Tag: Estate Planning

Jul 3rd

Recent Updates Regarding Washington State Taxes

Washington Capital Gains Tax

Beginning January 1, 2022, a flat 7% tax on net long-term capital gains went into effect. Many advisors believed the tax to be unconstitutional and that it would be repealed if/when challenged. However, the WA Supreme Court upheld the tax in March of 2023 in Quinn v. Washington. Additionally, the public had a chance to repeal the tax in November of 2024, but approximately 63% of the voters opposed repealing the tax. Regardless of the questionable legality and polarizing nature of this tax, it is here to stay.

On May 20, 2025, Senate Bill 5813 was signed into law, creating a new tier to the capital gains tax, adding 2.9%, for a total of 9.9%, for gain exceeding $1m. The change is retroactive to January 1, 2025.

Summary of the Washington Capital Gains Tax

A full explanation of the Washington Capital Gains Tax is beyond the scope of this update; however, several key items are highlighted here:

  • Only individuals are subject to the tax. This includes any gains that flow through to individuals from pass-through and/or disregarded entities such as LLCs and S corporations.
    • Taxable trusts are currently exempt.
      • Gains recognized by grantor trusts, being disregarded entities, will flow through to the grantor(s) and may be subject to the tax.
    • Additionally, beneficiaries of taxable trusts who receive allocations of long-term gain may be subject to the tax.
  • Only long-term capital gains are subject to the tax. Ordinary income, short-term capital gains, qualified dividends, tax-exempt interest, etc., are all exempt.
  • Taxpayers have an annual standard deduction ($250,000 originally but adjusted for inflation. The 2024 deduction was $270,000. The 2025 amount has not yet been released.) With the recent update, the new effective tax brackets are:

    • The deduction is per taxpayer. Married couples are considered one taxpayer. Therefore, married couples have just one deduction.
  • Generally, only individuals who are domiciled in Washington (on the date of sale) are subject to the tax. Gain from the sale of certain tangible property is subject to the tax for those domiciled outside the state.
  • The tax is calculated by starting with the taxpayer’s federal net long-term capital gain for the year and then modified for gains and losses excluded from the tax. The following are excluded (this is not a complete list):
    • Gain/Loss from the sale of all real estate (which includes gain from the sale of real estate flowing through pass-through entities).
      • Sales of entities that own real estate, as opposed to the sale of the real estate itself, will likely not qualify for the real estate exemption.
    • Gain/Loss from the sale of depreciable property under IRC §167(a) or under §179 (i.e. business property such as equipment).
    • Gain/Loss from the sale of qualified family-owned small businesses:
      • What constitutes a family-owned small business and how to calculate the related deduction is complex and beyond the scope of this article.
    • Alternative minimum tax adjustments associated with the gain.
    • Qualified opportunity zone gain exclusions (this is an add-back for Washington tax).
    • Like California, gain recognized federally by an incomplete non-grantor trust (ING), regardless of situs, is pulled back into Washington, and taxed as part of the grantor’s individual capital gain.
  • The taxable gain is reduced by charitable gifts, but only gifts made to charities principally managed in the state of Washington. Additionally, only gifts exceeding $250,000 (also adjusted for inflation, so it tracks with the standard deduction) are deductible, and the total deduction is limited to $100,000 (adjusted for inflation, $108,000 in 2024).
    • For example, if a taxpayer made $300,000 of charitable gifts in 2022 (before the inflation adjustments), they would deduct $50,000 from their taxable gains, producing $3,500 of tax savings.
    • Charitable gifts to donor-advised funds (DAF) would only be eligible if the DAF is directed or managed in Washington (even if the DAF distributes grants to organizations outside Washington).

The tax is relatively new, and there remain several complexities and uncertainties beyond the scope of this article. These include, but are not limited to:

  • Consideration of capital loss carry forwards
  • Qualified family-owned small businesses
  • Qualified small business stock
  • Charitable remainder trusts and how the tax may impact both the grantors and beneficiaries
  • Allocation of the $250,000 deduction between spouses who file separately
  • Credits related to:
    • B&O Tax
    • Taxes in another jurisdiction related to the same gain

Planning Opportunities

The recent update has not materially changed the existing tax, so the same planning strategies remain. What the increase has done is further clarified the direction and plans of Washington State’s legislature as it relates to tax policy. Along with recent increases in Washington’s Estate Tax, the state has broadened sales taxes and expanded interpretations of B&O Tax. It appears likely the state will continue to create and increase taxes on individuals and businesses residing and doing business in Washington.

There are several strategies for avoiding Washington capital gains tax, including:

  • Domicile Planning – The Washington capital gains tax is primarily a tax on gain associated with the sale of intangible assets, like marketable securities. This type of gain is sourced to a taxpayer’s state of domicile. Depending on the facts and circumstances of each taxpayer, being thoughtful about the timing of a domicile change may be worth consideration. This is also a powerful planning tool for estate tax avoidance.
  • Spreading Gain Across Years – Each taxpayer has a $250,000 (inflation-adjusted) annual deduction, and being thoughtful about the timing of sales can be meaningful, as well as specific strategies like installment sales to spread receivables and gain over several taxable years.
  • Spreading Gain Across Taxpayers – Because every taxpayer has the standard deduction and Washington state has no gift tax, outright gifts to individuals (other than spouses), while being mindful of the federal gift tax implications, can multiply the exemption. This is even more powerful if the gift recipient is domiciled outside of Washington state, making any gain for them fully exempt.
  • Taxable Trusts – Other than INGs, taxable trusts are exempt from the tax. Once again, being mindful of federal gift tax implications, gifts in trust can completely avoid Washington capital gains tax. Additionally, converting grantor trusts to non-grantor trusts is also potentially a viable strategy.

Washington Capital Gains Tax currently has a maximum rate of 9.9%, and although this is only one aspect of any planning, and although it is unlikely that this tax would be the defining factor in decision making, nearly 10% tax is likely not immaterial. With the state of Washington creating higher taxes across the board, this is a good time to consider both your short-term and long-term planning.

Washington Estate Tax

Recent Update

In addition to an increased capital gains tax, there were two, potentially more impactful, changes to the Washington Estate Tax, impacting estates of decedents dying on or after July 1, 2025:

  • Estate tax exclusion is increasing from $2.193m (which has been static since 2018) to $3m. Additionally, the exclusion will be adjusted annually for inflation going forward.
  • Tax rates are increasing dramatically as detailed below, with the top rate growing from 20% to 35%.

To demonstrate how meaningful these changes are, consider the following examples:

Similar to the changes for the Washington capital gains tax, the changes in estate tax do not fundamentally change how the tax works but rather increase the negative outcomes. The same strategies advisors have been using to avoid the estate tax are all still viable, simply more effective now. Common strategies include shifting growth assets out of large estates, domicile planning, employing multi-generational GST-exempt trusts, charitable giving, and so on. With these radical rate increases, it’s the perfect time to have conversations with your advisors.

One planning item that is often overlooked is entity structuring related to real property. Washington estate tax excludes real property outside of Washington, but intangible assets are sourced to the state of domicile. This creates a valuable planning opportunity to categorize assets as intangible or tangible based on the location of the asset and the domicile of the taxpayer. For example, if you are a Washington domiciliary and you directly own a house (i.e. not through an LLC or corporation), or other tangible property, outside of Washington, upon death, Washington will exclude this asset from estate tax because tangible assets located elsewhere are not subject to WA estate tax.1 However, if a Washington domiciliary owns units of an LLC, which owns that house, the value of those LLC units is included in that decedent’s estate tax because LLC units are considered an intangible asset.

To plan for this situation, a Washington domiciliary can own real property located outside the state either directly or in a revocable trust. Conversely, if a non-WA domiciliary owns real property in Washington, that property can be owned in an LLC to ensure that the property is sourced to the non-WA decedent’s state of domicile. This planning should consider non-tax issues, such as any liability concerns, as well.

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Jun 4th

Real Estate Succession Planning

Who will manage your real estate portfolio when you’re no longer able to?

Families with significant real estate holdings tend to have complex wills and trusts, and transitioning a real estate portfolio after the head of a family passes can be an intricate and stressful process.

“At Whittier Trust, our goal is to help families hold on to their assets, not just sell them,” says Thomas J. Frank, Executive Vice President. “We want to build a relationship, understand your portfolio and intentions for the future, and get plans in place long before succession becomes an issue, while the wealth builder of the family is still alive and running things.”

While many asset managers avoid direct ownership of real estate assets, the Whittier team has decades of experience in a wide variety of property ownership scenarios and structures. “For example,” Frank says, “Sometimes real estate is owned directly in the family trust. By moving the assets into structures like LLCs, we add a layer of liability protection and more easily segregate ownership interests.”

Charles Adams III, Executive Vice President and Manager of Whittier Trust’s Real Estate Department, provides some other examples. “Some families have vacant land,” he says, “and then we have to decide whether that's a long-term hold because it's not creating income. It might be a liability, or it might be a very productive property with a good tenant and strong rental income, but the lease will be expiring soon. Then we’d need to discuss whether the family wants to sell it or retain it depending on the tax situation, cost basis, and the market.”

The Next Best Thing to Family

Whether you hope to have a family member take over the business or you need an unbiased fiduciary partner like Whittier—or both—the time to start making a plan is today. “We work with your attorney and accountant to ensure the properties are owned in flexible yet durable entities,” Frank explains. “We sit beside you as you manage the business so we can understand your style and priorities and be ready to step in if necessary.” Whittier Trust is primed to communicate with beneficiaries, tailoring conversations and reports to each family member's level of involvement and interest. When necessary, the team of advisors oversees property managers, making sure leases are renewed, repairs are made, capital improvements are considered, and new tenants are found.

“You need to have a capable, engaged team in place,” Adams adds. “You need brokers, appraisers, leasing agents, salespeople, and financing people, just to name a few, and Whittier can provide all of those with appropriate oversight. A lot of times, the family patriarch or matriarch has been serving in all these roles themselves. That’s fine, except that it may not provide for succession in the family.” 

Adams notes that there are often differing levels of interest from the next generation—some may never have had an interest in the business or the opportunity to learn the business. “That's where Whittier Trust comes in,” he says. “We have a strong network of resources and systems for handling these affairs, no matter how complicated. We offer whatever level of support is needed, from full management oversight to simply serving as backup. As one client recently told me, Whittier is ‘the next best thing’ to family.”

Tailored to Each Family’s Capacity

One example Adams shares is of a family who owned a number of industrial properties. The parents, in their late 80s, had named a daughter to act as successor co-trustee alongside Whittier Trust. But in private, the daughter asked the Whittier team to do all the decision making, saying she would sign off on whatever was recommended. Although that request didn’t align with Whittier’s goals to keep family involved, Adams and his team understood that she was overwhelmed—that she didn't know as much about real estate as her parents might have assumed. So they set up a de facto board that she could be a part of to gradually learn about the business while also having voting rights. 

“We’re also happy to work with families that haven’t managed to plan ahead, though of course it’s much more difficult,” Adams says. One client, for example, came to Whittier Trust when the patriarch was already experiencing memory loss. They owned an office building with nearly 50 tenants, but the tenants were no longer getting consistent services because the father didn’t realize he couldn’t manage it by himself anymore. The two adult children relied on the income from this property, but that income was drying up because tenants were leaving or simply not paying rent. So the Whittier team had to go in, sort it out, and get everything running smoothly again.

No matter what the situation, when Whittier Trust serves as a trustee, our role as a fiduciary means we will implement what's in the best interest of all the beneficiaries and the properties without bias. Our deep experience working hand-in-hand with real estate-owning families is a proud distinction of Whittier’s 40-year history as a boutique multi-family office, and our very favorable client-to-advisor ratio is the hallmark of our business. We take pride in our role as stewards of your family’s legacy.

To learn more about how Whittier Trust can make a difference for you and your loved ones, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

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May 5th

Five Key Questions to Ask Before Transitioning the Family Business

What ultra-high-net-worth individuals need to consider when mulling an exit.

In my role at Whittier Trust, I've seen firsthand how critical it is for ultra-high-net-worth individuals (UHNWIs) to have a well-thought-out exit strategy for their family businesses. Despite the intensive planning that typically goes into wealth management, recent research from the Exit Planning Institute suggests that a staggering 80% of business owners lack solid exit strategies, leaving their wealth in limbo and risking economic continuity for future generations.

The planning process of an exit strategy can often be fraught with uncertainty and potential pitfalls, making it a critical issue for business owners nearing retirement or a transfer of ownership or leadership. Here are the five key questions UHNWIs should ask their advisors to ensure a smooth and successful transition.

1. How many different exit strategies are available to me?

Understanding the various ways you can exit is fundamental to choosing the right path for your business. Each exit strategy has unique implications and suitability depending on your business's circumstances and your personal objectives. Here's a breakdown:

Generational Family Transfer

When multiple generations of a family are actively involved in the business, an owner might prioritize business legacy and family engagement over the sale price. If the objective is to keep the business in the family, the exit plan might involve transferring company stock, often at a discount, to direct heirs over many years. While keeping a majority stake in the company and control over operations, the owner can transfer assets to the next generation while still mentoring and training the next leader.

A generational family transfer can play out in a variety of ways: the owner may ultimately sell stock in the company to family, retire holding minority ownership or gift all stock to heirs. A successful transfer will take at least three to five years to accomplish, position the business for success, meet the owner's liquidity and financial needs after the transfer and leave the new owner(s) financially stable after the transaction.

Management Buyout

An owner who wants to sell all or part of the company to existing management might favor a management buyout. This type of ownership transition involves structuring a deal in which management uses the assets of the business to finance a significant portion of the purchase price. This can work for an owner who believes in the management team and thinks it will be able to keep the business thriving when he/she exits. However, if the management team lacks adequate liquidity, the seller may have to accept a lower price or unattractive deal terms, including heavy seller financing.

Sell to Partners

When the owner has partners and a quality buy-sell agreement, a sale to partners may be the only selling option. A buy-sell agreement generally articulates a controlled process for transferring ownership. Since the buyers fully understand the business and it's a planned process, selling to partners generally isn't too expensive. Common challenges in selling a business to partners include a lower sale price, slow transfer of proceeds and potential disagreements among partners.

Sell to Employees (ESOP)

When an owner wants to sell the company to its employees, an employee stock ownership plan (ESOP) might be the answer. In this type of sale, the company uses borrowed funds to acquire shares from the owner and contributes the shares to a trust on behalf of the employees. ESOPs require a securities registration exemption and are classified as an employee benefit, so it's an involved process. An ESOP sale takes many years to complete and is generally more expensive and complicated than other options. However, it can be a way to reward valued employees with company ownership. The tax savings to the seller can be substantial as well.

Sell to a Third Party

When the business is healthy and the owner wants to cash out, selling to a third party could be a good option. Whether the interested party is a strategic buyer, a financial buyer or a private equity group, the owner should expect to pay some big up-front costs to engage experienced professionals to guide the owner and company through the selling process. Having the right partners attending to the owner's interests, negotiating with the buyer and structuring deal terms are crucial to achieving the best outcomes.

Although the payoff can be attractive, third-party sales are not for the faint of heart. The process takes at least nine to twelve months and can be intense and emotional for the seller. Often, the seller retains some obligation to the business beyond the sale but has to be ready to give up control entirely. A third-party sale is ideal for an owner who is open to having the buyer bring new energy, ideas and change to the business.

Recapitalization

An owner who is open to having outside investors fund the company's balance sheet might consider bringing in a lender or equity investor to act as a partner in the business. By selling a minority or majority position, the owner can partially exit, monetize a portion of the business and reduce ownership risk in the company. New growth capital can bring more earnings to the original owner. When ready to exit the company completely, the original owner might sell the remaining shares through further recapitalization or another exit option.

Selling any portion of the company to an outsider can precipitate a loss of control and a cultural shift within the company. An owner who is not ready to be accountable to partners should consider this before opting to recapitalize.

2. How long before retirement should I begin thinking about my exit?

Ideally, business owners should start thinking about their exit strategy at least five to ten years before their intended retirement. This period allows for comprehensive planning that can influence key outcomes of the eventual sale. Value-building initiatives need time to succeed and show results before they can impact sale proceeds (valuation optimization). Identifying and grooming a successor — whether a family member, a key employee or an external buyer — is generally most effective over an extended period (succession planning). Structuring the business and the sale to maximize tax efficiency and comply with legal requirements is an involved process (legal and tax planning). Finally, strengthening the business's operations and financial health can make it more attractive to potential buyers (operational improvements).

3. What steps should I take to optimize valuation and transition?

Optimizing your business's valuation and ensuring a smooth transition involves several strategic steps. First, conduct regular financial audits to present clear and accurate financial statements; transparency is key to attracting serious buyers and securing a favorable sale price. Next, take a look at opportunities to enhance operational efficiency to demonstrate the business's profitability and growth potential. This might involve adopting new technologies, improving processes or cutting unnecessary costs. Another crucial step is to develop a strong management team that can operate independently, as a business that doesn't rely solely on the owner is more attractive to buyers. Solidifying relationships with key customers and suppliers is also important, since long-term contracts and stable relationships add value and stability to the business. Finally, ensure the business complies with all legal and regulatory requirements. Any outstanding legal issues can deter buyers or lower the sale price.

4. What if a big part of my exit is going to be a sale or a partial sale?

If you are leaning toward a sale, either partial or complete, several considerations come into play. Engaging professionals is one of the first and most crucial steps. Working with experienced legal, financial and business advisors helps owners navigate the complexities of the sale process. Those professionals can also help with due diligence. Buyers will conduct thorough examinations of every facet of your business, including financial records, legal documents and operational data. Being prepared with detailed and organized documentation can facilitate a smoother due diligence process and instill confidence in potential buyers. This preparation not only expedites the sale process but also helps in presenting your business as a well-managed and transparent entity, which can lead to a more favorable sale price.

Identifying potential buyers is also a strategic consideration that can greatly influence the sale’s success. Depending on your business's nature and industry, potential buyers could be competitors, private equity firms or even international investors. Identifying and approaching the right buyers ensures that you attract parties who see the most value in your business.

5. How should I structure sale deals?

Structuring a sale deal requires careful planning and negotiation to balance your needs with the buyer's. This involves key elements like payment terms, which can be a one-time lump sum or installments. You might even consider seller financing, which can make the deal more attractive but comes with the risk of the buyer defaulting. Another option is to structure earn-out payments tied to the business’s future performance, which can bridge valuation gaps but require clear metrics and timelines. Noncompete agreements are often requested by buyers to prevent owners from starting a competing business post-sale, so ensure the terms are reasonable and don’t unduly restrict future options.

The structure of the deal can also significantly impact your tax liabilities. Understanding the tax implications of different payment structures is crucial, as installment payments may help spread the tax liability over several years. Work with wealth management advisors to explore strategies that could mitigate your tax burden. Experienced legal counsel can help you draft and review all agreements, focusing on representations and warranties to minimize future liabilities and ensuring provisions for indemnification to protect against potential future claims or disputes.

You will also have to decide whether you'll stay involved in the business after the sale, in either a consulting capacity or a more formal role. This can ease the transition and provide additional income, but it might also limit your ability to fully step away. Don't forget to consider how the sale aligns with your personal and family goals. Reflect on how the sale proceeds will be integrated into your overall estate plan, ensuring the structure supports your legacy and philanthropic goals. Also assess how the sale structure impacts your lifestyle and plans, whether it involves retirement, new business ventures or other personal endeavors.

The transition of a family business is a complex process that requires careful planning and execution. By asking your advisors the right questions, you can ensure a smooth and successful exit that secures your legacy and financial future.

Featured in Family Business Magazine.

Written by Elizabeth Anderson, Vice President at Whittier Trust. Elizabeth is based out of the Pasadena office and focuses on family business transitions, succession planning and pre-liquidity personal planning.

For more information, start a conversation with a Whittier Trust advisor today by visiting our contact page. 

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Feb 28th

Thinking of Selling Your Business? Sell Smart

Smart entrepreneurs look far beyond financials.

“The difference between great people and everyone else is that great people create their lives actively, while everyone else is created by their lives, passively waiting to see where life takes them next,” Michael E. Gerber wrote in his book, The E Myth. The sentiment applies to entrepreneurs approaching the impending sale of the business they built: They must create the most favorable conditions to achieve their desired outcome, which can go far beyond optimizing the balance sheet and achieving a high valuation multiple.

Business owners are used to looking at all sides of a transaction, and that skill comes in handy with the ultimate transaction–the sale of the business itself. It is vital to consider not only the financial and tax consequences of such a sale, but also the impact on one’s family situation, next generation planning, other business holdings, and charitable giving pursuits. When all is said and done, you want to know that you maximized opportunities, minimized regrets, and positioned yourself for a rewarding next chapter. This doesn’t happen without thoughtful and timely planning.

Keep these three things in mind so that you can sell smart when you sell your business:

1. Enlist help.

Oftentimes, that’s where a certified exit planning advisor can come in to help strategize and execute the steps leading up to, and following, a sale. At Whittier Trust, the oldest multifamily office headquartered on the West Coast, we take a holistic approach that prioritizes investments, family relationships, and tax, estate, and philanthropic planning. By spending time getting to know clients’ needs and goals, we’re able to help avoid obstacles and optimize results. Often, by taking this approach and thinking ahead, we seek to help them achieve the best results possible. We focus on surrounding the entrepreneur with Whittier and non-Whittier professionals who will collaborate to educate, strategize, and help the business owner exercise more control over personal, financial, and business outcomes that might otherwise be left to chance.

2. Look beyond the bottom line.

One way our Whittier Trust team helps entrepreneurial business owners navigate a potential sale is by doing a deep-dive to understand the impact the sale of the business may have on your business goals and your personal life. In addition to fact-finding about the business itself and how it’s structured, the team works to understand the motivations behind why you built the business, why you’re prepared to sell, and how to best achieve your goals for the future. Here are some questions to help get you started:

  • What prompted you to start the business in the first place?
  • Why are you thinking about leaving the business?
  • Do you have a timeline in mind for your exit?
  • What’s your vision of the ideal transition?
  • What personal or business objectives would you like to see accomplished in the transition?
  • How do you expect exiting the company to impact your life?
  • Do you want to stay involved in the business after the sale?
  • Do you expect any family members to remain active in the business?
  • Are you concerned about any family issues?
  • How do you expect your key employees to be impacted?
  • Are you concerned about any employee issues?
  • Do you anticipate any partner or shareholder issues?
  • How important is preserving the legacy of the business?
  • Have you identified a successor(s)?
  • Have you taken steps to formalize a transfer arrangement?
  • What are you most concerned about relative to the transition?
  • Have you had the business appraised in the last 12 months?
  • Have you worked with anyone to evaluate the health of the business?
  • How will exiting the business impact your personal financial situation?
  • Does anyone else depend on the business for income or financial support?
  • Do you currently have a wealth management consultant?
  • Do you have an estate plan?
  • Do you have a plan for optimizing tax efficiency and savings related to the transaction?
  • Have you estimated your cash flow needs after the transaction
  • To what extent do you expect to rely on proceeds of the sale to meet your post-transaction cash flow needs?
  • What are your post-sale goals?
  • Are there any family dynamics that might be a cause for concern when the sale happens?

3. Establish a realistic timeline.

This list of questions isn’t exhaustive, but it’s designed to help uncover risks and planning opportunities that are best addressed months, or even years, before the sale. Understanding your priorities is the first step in maximizing the success of your outcome.

Keep in mind that to increase your chances for a big win, it is essential that you coordinate with your professionals to tailor the results to your needs. At Whittier Trust, we have years of experience working with legal, accounting, and business advisory teams to ensure that the specifics of your deal will focus on the outcomes you seek from a holistic perspective. No two businesses are alike, just like no two families are the same, and we take pride in being the partner business owners can count on to pave the way for the result they want. Clients who have the most successful sales start thinking about the process early and focus on the personal results they want to achieve as well as the financial payout.

To learn more about how Whittier Trust can help you with the transition away from your business, start a conversation with a Whittier Trust advisor today by visiting our contact page.

From Investments to Family Office to Trustee Services and more, we are your single-source solution.

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Feb 5th

The Overlooked Key to Multigenerational Wealth: Proactive Estate Planning

For many ultra-high-net-worth individuals (UHNWIs), it's easy to believe there will always be time to address estate planning. The demands of running a business, managing investments and nurturing family relationships often take precedence. But estate planning isn't just about preparing for the inevitable; it's about ensuring your wealth survives — and thrives — for generations to come, even in the face of unexpected events.

At Whittier Trust, I've seen too many situations where a lack of proactive planning has created unnecessary stress, conflict and financial strain for families. The good news? With a thoughtful, early approach to estate planning, these crises can often be avoided. Here are some of the critical lessons I've learned from my years in estate planning and wealth management.

Why Early Action Matters

Waiting to address estate planning until it feels urgent is a common mistake. It's human nature to focus on immediate priorities, but this approach leaves families vulnerable to the unexpected. One of the most overlooked aspects of estate planning is ensuring that the right legal structures are in place to address unforeseen circumstances, including incapacity.

Imagine a scenario where a family patriarch or matriarch — the key decision-maker — suffers a sudden illness or accident that renders him or her unable to manage the family's financial affairs. Without a plan in place, this can lead to delays in critical decision-making, confusion over who has the authority to act, and even costly legal battles. Such crises can strain family relationships and jeopardize the wealth that generations worked hard to build.

The consequences of failing to plan for the unknown can be significant. In one case I handled, a family member serving as trustee began losing capacity — repeatedly requesting the same distribution within days, forgetting she had already done so and that it had already been fulfilled. It became clear that she could no longer reliably fulfill her responsibilities, but determining her incapacity and appointing a successor trustee created tension, confusion and delays — three things you never want in the financial world. Without a clear plan, these situations can lead to family conflicts and financial risks, all of which could have been avoided with proactive estate planning.

This is also where powers of attorney play a critical role. Many people assume that simply having a document in place is enough, but these agreements often lack the flexibility to optimize the estate for tax purposes. For example, most powers of attorney grant authority only to make annual exclusion gifts (currently $18,000 per recipient). However, more comprehensive provisions can allow an attorney-in-fact to gift beyond this amount, potentially reducing estate tax burdens significantly. Without this foresight, families may miss critical opportunities to minimize taxes and preserve wealth.

The Hidden Risks of Family Trustees

Another common challenge arises when families don't take the time to fully understand their options and appoint relatives as trustees. While it may seem like a natural choice to entrust a loved one with managing your estate, this can lead to unforeseen complications. Family members serving as trustees are often unprepared for the legal, financial and emotional responsibilities the role entails. Worse, they may face undue influence or capacity issues that compromise their ability to act in the best interests of the estate.

As an unfortunate example of undue influence, a patriarch serving as trustee became entirely dependent on a caregiver for his daily needs. This caregiver isolated him from his daughters, changed the locks on his home and persuaded him to create a trust for the caregiver's grandchildren. Such scenarios are heartbreaking but also preventable with the appointment of a corporate trustee.

Corporate trustees can offer an impartial, professional alternative. Unlike family members, a corporate trustee doesn't age out, lose capacity or develop emotional conflicts of interest. This neutrality preserves healthy family relationships and ensures fiduciary responsibilities are upheld.

Beyond the logistical benefits, a proactive estate plan can mitigate the emotional strain that often accompanies wealth transitions. For example, I worked with a family that inherited a strip mall in Los Angeles. Purchased by their grandparents, the property was deeply sentimental to one sibling, but financially burdensome to the others. Despite a lucrative offer to sell, the emotional attachment of the sibling serving as trustee created a rift that took years to heal.

A corporate trustee could have handled the situation differently, prioritizing the long-term financial well-being of all beneficiaries. By removing emotions from decision-making, corporate trustees can help families avoid these types of conflicts, fostering unity instead of division.

Protecting the Next Generation

One of the most meaningful aspects of estate planning is preparing the next generation to manage the wealth they inherit. This involves more than financial education; it's about instilling values and fostering stewardship. Trust provisions can be structured to encourage responsible behavior, support charitable giving and provide for future generations without creating dependency.

By engaging in open conversations about your intentions, you can help your heirs understand their roles and responsibilities. This transparency reduces the likelihood of misunderstandings and ensures your legacy is managed in a way that aligns with your vision.

A Call to Action

As UHNWIs, you have the resources and influence to shape your family's future for generations. Don't let procrastination or a false sense of security jeopardize the legacy you've worked so hard to build. Proactive estate planning is not just about protecting assets; it's about preserving relationships, minimizing stress and creating a roadmap for your family's continued success.

Whether it's revisiting your powers of attorney, appointing a corporate trustee or ensuring your trust provisions reflect your values, every step you take today can prevent potential crises tomorrow. Estate planning may not always feel urgent, but its impact on your family's future cannot be overstated. As someone who has spent decades helping families navigate these complexities, I can't emphasize enough the importance of starting early.

Sharon Perlin is a Senior Vice president and Client advisor at Whittier Trust's Seattle Office, which celebrates its 25 anniversary this year.

Featured in Family Business Magazine. For more information about proactive estate planning, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

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Jan 21st

Whittier Trust Celebrates 60 Years in the Pacific Northwest

Company Proudly Marks 25th Anniversary in Seattle 

Whittier Trust, the oldest multi-family office headquartered on the West Coast, celebrates two major milestones in 2025: 60 years of service to the Pacific Northwest and the 25th anniversary of our Seattle office. Our legacy in the Pacific Northwest began in the 1960s with founder Paul Whittier's vision and passion for the region. With a rich history and an enduring commitment to clients, Whittier Trust has been a trusted partner to generations of families and local community organizations throughout Puget Sound.

“As we celebrate six decades in the Pacific Northwest and 25 years since opening our Seattle office, we are immensely proud of our rich history and enduring commitment to our clients and the region’s future,” says David Dahl, President and CEO of Whittier Trust. “We look forward to upholding our dedication to excellence and delivering tailored wealth management, family office and trust services for generations to come.”

The Whittiers were visionaries who recognized the potential of the Pacific Northwest. Their passion for the region’s natural beauty initially led them to Goudge Island in British Columbia, which they purchased in 1949, and then to the San Juan Islands, where they dedicated themselves to philanthropic endeavors. 

Today, Whittier Trust’s support of local organizations—including the Friday Harbor Airport, Seattle’s Museum of Flight, San Juan Airlines, Shuttle Express and the San Juan Community Theater—continues to leave a lasting impact on the community. The Whittier Trust team remains actively engaged in supporting these vital entities.

“Paul Whittier’s vision to expand our family office, wealth management and trust services to multi-generational families in the Puget Sound region—anchored by the values of duty, loyalty and commitment—continues to inspire us as we build on our strong foundation,” says Nickolaus Momyer, Northwest Regional Manager, Senior Vice President and Senior Portfolio Manager at Whittier Trust. “We are proud to honor the Whittier Family’s legacy by delivering innovative solutions and personalized service to our clients.”

To view a timeline commemorating the Whittier family’s legacy and Whittier Trust’s impact throughout the region, click here.

Beyond its impact in the Pacific Northwest, Whittier Trust is globally recognized by the Society of Trust and Estate Practitioners (STEP) as one of the top five multi-family offices in the world. The company has also been named one of Washington’s 100 Best Workplaces by the Puget Sound Business Journal, underscoring the company’s dedication to cultivating a positive, productive work environment that empowers its team to exceed client expectations.

Throughout this year, Whittier Trust will host several events and programs to deepen relationships with clients, their families and the local community. Follow Whittier Trust on LinkedIn to learn more about these initiatives and how the company plans to honor this commemorative year. 

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For more information about Whittier Trust's wealth management, estate planning and family office services, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

 

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Jan 17th

Strategic Wealth Planning for UHNWIs for the Second Trump Administration

The new year will present challenges and opportunities for ultra-high-net-worth individuals as they re-evaluate their portfolios and long-term financial plans in light of President-elect Donald Trump’s incoming administration. Strong partnerships between UHNW clients and their advisors will be essential during this transition and the ensuing four years. Proactive planning will be key, especially given potential shifts in tax laws, market dynamics and interest rates.

Tax Law

Before Trump’s election in November, many ultrawealthy families were scrambling to optimize their estate plans ahead of the scheduled sunset of the Tax Cut & Jobs Act to take full advantage of exemptions while they remained in place and to adjust estate plans when and if those exemptions reverted at the end of 2025.

The policy uncertainty in 2024 paved the path for families and their advisors to give more consideration to their legacy and how it will affect their extended family in the future. The impending tax law change forced conversations around important estate planning considerations such as dispositive provisions, age attainments, and wishes for the use of the hard-earned wealth for future generations. The difficult decisions around the mechanics of intergenerational wealth were front and center leading up to the election.

However, with the incoming administration, it’s likely that the TCJA will be extended or even made permanent. UHNWIs and their advisors should continue to review their estate plans and build on those important conversations despite having more time to approach their plans strategically.

This extended horizon also allows for a renewed focus on aligning investments and real estate strategies with enduring goals, emphasizing tax efficiency, diversification and legacy planning. Advisors should take this opportunity to evaluate the use of tax-advantaged structures, optimize trusts and consider philanthropic vehicles that can minimize tax burdens while fulfilling broader family objectives.

Market Dynamics

From deregulation to policy shifts on renewable energy sources to protectionist economic policies, Trump’s election will hold many implications for investors and their portfolios.

The stock market’s reaction to the election results was initially positive. The day after the election, 3 in 4 companies traded higher, with the three major indices reaching record highs. As investors digested the possible policy changes under the new administration, markets in November saw a strong post-election rally, led by small-cap stocks and supported by gains in large-cap indices. However, recent Federal Reserve interest rate cuts and signals of a cautious monetary policy approach for 2025 have sparked turbulence, with major indices like the Dow, S&P 500 and Nasdaq experiencing sharp declines in mid-December.

Projected winners are expected beneficiaries of deregulation including banks; energy-related companies (especially in the liquified natural gas space); cryptocurrencies, particularly bitcoin; technology companies facing increased anti-trust exposure; and Tesla with Elon Musk leading the newly formed Department of Government Efficiency, or DOGE, committee.

Projected losers are companies in the renewable energy space, including EVs not owned by Elon Musk and utilities invested in renewable energy sources. Other losers, given Trump’s protectionist platform, include international companies broadly, and China specifically.

It is still unclear how the markets will treat healthcare companies. Managed care organizations initially saw a bump in anticipation of a hoped-for easing in pricing scrutiny.  Since the election, MCOs have been selling off (CVS Health’s Stock has fallen 24% in December with UnitedHealth Group and Cigna Group also experiencing substantial declines), with the expectation that they may be more heavily scrutinized if Robert F. Kennedy Jr. is confirmed to head the Department of Health and Human Services. The industry-level volatility may create opportunities for investors with the ability to tolerate short-term pricing aberrations if the policies are more moderate than feared.

Seriously, Not Literally

As the markets react and overreact to policy decisions, we are reminded that the new administration should be taken "seriously" but not "literally." Advisors and clients should keep in mind that administrations rarely achieve everything they set out to do. The challenge will be to react to a broader understanding of what the administration intends to focus on rather than fearing the most radical proposal or enacted policy.

Regardless of what policy shifts come to pass, the time-honored values of successful planning remain the same: prioritizing long-term strategies, tax efficiency and high-quality companies. It’s important for the advisor to encourage clients to stay disciplined, avoid being too hasty to react, and emphasize strategic consistency within a portfolio.

Having said that, it’s also important to communicate often with clients about shifts and expected changes within market cycles, as there are opportunities to be seized within any market environment.

Caleb Silsby is the Executive Vice President, Chief Portfolio Officer at Whittier Trust, overseeing a team that collaboratively manages portfolios for high-net-worth clients, foundations, and endowments. He is credentialed as a CFA Charterholder and CFP professional.

Featured in Barron's. For more information about private market investments, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

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Nov 26th

Wealth Education: Fall Back Into Financial Discipline and Secure Your Family’s Future

As the fall season and the upcoming new year usher in a sense of fresh beginnings, they provide an ideal opportunity to revisit an essential aspect of family wealth: preparing younger generations to manage and preserve it responsibly. Just as students gain knowledge for their futures, educating heirs about financial discipline and responsibility equips them to handle the complexities of wealth. This season is a perfect time to embrace a mindset of renewal and growth in family wealth education, establishing a legacy that will benefit future generations.

Wealth education is a crucial element of estate planning, empowering heirs to understand and build upon the foundation their families have established. Here are five strategies to create a culture of financial responsibility and stewardship within your family, and how Whittier Trust’s family office services can play an influential role in your journey.

1. Start Early

Integrating financial education at an early age is paramount to personal development. Foundational skills like budgeting, saving, and investing can be tailored to fit each stage of development, ensuring that wealth management becomes second nature. These early lessons should progress from simple financial activities, such as managing allowances or setting savings goals, to more complex discussions and experiences that develop a lifelong understanding of prudent wealth stewardship. Fostering these responsible habits will set your children up for success, supporting their futures in many ways.

2. Create a Family Legacy

 True wealth education extends beyond numbers; it instills a deep-rooted understanding of hard work, family values, responsibility, and philanthropy. Children should be taught that wealth extends beyond financial capital—it represents the power to create, impact, and foster societal change. Family discussions centered around shared goals, charitable initiatives, and community contributions not only reinforce these values but also inspire a sense of purpose that transcends material wealth. 

3. Involve Advisors

Navigating the multifaceted nature of wealth management requires expertise, and a family office can play a vital role in supporting families through this journey. Engaging trusted advisors provides heirs with guidance that goes beyond family conversations, introducing them to the nuances of wealth management from a professional standpoint. At Whittier Trust, our team of advisors works alongside families to guide them in creating structured wealth education, ensuring heirs receive advice that reinforces family values and clarifies their financial responsibilities.

4. Foster Open Communication

Effective wealth stewardship is built on a foundation of open communication. Transparent discussions about the complexities of managing significant assets help develop a clear understanding of roles and responsibilities within the family structure. By encouraging questions and facilitating conversations about wealth, families create an environment where heirs feel empowered to participate actively and responsibly in managing the family estate. Such dialogue mitigates potential future conflicts and reinforces a unified family approach to wealth.

5. Embrace Continuous Learning

Financial education should be an ongoing process, with each generation adapting to new financial landscapes and personal milestones. Incorporating continuous learning into family life—through discussions, advisor-facilitated workshops, or shared learning activities—ensures that heirs remain well-prepared to manage their assets as circumstances evolve. This commitment to lifelong learning fosters resilience and a proactive mindset, hallmarks of responsible and adaptive wealth management.

As you look to the future, consider how investing in wealth education can fortify your family’s legacy. By instilling these principles, families create a framework for future generations to navigate their financial responsibilities with acumen and respect for the values that define their family. By embracing these strategies, supported by Whittier Trust’s comprehensive expertise, families can establish a tradition of disciplined wealth stewardship that secures their prosperity and purpose for years to come.

To learn more about wealth education and the stewardship a multi-family office can offer future generations, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

 

 

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Nov 18th

Weathering the Storm: Preparing for the Unexpected in Wealth Management

In a world where sudden shifts are inevitable, natural disasters such as the recently devastating Hurricanes Helene and Milton are powerful reminders of life’s unpredictability. Such events highlight the importance of robust financial preparation for ultra-high-net-worth individuals (UHNWIs), especially on the West Coast—an area prone to natural risks. While personal disaster preparedness is key, UHNWIs should also focus on “storm-proofing” their estates and real asset portfolios. Just as it's necessary to reinforce a home to withstand a hurricane, safeguarding wealth from the unexpected requires a strategic approach. Proactive wealth planning can act as a financial safety net, helping to ensure financial resilience against both environmental and economic storms and unforeseen complications.

What Are The Challenges For An Estate?

Earthquakes, wildfires, and other natural disasters can create challenges for property, businesses, and financial portfolios. In 2020 alone, OEHHA reported that California experienced a record high of 4.2 million acres burned, which was more than 4% of the state's land. As of October 22, 2024, Cal Matters has recorded 1,708 structures that have already been destroyed by wildfires this year. The California Department of Conservation also estimates that the state's annual earthquake loss is around $3.7 billion. 

UHNWIs are advised to consider not only that real assets could be in danger but a broad spectrum of risks—including family challenges, market volatility, and even potential economic disruptions—that could impact their financial well-being. By aligning wealth management strategies with these regional threats, UHNWIs can create more resilient financial plans.

Staying Ahead of Risk: You May Not Be Thinking About It, But a Good Advisor Is

Ultra-high-net-worth families and individuals already have much to consider, and while they’re deeply invested in managing their estates, they may not fully grasp the range of challenges that could impact their assets. In other words, people often don’t know what they don’t know to look for. Fortunately, multi-family offices and experienced advisors do, and it’s proven to be a sound practice to trust long-term preparation and proactivity to the professionals. 

As an example and an area of focus often impacted by “Acts of God,” Whittier Trust helps clients stay on top of essentials like insurance, ensuring that their coverage matches the current value of their properties, collections, and other real assets and is comprehensive enough to mitigate for any number of events. Proper coverage for homes, collectibles, and other valuables is essential in regions prone to earthquakes and wildfires, where the cost of damage can quickly escalate. Additionally, business owners may need specific policies to protect against disruptions from natural events, ensuring continuity and stability despite environmental challenges. The peace of mind that comes with knowing your family office has thought through every detail—both expected and unexpected—means clients can focus on their passions, families, and future without worry. It’s about being able to enjoy the present, knowing the future is secure.

For ultra-high-net-worth families, a trusted family office does more than manage finances—it handles the day-to-day, so clients can focus on what truly matters, while also preparing for the unexpected. A family office like Whittier Trust is dedicated to looking out for every aspect of a client’s wealth, anticipating needs they may not even be aware of, from tailored insurance coverage to proactive asset protection.

Protecting Real Estate Assets

Real estate can be an impactful asset, but it comes with its own set of risks—especially in regions prone to natural disasters. For the same reasons that Whittier Trust portfolio managers diversify to mitigate the effects of market instability and disaster-related threats on investments, Whittier Trust understands these challenges and takes a “storm-proofing” approach to managing real estate portfolios. This means not only diversifying locations but also selecting properties and investment strategies that can weather market and environmental changes. What sets Whittier apart is their in-house real estate team, which actively manages assets with an eye toward both protection and growth—a unique benefit few family offices offer.

Communication and Education: Ensuring the Family Is Prepared

Preparing for the unexpected isn’t just about securing assets; it’s also about ensuring that family members are prepared. Whittier Trust holds firm to the belief that open communication and education are essential. Our team understands the unique dynamics of family relationships and helps navigate these to promote cohesion and clarity, particularly in times of change or uncertainty. By working closely with families to keep them informed on the protections and strategies in place—from insurance to estate plans—we ensure that each member understands their role and responsibilities in case of an emergency.

Empowering the next generation with financial stewardship education is also a crucial piece of preparation that multi-family offices and wealth management advisors employ to ensure younger members of the family are ready to take on future challenges and responsibilities. Family meetings led by Whittier Trust advisors not only keep everyone informed and engaged but also foster a culture of resilience across generations, making it easier to adapt and respond effectively to the unexpected.

Estate Planning: The Silver Bullet of Preparedness

Estate planning is one of the most valuable tools for preserving family wealth against all manner of challenges. Whittier Trust focuses on creating estate plans that account not only for life’s expected transitions but also for impactful natural events and sudden changes within the family or Family Business. A comprehensive estate plan includes everything from trusts and charitable foundations to provisions for asset distribution and protection in unexpected circumstances. Our goal is to ensure that, no matter what happens, your family’s vision is safeguarded, and your legacy is protected for generations to come.

By working with a multi-family office to prepare for both expected and unexpected events, UHNWIs can build resilience and confidence, allowing them to weather not only financial storms but also life’s inevitable shifts with stability and foresight.

To learn more about how an experienced multi-family office can help protect your assets, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

 

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Nov 14th

Assessing the Need for a Family Office or Transitioning an Existing One

For individuals and families of significant wealth, managing a substantial portfolio of assets and investments demands a sophisticated and comprehensive approach. From financial planning and asset management to legal and tax strategy, risk mitigation, and multi-generational legacy preservation, there are myriad intricate factors to navigate. This growing complexity has led many affluent individuals and families to establish private family offices—exclusive firms dedicated entirely to addressing the distinct challenges of significant wealth.

Family offices can take various structural forms. Sometimes, these offices evolve organically within a family-owned business over time to meet specific family needs. In other instances, they are established through a family-controlled holding company, often following a significant liquidity event or wealth transfer. Alternatively, they may be operated by a professional multi-family office firm, such as Whittier Trust, servicing the needs of multiple wealthy families collectively.

Regardless of their particular structure, family offices function as the private wealth management and advisory teams for ultra-high-net-worth individuals and families. Their primary goal is to centralize the comprehensive management and stewardship of substantial family assets. These offices offer a range of services, including investment management, estate planning, philanthropic guidance, tax planning, accounting/bookkeeping, real estate administration, and family business oversight. However, most tend to specialize in a few core areas based on the family's specific situation.

The evolution and particular needs of a family office can vary greatly depending on factors like whether the family operates an active business, their generational status, any significant past liquidity events, and the extent of their philanthropic goals. For families led by first-generation wealth creators, the office may concentrate operationally on accounting, bookkeeping, taxes, and growing the founder's assets. Transparency and outside advisory involvement can be more limited.

Families undergoing a liquidity event, such as selling a business or transferring to subsequent generations, often require more comprehensive services. This includes support with multi-generational wealth transition, estate and tax planning, family governance, and philanthropic engagement. Embracing change and collaborating with specialist advisors during this phase is key.

For families with an office spanning multiple generations after a full wealth transition, the focus may shift to maximizing core competencies like investments or charitable activities. These well-established offices rely heavily on robust governing protocols and targeted outside expertise. However, given the private nature of family offices, it can be difficult for them to find opportunities to share ideas and gain outside insight.

Defining family offices presents a challenge, as the industry's interpretation varies widely based on perspectives and context. As the saying goes, "If you've met one family office, you've met one family office." Each is uniquely tailored to individual client needs, current stage, and philosophies regarding legacy and wealth management. Understanding these nuances is crucial for affluent families assessing whether to establish a centralized family office or transition an existing one.

Families can face significant challenges when it comes to structuring a new family office, modifying an existing office, or winding down operations due to the retirement of key employees or shifts in priorities. The cost of setting up or maintaining a single-family office can start at $1.5 million annually and increase substantially from there. Additionally, the ability of a single-family office to adapt to rapidly changing landscapes in areas like cybersecurity, compliance, and technology efficiencies can be costly or difficult to implement effectively.

Partnering with a multi-family office like Whittier Trust can allow families to still look and feel independent while gaining enhanced benefits from leveraging an institutional-caliber platform. These firms provide families with seamless access to sophisticated resources, dedicated expertise across all wealth disciplines, and a permanent governance framework able to evolve with the family's needs over generations—all often with a significant decrease in overall operating cost.

Knowing when and where to partner with a firm that can provide scale, deep resources, and specialized implementation capabilities is vital for affluent families navigating critical family office decisions. By consulting seasoned multi-family office professionals well-versed in the entire lifecycle, families can gain invaluable guidance tailored specifically to their circumstances and long-term goals.

Written by Whit Bachelor, Senior Vice President, Client Advisor at Whittier Trust. Whit is based out of the Newport Beach Office .

Featured in the Las Vegas Review Journal. For more information about how Family Office services can bennefit your family, start a conversation with a Whittier Trust advisor today by visiting our contact page.

 

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