested in taking over the management and ownership of the business? If not, do they have a key employee that might be a good fit? If there was a sudden death, for example, is there a plan to market the business outside of the family to try to find a potential buyer for the business? These can be difficult conversations but sweeping them under the rug is the worst thing that someone can do. Many times, clients do have at least one child or other family member involved. That does make for typically a smoother transition, but it can also cause challenges if there’s one or more family members or children who are not involved in the business and trying to make sure that there’s fairness in the way that the estate is ultimately divided. For some of my clients, they do come in, for example, with potentially a buy-sell agreement, but it’s 20 years old. It probably worked great at the time, but at this point, the business is valued much differently, perhaps there’s different people involved, different ownership even. Even for those clients who have a plan in place, if it’s not updated every so often it can almost be worse than having no plan at all.

What other trends are you seeing?
I have more and more clients who have a longer period of incapacity preceding death. It’s a very important aspect of estate planning. That’s true for the business owner, too. If a business owner becomes incapacitated, is there someone who can step in and run the business? It’s important to have these conversations when there’s absolutely no question of capacity so the chance for litigation and trying to invalidate the documents is less in the future.