For millions across the country, the 2026 midyear mark is as much a time for financial planning as it is for celebration. This summer marks America's 250th birthday — a historic milestone for our country's independence.

But while the nation was founded on a rebellion against unfair taxes, tossing your computer into the nearest harbor probably wouldn't work when it comes time to pay the IRS; December 31st is the final deadline for most 2026 tax year money moves.

Instead, you might just want to look to the wisdom of founding father and financial thinker, Benjamin Franklin, this planning season.

Franklin famously noted that, "nothing can be said to be certain except death and taxes." And though you can't escape either, you can control how much you overpay the government.

By applying Ben Franklin's wisdom to midyear tax planning today, you could help secure your retirement nest egg, fund intergenerational wealth, and potentially lower your tax bill in 2026. Here's how.

1. "The Doors of Wisdom are never shut."

Popularized in the 1755 edition of the Almanac, Franklin quoted this proverb to challenge the status quo in how we do things; it's easy to fall into a routine of wash, rinse, and repeat.

But routinely doing your taxes the same way every year can cost you. Gain a little midyear tax wisdom through the following ways:

• Learn midyear strategy. You don't have to wait until April to learn a new tax strategy. Platforms like the IRS Video Learning Portal and tax software academy portals offer free, year-round webinars to help you spot planning opportunities before the year-end deadline strikes.
• Revitalize your filing plan. Your revenue streams may change, and so should your taxes. For instance, if your financial situation has simplified, you might no longer need an expensive tax professional anymore. Alternatively, if you've bought property or started a business, doing taxes yourself might cause you to overlook certain tax deductions and credits.
• Save with free tax tools. There are several ways to file your taxes for free each year. For example, the IRS reports that millions of taxpayers have saved over a billion dollars collectively using IRS Free File alone. Evaluate free filing tools available to you now, while you're outside of the chaotic tax season stress.

2. "Beware of little expenses; a small Leak will sink a great Ship."

In the Almanac, Poor Richard warns that "a little punch" or extra tea now and then might seem like "no great Matter," but accumulated tiny expenses can sink your long-term financial ship.

In terms of midyear tax planning, the lesson is simple: Don't miss the small stuff. Now is the perfect time to audit your tax records before the end-of-year holiday chaos.

• Audit your health accounts. Check your Flexible Spending Account (FSA) or Health Savings Account (HSA) balances. Ensure your medical procedures, prescriptions, and qualifying purchases are properly documented with clean receipts (no matter how small), and budget out your remaining FSA funds if your plan has a strict year-end deadline.
• Track new tax provisions. If you plan on claiming provisions from the 2025 Trump tax bill, tracking documentation is key. For example, the car loan interest deduction allows you to deduct up to $10,000 in interest, but only if the vehicle was bought new, is used primarily for personal use, and had its final assembly in the U.S. Make sure you qualify for all the tax deductions and credits you plan on claiming.
• Organize the paper trail. Start digging through your kitchen junk drawer or email folders. You'll want to make sure you have your tax mileage log on file if you're, say, a ride-share driver, or have your gambling tax documentation if you've placed a bet this year. Start the family's designated "tax folder" now to avoid unnecessary stress later.

3. "Early to Bed and early to rise, makes a Man healthy, wealthy, and wise."

Printed in the 1735 edition of the Almanac, this phrase originally praised the discipline of an industrious lifestyle. Let's modernize that approach and polish it into a midyear tax mantra:

"Early to check and early to optimize makes you more planned, less stressed, and energized."

Corny, sure.

But a midyear checkup ensures you aren't accidentally giving Uncle Sam an interest-free loan — or worse, setting yourself up for an IRS underpayment fee or penalty. Here's the phrase broken down:

For more information on how to plan your tax payments and optimize your withholdings, check out Kiplinger's reports on Estimated Tax Payments and 13 Things Every Worker Needs to Know About Withholding.

4. "Having been poor is no Shame, but being ashamed of it is."

Printed in 1749, this quote reminds us that financial struggle is often a consequence of shifting circumstances, not a lack of virtue. In tax planning, knowing how to handle these financial pivots — and leveraging the IRS code to protect your downside — can be a key tool in your tax toolbelt.

Here's how we can relate that to our midyear tax planning strategy:

• Harvest your investment losses. Know when a position isn't working out. Through tax-loss harvesting, you can sell underperforming equities to counteract your capital gains. If your losses exceed your gains, you can use them to offset up to $3,000 of ordinary income, carrying the rest over to future years.
• Strategize charitable giving. If you want to support a cause close to your heart, plan those donations now rather than scrambling in December. Strategizing early helps you maximize itemized charitable deductions and navigate the new 2026 rules on charitable giving.
• Utilize a QCD. If you're age 70½ or older, you can make a qualified charitable distribution (QCD) directly from your IRA to an eligible charity. This counts toward your required minimum distribution (RMD), the minimum annual amount you must withdraw after reaching a certain age, and also helps keep that money out of your AGI, potentially lowering your tax bill.

5. "Money can beget Money, and its Offspring can beget more."

Moving away from the Almanac, this quote comes from Franklin's 1748 essay, "Advice to a Young Tradesman." Franklin was explaining compound interest, noting that money is of a "prolific generating nature."

Retirement accounts and legacy planning are perfect examples of compounding wealth while avoiding high taxes. And midyear is a great time to double-check that your savings vehicles are on track.

• Maximize pre-tax contributions. If you're currently working and in a higher tax bracket than you expect to be in retirement, maximize your traditional 401(k) or other traditional IRA contributions now. It lowers your taxable income today and gives you more immediate cash flow to save or invest. Later, when your federal tax bracket is (hopefully) a little lower, you'll be taxed on the contributions when you withdraw them.
• Plan the "perfect" Roth conversion window. If you anticipate an upcoming low-income year — maybe you're freshly retired but haven't started drawing Social Security or reaching your RMD age yet — plan a potential Roth IRA conversion ahead of time. Converting traditional retirement funds into a Roth during a low-income year allows you to pay a low tax rate on the conversion, but while there are six reasons to convert to a Roth, there are reasons not to.
• Evaluate your estate tax plan. Check in with your financial advisor about your new estate tax exemption amount. Are you optimizing for the stepped-up basis of inherited assets, leaving appreciated equity without capital gains after death? Also, review whether you should use the annual gift tax exclusion to pass tax-free assets to children or grandchildren in 2026.

From shifting brackets to new legislative bills, tax planning is typically a moving target that requires at least a bi-annual checkup.

While a great financial professional can help you tailor these moves to your specific roadmap, keeping these five pieces of financial wisdom in mind may help you avoid being caught off guard and keep you focused on what matters most this summer — celebrating.

Happy planning!

This article is for informational purposes only and does not constitute professional tax or financial advice. Tax laws (including state taxes) are subject to change and vary by individual circumstances. Consult with a qualified tax professional regarding your specific situation.

Explore More

• Here's the age at which most Americans hire a pro to do their taxes.
• Ever heard of the rubber duck rule of retirement tax planning?
• Vacationers: Pack these 11 travel items that are totally HSA-eligible.

Dear Wealth Wise: I'm 46 with two teens. I'm debt-free, own my home outright plus three rentals, and have a $5 million portfolio that I actively manage across diversified markets. I live well below my means, am extremely frugal, and do most repairs myself. I met a great partner (48) who also has two teens, owns a home with a mortgage, has a great job with a pension in six years and has a 401(k) worth $400K. He spends way more freely than I do. We're discussing the future but have different views on money and different asset levels. How can I protect myself and my kids?
— Cautiously in Love

Dear Cautiously in Love: Meeting a romantic partner later in life can be a wonderful but challenging thing, especially if there are kids in the picture. Blending families isn't easy, especially when navigating the already tricky teenage years. Here's what the experts have to say about her situation.

A prenuptial agreement is key

When you have two people entering a potential marriage with very different levels of wealth, it's natural to want to protect yourself, as well as your children.

Julia Rueschemeyer, a Massachusetts-based divorce lawyer, says, "If you are planning on getting married, the best and only way to protect yourself is to do a prenuptial agreement. This can spell out exactly what would happen financially in the case of divorce, and it would trump any state laws about division of assets and alimony."

The challenge is that prenups can have a negative connotation, but it's important to recognize that signing a prenup isn't inviting your marriage to fail. It's simply a way to protect yourself, especially since some states have very strict laws about how assets are divided in the event of a divorce.

As Rueschemeyer cautions, "[Massachusetts] state law says that a judge can take any and all assets of one party from before or during marriage and give them to the other party. Only a prenuptial agreement protects you from that."

Don't be afraid to keep some of your finances separate

It's clear that frugality has played a role in your financial success. That's why Kristyn Carmichael, professional mediator, family attorney, and certified divorce financial analyst at Couples Solutions Center, says it might be a good idea to keep some of your finances separate, especially if you and your partner tend to have different views on spending.

"Many of my clients are in this exact situation," she says. "Anything they bring into their marriage is kept separate property. They open a joint bank account that is for agreed upon joint expenses. ... They determine their budget for these expenses and contribute to the account either equally or in proportion to income on a monthly basis."

From there, though, all other expenses, such as individual costs for hobbies, shopping, solo vacations and kid-related expenses, should be paid from their own accounts, Carmichael advises. That way, there doesn't have to be resentment about how much is being spent. In addition, each person retains autonomy without having to consult the other.

This could lead not only to cleaner finances but also to a more harmonious relationship.

Put the right estate planning documents in place

In addition to a prenup, Carmichael says it's important to have your estate-planning wishes documented.

"You will also want a will and trust in place to protect your children individually," she says.

Carmichael says that a trust, for example, might come into play if one of you moves into the other's home.

"If the owner of the home were to pass away," she says, "they [could] will the home to their children but leave a clause that their partner can live in the home for up to a certain amount of time. This allows that person time to grieve since they lost their partner without being kicked out of their home, giving them a transition period while also retaining the children's interest in the asset."

Rueschemeyer says a revocable trust could be a particularly powerful tool in this situation.

"Real estate in a revocable trust does get the step-up in basis when the owner dies," she says. "The heirs pay capital gains only on increases in value from the time the property passes to them until they sell it."

Finally, our reader might consider a qualified terminable interest property or QTIP trust, which is especially helpful for blended families. A QTIP would allow her to provide lifetime income for her husband if she dies first, while legally ensuring that the remaining principal ultimately goes to her children, not his.

Talk to a counselor to avoid financial conflict

It's clear that you and your partner view money differently, and there's nothing wrong with that. You don't need to have the exact same financial philosophy to make a marriage or long-term relationship work.

That said, Rueschemeyer suggests, "Besides getting a prenup, you should meet with a relationship counselor to talk about money before you get married. This could help you talk about your financial habits and aspirations and come to a better understanding and appreciation for each other.

Counseling could also give you the coaching you need to talk about money openly, Rueschemeyer says, so you can enjoy it in your relationship rather than have it become a source of conflict.

A word from Wealth Wise

We understand our reader's concern about protecting her considerable assets in a new marriage, but we aren't convinced that her love interest is a financial slouch. With savings of $400,000 in his 401(k), he has amassed a much larger 401(k) balance than the average 40-something in the U.S., which was $140,000 in the first quarter of 2026.

Moreover, he has a pension, a good job and owns a home, which demonstrates financial discipline and a commitment to a solid retirement. He might feel more comfortable spending money than she does simply because they grew up in different financial circumstances or cultures.

For that reason, we recommend she start with Rueschemeyer's advice to see a counselor. The couple will need to discuss some basic assumptions and questions, such as how much money they need to feel safe, how they'll handle big expenses and purchases and where and how they want to live and retire.

More Advice from Wealth Wise

Wealth Wise is Kiplinger's advice column on navigating retirement-related dilemmas. Questions from real people, for real people.

• Wealth Wise: Should We Borrow Money From Our Elderly Father?
• Wealth Wise: Should We Downsize or Drain Our 401(k) to Pay Off Our Home?
• Wealth Wise: You’ve Mastered Asset Allocation — Now It’s Time for Asset Location
• Wealth Wise: Bridging the Healthcare Age Gap for Military Couples with TRICARE and Medicare

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our writers and experts, in this advice column, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial adviser regarding any questions you may have in relation to the matters discussed in this article.

Read More

• My Husband and I Retired at 67 With $3.2 Million, But He's Frugal About Travel. How Can I Convince Him to Loosen Up?
• We're 67 With $5.8 Million. I Want to Spend $300K on Home Renovations and a New Car. My Wife Is Nervous About Spending So Much.
• We Retired at 70 With $4.3 Million. My Wife Won't Spend 'Our Grandkids' Inheritance,' but I Want to Travel.

For many people, estate planning starts with a will, a durable power of attorney and a healthcare proxy.

These documents are important. They help determine who receives your property, who can make decisions for you and how your wishes are carried out if you are no longer able to speak for yourself.

But in some situations, they may not be enough.

A trust can be an important part of an estate plan, but it is also one of the most commonly misunderstood estate planning tools. As an estate planning attorney with several years of experience, I have heard a number of assumptions.

Some people assume a trust is only for the very wealthy. Others think a trust is only about taxes. Some believe that if they have a will, they have already avoided probate.

None of those assumptions is necessarily true. My job is not only to ensure an efficient and orderly transition of assets for my clients, but also to ensure that they understand why I am recommending certain documents, including a trust, as part of their estate plan.

What is a trust?

At its most basic level, a trust is a legal arrangement. Think of it as a contract between the person creating the trust and the person responsible for administering it.

The person creating the trust may be called the grantor, settlor or donor. The person responsible for managing the trust is the trustee. The people who benefit from the trust are the beneficiaries.

The trust says, in effect:

• Here are the assets
• Here are the people I want to benefit
• Here is how I want the assets managed and distributed
• And here is the person I am trusting to carry out those instructions

That trustee has a fiduciary obligation to administer the trust according to its terms and in the best interest of the beneficiaries.

Trusts are not just about avoiding probate

One of the most common reasons people consider a trust is to avoid probate. That is a valid reason, but it is not the only one.

Probate is the court-supervised process for administering assets that are part of someone's probate estate.

In Massachusetts, for example, the probate process requires forms to be filed with the court, reviewed and approved. A personal representative must be appointed.

There is also a one-year creditor period during which creditors can file claims against the estate. If assets are distributed too early and a valid creditor claim later appears, the personal representative can be responsible for that claim.

Probate can add time, expense and administrative burden at a point when families are already dealing with a loss. A trust can help avoid that process for assets that are properly transferred into the trust.

For example, if a house is owned by the trust, the trustee can administer or distribute the property according to the terms of the trust, rather than requiring the family to go through probate for that asset.

But a trust is not the only way to avoid probate. Beneficiary designations can also do a significant amount of work. A checking account, savings account, retirement account or other financial account may be able to pass directly to a named beneficiary outside of probate and accomplish much of what is needed in some circumstances.

A will does not avoid probate

Another common misconception is that having a will means your family avoids probate.

A will is important, but it does not keep you out of probate. In many cases, the will is the document that gets filed with the probate court to begin the probate process.

What a will does is provide direction. It tells the court and the personal representative how you want your probate assets distributed. It can reduce uncertainty and clarify your wishes. But the will still has to be accepted by the court, and the personal representative still has to be appointed.

A trust works differently. A revocable trust, often called a living trust or inter vivos trust, is created during your lifetime. It can hold assets while you are alive and provide instructions for how those assets should be administered after your death.

A common estate plan may include a health care proxy, durable power of attorney, pour-over will and revocable trust. The pour-over will acts as a backup, directing any assets that end up in the probate estate into the trust. The trust itself typically contains the detailed instructions for administration and distribution.

When does a trust make sense?

A house is often one of the major reasons people create a trust, because transferring the house into the trust can allow it to be administered without probate. A trust may also make sense if you want to leave assets to a minor child, niece, nephew or grandchild. Most people would not want an eight-year-old to receive a large sum outright. They also may not want the child's parent or guardian to have unrestricted control over the money.

In that situation, the trust can provide that funds be used for the child's education, health, support or other needs. It allows the person creating the trust to provide for the beneficiary while putting guardrails around how the money is managed.

Trusts can also help when a beneficiary is not great with money, has creditor issues or struggles with dependency issues. The goal is to protect the assets and provide structure. A trust can also be amended during your lifetime, if it is revocable, to reflect changing circumstances.

What about blended families?

Trusts can be especially helpful for blended families.

A person in a second marriage may want to provide for a surviving spouse while also ensuring that children from a prior relationship ultimately receive an inheritance. If everything is left outright to the surviving spouse, the surviving spouse may later change their estate plan, remarry, spend the assets or leave the remaining property to different beneficiaries.

A trust can create more clarity and help avoid conflict. It can allow assets to be used for the surviving spouse during the spouse's lifetime, while preserving what remains for children or other beneficiaries after the spouse's death.

Are trusts only for people with more than $2 million?

No. Tax planning is one of the more common reasons to use a trust, but it is not the only reason.

In Massachusetts, the state estate tax threshold is $2 million. For married couples whose combined assets exceed that amount, trusts may be used to shelter assets and defer or reduce estate tax exposure. Assets can include cash, a home, retirement accounts, bank accounts, brokerage accounts and business interests.

But many people who are below the estate tax threshold may still benefit from a trust for non-tax reasons, including probate avoidance, privacy, real estate planning, minor beneficiaries, family complexity or beneficiary protection.

What does a trust cost?

The cost varies by region, law firm and complexity. Some firms charge a flat fee. Others charge hourly. A straightforward trust may cost a few thousand dollars, while more complex planning can cost more. While that upfront cost can feel significant, for many families, it is often less than the expense and delay of probate later.

The key is to start with your goals. What do you own? Who do you want to benefit? Are those beneficiaries ready to receive assets outright? Are there family dynamics that could create conflict? Are there tax, probate or creditor issues to consider?

A good estate plan should not be more complicated than it needs to be. But it should be thoughtful enough to accomplish what you actually want. A trust can provide that structure when a will or beneficiary designation alone does not go far enough.

Related Content

• Want to Leave Money to Your Descendants But Still Keep Control? Choose Your Trustee Wisely
• Is Your Estate at Risk? The 5 Trusts You Need to Understand
• Three Legal Documents Your Child Should Sign When They Turn 18
• Where There's a Will, There's a Way Your Assets Will Be Distributed as You Wish
• I'm an Estate Planning Attorney: These Are the Two Legal Documents Everyone Should Have

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Editor's note: This is part two of a two-part series about estate planning. Part one is These Are the 3 Pillars You Need Before You Build Your Estate Plan.

In the first article in this two-part series on estate planning, I shared the three foundational financial pillars you need to have in place before creating your estate plan. This article also comes in threes — the three-step process for executing an effective estate plan.

When most people think about estate planning, they picture it as signing a will or trust and checking the box as complete. The documents are drafted, notarized and filed away, and it feels like the job is done.

In reality, estate planning is not a single event. It's a three-step process: design, structure and funding. While the first two steps get the most attention, the third is often overlooked. That's the problem, because without funding, even the most carefully drafted trust might not accomplish what it's supposed to.

Understanding how these three steps work together can mean the difference between an estate plan that functions as intended and one that only exists on paper.

Step 1: Estate design: Deciding what to do with your assets

The first step in estate planning is design. This is the vision-setting stage at which you determine what you want to happen with your assets and how you want them managed.

These conversations should focus on questions such as:

• Who should receive your assets?
• When should they receive them?
• Should distributions happen all at once or over time?
• Do you want to provide protection for beneficiaries?
• Do you want control of how money is used after you're gone?

This stage is less about legal language and more about understanding goals. It also requires a broader look at your financial life. Your investments, retirement accounts, tax considerations and long-term care planning all influence what type of estate plan makes sense.

For example, if you're someone who wants to control how assets are distributed over time, you might need a trust.

On the other hand, if you're comfortable with direct transfers, you might want to rely more heavily on beneficiary designations. These decisions shouldn't be made in a vacuum. They depend on how assets are structured and the outcomes you're trying to achieve.

Step 2: Estate structure: Putting legal documents in place

Once the estate design is in place, the next step involves how to properly structure your estate. This is typically when an attorney is called in to create the legal documents that support your goals and wishes.

These documents could include a will, a revocable living trust, powers of attorney and healthcare directives. This step puts your wishes into a definitive written plan, translating your goals into legal instructions that can be executed later.

This is also when many people must decide between a will and a trust. Though frequently used together, there are distinct differences between the two.

A will directs how assets should be distributed after death, but it must go through probate, which is the legal process that oversees the division and distribution of assets among beneficiaries.

A trust is a separate legal entity that can own assets during or after your lifetime, often avoiding probate and allowing more control of how assets are managed.

Because trusts offer additional flexibility and control, many people choose to go that route when creating their estate plans. But this is also where a common misconception begins: Signing trust documents doesn't automatically place assets into the trust.

That leads to the most critical and often overlooked step.

Step 3: Estate funding: Putting the plan into action

Funding your estate is the process of transferring assets into your trust or aligning beneficiary designations so your estate functions as intended.

Without funding, a trust can exist legally but have no authority over any assets. If that's the case, the estate plan may default to probate or distribute assets in ways that don't reflect your wishes.

Unfortunately, this happens more often than people realize. Someone might go through the effort of creating a trust, only to leave their home, bank accounts and investments titled in their individual name. When that happens, the trust doesn't control those assets. It essentially becomes a document sitting on a shelf.

Don't let missteps ruin your estate plan. Work with a financial professional who can protect and preserve your assets and help you leave a legacy for the next generation.

Funding requires action. Depending on the type of asset, this could involve changing ownership or updating beneficiaries. Assets commonly found within a trust include real estate, after-tax brokerage accounts and bank accounts. For example, if you want your home governed by your trust, the deed must be updated so the trust becomes the owner instead of you.

Other assets, such as an individual retirement account (IRA), cannot be owned by a trust. These accounts must remain in an individual's name while they're living. However, they can name a trust as a beneficiary in certain situations, allowing assets to flow into the trust upon death.

A complete estate plan requires coordination

Estate planning is most effective when all three steps — design, structure and funding are completed one after the other. The design clarifies your goals. The structure puts legal documents in place and funding is what makes the entire plan work.

Without it, your wishes might not be carried out the way you intended.

If you've already created a will or trust, it might be a good idea to review it alongside a professional to determine whether your assets are properly aligned with your wishes. A trust that owns the right assets can help ensure your plan is executed without heartache and financial hardship.

At Blue Ridge Wealth Planners, we believe everyone deserves to have their wishes respected and legacy preserved. A thoughtful and well-coordinated estate plan will help you better protect your assets, not only for yourself, but for your loved ones and the causes closest to your heart.

Blue Ridge Wealth Planners is an independent financial services firm and uses a variety of different investment strategies. This is for informational purposes only and is not intended to serve as the basis for any financial decisions, nor should it be construed as legal or tax advice.

Related Content

• Beneficiary Designations: 5 Critical Mistakes to Avoid
• Is a Living Trust the Right Choice for Your Estate Plan?
• The 4 Estate Planning Documents Every High-Net-Worth Family Needs (Not Just a Will)
• I'm a Wealth Planner: These 3 Steps Can See You and Your Heirs Through a Wealth Transfer
• The Middle Wealthy Are the Goldilocks of Retirement, But Where Do You Find the Financial Advice That's 'Just Right'?

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

There's a lot of chatter about the Great Wealth Transfer — as much as $124 trillion that’s predicted to pass between generations over the next couple of decades. And much of that is likely to end up in the hands of women.

If you’re fortunate enough to inherit a windfall, be prepared to be patient. For starters, it can take time to gather the necessary documentation and navigate the legal niceties of inheritance (see our article on where to start if you've received an inheritance). And once you have the money in hand, "rule number one is don’t go out and spend it all," says Alexandra Armstrong, a certified financial planner and author of On Your Own: A Widow’s Guide to Emotional and Financial Well-Being.

Among people who inherit, there’s a tendency to want to do one of two things, says Armstrong: pay off the mortgage on the house or take your dream vacation. But before you do anything, consider the tax implications. For instance, if you have a low-interest-rate mortgage that’s tax-deductible, you may be better off keeping it and putting the bulk of your inheritance to work in other ways. If you inherit your spouse’s IRA, you can roll the money into your own IRA. But if anyone other than a spouse inherits an IRA — say, an adult child or a sibling — the money must be withdrawn over 10 years, and payouts are taxable.

Getting guidance from a tax adviser or other financial professional should be high on your to-do list. A third party can also act as a buffer between you and other family members and friends who’d like a share of the windfall.

Also, you may not get immediate access to your inheritance. “You can usually count on at least six to nine months to settle even a quick estate,” says Armstrong, and even longer if you inherit something like real estate that must be sold and possibly divided among several heirs.

Take your time: Unless there’s a legal or tax urgency, give yourself time to think through all the variables.

"Don’t make any permanent decisions for at least a year or even longer,” advises Natalie Colley, partner and senior lead adviser at Francis Financial in New York City. Park the money in a money market fund, or leave it in existing investments until you come up with a strategy, says Colley. “Give yourself permission to change your mind."

That’s particularly true of assets with sentimental value, says Elizabeth Zelinka Parsons, author of Encore: A High Achiever’s Guide to Thriving in Retirement. "It might be easier to sell the family home or Dad's art collection in year three,” says Parsons.

Getting a windfall can be especially challenging for women who have never played a role in handling their family’s finances. Even women who are involved in day-to-day money management often lack confidence when it comes to long-term investment planning, says Colley. Her advice: "Break it down into bite-sized pieces that you can digest. Repetition helps build confidence and competence."

Bottom line: Any preparation you can do now, either as a giver or a potential beneficiary, will yield a big payoff when the time comes. Take this advice from reader Judith Meservey, a widow who offers support to other widows in her active adult community. Writes Meservey: "I see quite a range of preparedness among the women. I try to encourage couples to be interchangeable when it comes to financial and estate matters, encouraging them both to know how to pay bills, where the assets are and what the passwords are. In my case, I created a document 20 years ago with key information that I update each year for my sister in case something happens to me. It would help someone step in with ease and confidence."

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Related stories

• Suddenly Inherited Money? The Critical Steps You Need to Take First
• What to Look for in a Tax Professional
• Manage an Inheritance Like a Pro in Just Seven Steps
• I'm a Wealth Planner: These 3 Steps Can See You and Your Heirs Through a Wealth Transfer

Today's couples often build deeply intertwined lives long before, after or without marriage. They share homes, combine expenses, raise children, support aging parents and make long-term financial decisions together.

What often lags behind is the planning structure to support that life. Day-to-day systems can work smoothly for years, obscuring the fact that many legal and financial defaults still hinge on marital status, formal ownership and written authority.

LGBTQ+ couples have long navigated this gap firsthand, offering a clear example of why intentional financial planning matters.

Who has legal and financial authority?

One of the most overlooked planning gaps is authority during incapacity. Without explicit documentation, an unmarried partner may have no legal right to receive medical information, make treatment decisions or manage finances — even if they share a life in every practical sense.

LGBTQ+ financial planning frameworks underscore the importance of healthcare proxies, powers of attorney and account access as foundational elements of a sound plan.

For modern couples, these documents help ensure the most trusted person can act when decisions need to be made quickly, rather than defaulting to state law or next-of-kin rules that may not reflect reality.

Do beneficiaries match intent?

Beneficiary designations often override wills and estate documents, yet they are easy to overlook during major life changes. Career moves, new relationships, children or second marriages can leave outdated beneficiaries quietly in place for years.

LGBTQ+ planning conversations consistently highlight this risk because beneficiary alignment is one of the simplest ways to avoid unintended outcomes.

Regular reviews of retirement accounts, insurance policies and payable-on-death accounts can help ensure assets pass as intended — without confusion, delay or conflict during emotionally charged moments.

How is property actually owned?

Modern couples often co-own homes or contribute differently to shared property. One partner may provide the down payment, while the other covers monthly expenses or renovations.

Without clarity, it can quickly become unclear whether those contributions should be treated as gifts, reimbursements or equity.

A more disciplined planning approach aligns property titling with written agreements, such as cohabitation or marital agreements, so ownership and exit terms are clear.

LGBTQ+ households often adopt this discipline early, recognizing that intent alone does not determine legal outcomes when property must be divided or sold.

Are insurance and liquidity aligned with risk?

Life, disability and liability insurance are often purchased reactively — or not revisited as circumstances change. Yet, for modern couples, particularly those with children, businesses or income asymmetry, insurance plays a critical role in protecting both partners.

Insurance supports continuity, not just loss replacement. Adequate coverage can reduce the risk of forced asset sales, protect surviving partners and create breathing room during periods of loss or transition. Maintaining liquid reserves serves the same purpose.

Does the estate plan reflect the family?

Estate planning gaps are amplified for modern couples because default intestacy laws — which govern asset distribution when someone dies without a will — rarely account for blended families, unmarried partners or chosen-family structures.

These laws typically prioritize legal spouses and biological relatives, not the people most involved in daily life. Delaying planning can result in outcomes that conflict sharply with a couple's values and expectations.

LGBTQ+ planning checklists place particular emphasis on coordinating wills, trusts and guardianship provisions so that children, partners and extended family members are treated intentionally.

For modern couples, estate planning is not just about wealth transfer but also about clarity, dignity and control.

Turning intent into protection

What LGBTQ+ households demonstrate especially clearly is that good intentions are not a substitute for structure. A disciplined planning approach creates a repeatable way to align how couples live with how financial and legal systems recognize them — and turns abstract conversations into concrete decisions.

For modern couples, this process is not about anticipating failure. It is about reducing uncertainty when life changes — through illness, career shifts, separation or death — and ensuring decisions reflect shared values rather than outdated defaults.

Planning for the life you're already living

Modern couples are redefining partnership, commitment and family. LGBTQ+ households, having navigated these realities without built-in protections for years, offer a useful lesson: Planning works best when it is intentional, documented and regularly revisited.

A simple, disciplined framework can close the gap between how couples live and how outcomes are determined — protecting both partners and the life they have built together.

Related Content

• Three Financial Planning Tips for the LGBTQ+ Community From an LGBTQ+ Financial Adviser
• Protect Your Family's Future: Avoid These 12 Common Estate Planning Mistakes
• I'm a Wealth Planner: These 3 Steps Can See You and Your Heirs Through a Wealth Transfer
• An Estate Planning Attorney's Guide to the Importance of POAs
• Is Spring Fever Compelling You to Refresh Your Portfolio? 3 Ways You Could Be Acting Impulsively

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Imagine spending 40 years meticulously building a legacy, only to have it dismantled in 40 days because of a single, outdated signature.

For many high-net-worth individuals (HNWIs), their estate plans are often their "set-it-and-forget-it" documents, and only a few realize that this is a remarkably costly oversight.

It's true that the initial signing of a will or trust feels like the end game, but a legacy plan actually functions like a high-performance engine that requires consistent tuning so it remains operational.

Ultimately, the plan's legal power is only as effective as your most recent and updated signature.

When we look at American wealth management, the gap between life changes and legal updates is jarring. A 2024 survey sponsored by Bank of America found that only 27% of legal and financial clients update their plans every one to four years.

What's even more concerning is that 39% of the demographic do so only every five to nine years.

This delay creates a dangerous administrative lag between your current status and your legal instructions.

As we get older, family dynamics shift rapidly, but the documents governing life transitions often remain frozen. If your plans aren't current after a major milestone, you are proactively leaving behind a ton of legal disputes and increased tax burdens to your loved ones.

That could even lead to the very real possibility that your hard-earned wealth could end up in the hands of the wrong people.

Protecting your youngest heirs from 'accidental' probate

The birth of a child or grandchild is a moment of profound joy, but it also fundamentally changes the math of your estate. A common mistake many make is assuming that "natural heirs" are automatically covered under general language.

However, unless your plan is specifically updated to reflect a new beneficiary, that child may not have the legal protections they deserve.

This is especially critical for naming guardians. If your plan is not current, the decision about who raises your child may be left to a judge, and that is every parent's nightmare.

An updated estate plan should also lay out how and when a child receives an inheritance. For younger beneficiaries, that may mean naming a trustee to manage assets until they reach the legal age of majority. Normally, that age is 18, though it can vary by state.

For adult children, a structured distribution plan can offer added protection from lawsuits or other financial risks.

The necessity of a post-divorce estate audit

Divorce can change an entire estate plan in a lot of surprising ways, and they aren't always immediately obvious.

Technically, the court decree divides marital property. The problem is, it does not always automatically update every individual account or legal instrument.

That means any non-probate assets, including insurance policies and certain bank accounts, often pass outside the probate process and go directly to the beneficiary named on the account or policy.

In that case, you would need a comprehensive review as soon as possible. If beneficiary forms remain unchanged, an ex-spouse could maintain a valid legal claim to some of your most significant assets, regardless of what your current will states.

In many jurisdictions, a single forgotten designation can legally override your intended distribution.

The risks extend to your primary decision-making documents as well. For instance, an outdated power of attorney or healthcare directive can still give an ex-spouse the legal authority over your finances or medical care when you become incapacitated.

Outdated guardianship provisions can create the same kind of risk.

In a nutshell, if every designation still reflects your life before the divorce, they can trigger legal conflict and cause emotional and mental distress to your children at the very moment they need stability the most.

Why remarriage needs a plan overhaul

Remarriage certainly introduces a distinct set of complexities that can trigger "accidental disinheritance."

Without immediate and precise revisions, a new spouse might be left with no legal claim to your estate, and that often results in sudden financial hardship.

Conversely, when your entire estate is left to a current spouse, it can inadvertently disinherit children from a prior marriage.

Let's say that the spouse passes away later without their own updated plan, or is not on good terms with your kids — those assets may never reach your children as you originally planned.

In these blended family scenarios, assets are frequently distributed unevenly or unfairly, and that happens in real life.

So, an immediate review allows you to establish trust structures, such as a QTIP trust, that provide for a surviving spouse during their lifetime while ensuring the remaining principal eventually goes to your biological children.

Also, this secures that the new branch of your family tree is nurtured without starving the original roots.

The urgency of alignment

The moment a child is born, a marriage dissolves or a family blends, your existing estate plan becomes a historical document instead of a functional legal shield. Failing to act immediately creates a dangerous window where your legacy is governed by outdated (or malicious) intentions.

Life is unpredictable, so if a crisis occurs before your designations are updated, the law will not take your current intentions into account. It will follow the signature on file, even if that signature belongs to a life you no longer recognize.

The urgency here is not merely administrative. You want to ensure an ex-spouse does not inherit a retirement account by default, or a newborn is not left without a court-vetted guardian, or a new partner is not sidelined by rigid probate laws.

These life transitions move with incredible speed, and your legal framework must move faster to ensure your wealth serves your current family and circumstances.

Utilizing modern tools ensures that these vital updates are both signed and immediately accessible.

In estate planning, the only thing more costly than a mistake is a delay.

I would urge you not to wait for the "perfect time" to reconcile your documents with your life. By then, it may already be too late.

Related Content

• What Really Happens in the First 30 Days After Someone Dies (and Where Families Get Stuck)
• The 4 Estate Planning Documents Every High-Net-Worth Family Needs (Not Just a Will)
• An Attorney's Guide to Your Evolving Estate Plan: Set-It-and-Forget-It Won't Work
• Wills Gone Wild: How to Avoid Estate Planning Disasters
• Choosing Your Trustee: These Are the Common Options

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The financial professionals who contribute to Kiplinger's Adviser Intel are always here to make sure you have the information you need to make critical decisions about your retirement planning, estate planning and tax planning.

They've recently written about the growing number of Americans working past retirement age — and why the consequences can be more complicated than you might think in terms of Social Security, healthcare and tax.

This quiz is designed to test what you've learned. Let's see what you know! (And don't worry if you miss an answer: You can follow the links below the quiz to brush up on your knowledge.)

Please note that this quiz has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or financial advice.

Read More

• Social Security, Healthcare and Tax: The Potential Complications of Working Past Retirement Age
• Still Working While Receiving Social Security? A Financial Adviser's Guide to the Earnings Test
• Your Retirement Age Is Just a Number: Today's Retirement Goal Is 'Work Optional'

For years, the narrative around life insurance went something like this: Buy protection while you're young to replace your income so your family doesn't struggle if something happens to you.

And that message has clearly resonated. A good 51% of American adults say they have some life insurance coverage, according to LIMRA.

When it comes to buying life insurance, you have a choice. You could opt for a term life policy that offers limited coverage and no cash value accumulation. Or, you could buy whole life insurance, a type of permanent insurance that covers you for life and includes a cash value component. (Other forms of permanent insurance include universal and variable.)

While term life insurance holds appeal as the less expensive option, there's an inherent risk in buying it. In a nutshell, if you don't pass away by the end of your policy's term, you'll get nothing out of all of those premiums you paid (though you'll still be alive, so there's that).

With whole life insurance, you're guaranteed a payout. You can reserve the policy's death benefit for your loved ones upon your passing or tap your cash value for supplemental income in retirement.

In fact, you'll often hear whole life insurance touted as a useful retirement savings tool. But is it worth getting for that purpose?

Financial security that comes at a price

Life insurance is an inherently useful and important financial tool. But for many people, term life insurance can get the job done at a fraction of the cost.

Policygenius says that a healthy 30-year-old who doesn’t smoke might pay an average of $26 per month for a 20-year term life policy with a $500,000 payout. That same applicant would be looking at $450 per month for a whole life policy with the same benefit.

For this reason, proponents of whole life insurance tend to look beyond the "insurance" angle and incorporate whole life policies into the retirement planning equation. But while whole life insurance can provide policyholders with retirement income, it may not be the most efficient way to get there.

Whole life insurance lacks flexibility and efficiency in retirement planning

There are some use cases for whole life insurance in retirement planning. But Alex Langan, Chief Investment Officer and financial adviser at Langan Financial Group LLC, says point blank, "For most people in most situations, whole life insurance is not the right primary retirement savings vehicle. That's not a disclaimer. That's our honest assessment after working with clients across a wide range of financial situations."

For disclosure purposes, Langan Financial Group offers whole life insurance as part of its planning work, and in certain circumstances, advisers at the firm may be compensated for those recommendations.

The reason Langan doesn't usually recommend whole life insurance boils down to what the product is designed to do versus what long-term planners actually need.

"Whole life is built first around a permanent death benefit, with a savings component attached to it," Langan says. "Retirement planning is fundamentally about growth, flexibility, liquidity, and tax efficiency over time. Those aren't the things whole life is optimized for."

As Langan explains, whole life policies tend to grow more slowly than market-based alternatives. And since the costs are significant, especially in the early years, that's money that could instead go into an investment portfolio and generate stronger returns.

Derrick Schuler, CFP at Schuler Wealth Planning, agrees.

"Using whole life insurance as a retirement savings tool isn’t necessarily a waste of money, but there are much more efficient ways to save for retirement," he says.

Schuler formerly sold whole life insurance but no longer does. He makes recommendations on whole life insurance for clients, based on how it fits into their overall financial plan.

Schuler says that while whole life insurance accumulates a cash value that grows tax-deferred over time, "there are a lot of insurance costs, administrative expenses, and commissions built into the policy that can reduce the overall return on the cash value."

If retirement savings is the primary goal, says Schuler, then most people are usually better off first maximizing contributions to employer retirement plans, IRAs, and HSAs.

"These accounts generally offer lower costs, greater flexibility, and higher long-term growth potential than a whole life policy," Schuler insists.

Accessing funds from a whole life policy can be complicated

Another issue with using whole life insurance as a retirement savings tool, says Langan, is that accessing the cash value through policy loans or withdrawals comes with real trade-offs.

"Policy loans accrue interest and reduce the net death benefit while the loan is outstanding," he says. "If the loan is repaid in full, the policy can be restored to its original state. If it isn't repaid, the outstanding balance plus accrued interest is deducted from the death benefit paid to your beneficiaries."

Withdrawals work differently. They permanently reduce both the cash value and the death benefit and don't need to be repaid.

But, Langan cautions, "neither option works the way a straightforward account withdrawal does, and that matters when you're planning for retirement income flexibility."

There's also a timing issue Langan raises.

"Because of the way commissions and insurance costs are structured in permanent policies, it can take a meaningful number of years before the cash value exceeds what you've paid in," he explains. "That lag represents a real cost compared to other vehicles where contributions are working from day one."

When can whole life insurance actually make sense?

Langan says there are some scenarios where whole life insurance does make sense in the context of financial planning.

"The first is someone who has genuinely maximized every other tax-advantaged savings option available to them and is looking for additional ways to grow assets in a tax-efficient structure," he says. "At that point, the comparison set changes and whole life becomes more competitive relative to fully taxable alternatives."

Langan also says whole life insurance can fit into estate planning and legacy situations where a permanent death benefit is the actual objective.

"If someone needs a guaranteed death benefit regardless of when they die, and wealth transfer is a primary goal, permanent insurance makes structural sense because it's doing exactly what it was designed to do," he says.

Additionally, Langan says that whole life insurance could make sense as part of business planning. In that context, there are situations in which the guaranteed nature of the policy serves a specific functional purpose.

Of course, there's also a behavioral use case for whole life insurance.

"Some people know themselves well enough to recognize that they won't invest the difference between a term premium and a whole life premium," Langan says. "If the realistic choice is between a whole life policy that forces consistent contributions and builds cash value over time versus doing nothing because the money will otherwise be spent, a whole life policy is better than nothing."

But, Langan says, it's important to recognize that this still doesn't make using whole life insurance as a retirement savings vehicle an optimal financial strategy. Rather, he says, "It's a reasonable solution to a real behavioral challenge. There's a difference, and clients deserve to know which one applies to them."

Ultimately, Schuler says, it's important for savers to understand what life insurance is supposed to do — protect income, pay off debts, and provide for loved ones if something happens to them during their working years. Term life insurance can often provide that coverage at a fraction of the cost.

"For the average person looking to build wealth for retirement," Schuler says, "term insurance combined with disciplined investing will typically provide more insurance protection, more flexibility, and a larger retirement nest egg over time."

Read More

• 5 Smart Ways to Use Your Life Insurance While You're Still Alive
• Is Life Insurance Taxable When It's Paid Out?
• How to Shop for Life Insurance in 3 Easy Steps

If you have retirement savings in an IRA or 401(k), Uncle Sam is your partner on that money because every dollar you pull out of it is taxed.

Consider this common scenario: One spouse in a retired household passes away and the surviving spouse becomes a single taxpayer, which affects their overall tax liability, even though their income goes down.

Let's say the couple's total income was $200,000 a year. While they were married, this meant they had an effective tax bracket of about 15%.

When the husband passes away, the wife's income goes down to $180,000 because she loses the smaller of their two Social Security checks. But going forward, she will file as a single taxpayer, so she is now in the 20% tax bracket.

Additionally, if her RMDs and her income grow each year, her tax rate could keep climbing. And that doesn't even factor in future tax increases. (It's unlikely taxes will stay as low as they are now, considering our nation's debt of $39 trillion.)

Proactive tax planning could have helped protect her from the impact of higher taxes after losing her partner.

For retirees in higher tax brackets looking to help their spouse (or adult children) avoid this kind of tax trap in the future, partial Roth conversions now can help.

1. Protecting the surviving spouse

If you're a married couple, you're in a joint taxpayer bracket. And once both spouses reach age 65, you become eligible for specific additional tax benefits.

For example, with a taxable income of $148,300, you fall within the 12% tax bracket for married couples filing jointly after the deductions.

The $148,300 figure includes a $32,200 standard deduction based on your filing status. You would also receive the $3,300 additional standard deduction for both being over age 65 – this consists of $1,650 for each spouse, as determined by the One Big Beautiful Bill for taxpayers over 65. On top of this, there is an additional $12,000 bonus deduction for those over age 65 (up to a certain income limit).

However, when one spouse dies, the surviving spouse (usually the wife) jumps up to the 24% tax bracket.

If your income is higher, it's an even larger jump in taxes for the surviving spouse.

For example, if your taxable income as a married couple is $250,000 a year, you can see on the chart below that you're in the 24% tax bracket because you're "married filing jointly."

However, if the husband dies first, the surviving spouse is now a "single filer" with taxable income of $250,000. You can see she has now jumped up into the 32% tax bracket.

A Roth IRA may help protect the surviving spouse from higher taxes as a single taxpayer because you already paid the taxes while you were both alive as joint taxpayers.

2. Protecting non-spouses

When you die and leave your IRA to your children, they only have 10 years to empty your IRA completely.

Let's assume the IRA you leave to your children will earn 4% annual returns over the 10-year period after you leave it to them. This means that your children will have to take out approximately 14% of the IRA balance every year.

This would allow them to take out the 4% annual earnings along with 10% of the principal, so the entire IRA is drained over that 10-year period without a potential big tax hit in year 10.

However, this 14% annual IRA withdrawal could put your heirs in a higher tax bracket.

While a Roth conversion would mean paying income tax now, that could be a bargain compared to the potentially higher income tax brackets your heirs might have to deal with after you're gone — and any state income taxes they may also have to pay.

Additionally, if your children live in a state that has a state income tax (such as New York, which has a 10.9% top state tax bracket), they may be subject to federal income taxes and up to an additional 10.9% in state income taxes as well.

We use software called Holistiplan that helps identify the maximum amount to withdraw year by year to take advantage of today's tax brackets, and will work alongside an accountant or a tax professional.

When appropriate, we recommend our Strategic Roth Integration (SRI) plan to clients so that they can take advantage of today's income tax rates and never pay taxes on their Roth IRA again.

If you'd like to learn more, check out my new book, IRA Owners: Help Defuse Your Ticking Time-Bomb, co-authored with Steven Kao.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

Related Content

• Are You Ready to ‘Rothify’ Your Retirement?
• Are Roth IRAs Really as Great as They’re Cracked Up to Be?
• Considering a Roth IRA Conversion? Six Reasons It Makes Sense
• Four Reasons to Consider Doing Partial Roth IRA Conversions Now
• Have a Retirement Bucket List? Don’t Hesitate to Dive In

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Editor's note: This is part one of a two-part series about estate planning. Part two will explore the three-step process for designing your estate plan.

When most people think about estate planning, they think about a will. It's often framed as a final step, a document that ensures your wishes are carried out and your assets are distributed properly.

While that's important, it misses a much bigger point: A will governs only what's left.

The real question is, will there be anything left to govern?

That's where many people get it wrong. They focus on planning for their death without fully planning for their life. The financial decisions you make while you're living — how you invest, how you manage taxes and how you prepare for major risks — are what ultimately determine the size and strength of your estate.

In other words, estate planning shouldn't start with documents. It should start with building a financial life worth protecting.

The difference between estate planning and life planning

At its core, estate planning is about transferring assets after death. Life planning is about making sure those assets last throughout your lifetime.

The distinction matters more than most people realize.

If your financial plan doesn't account for income needs, market risk, taxes and unexpected expenses, your estate plan might never have the chance to work as intended. A will can't fix a portfolio that runs out of money, and a trust can't undo years of unnecessary taxes or cover the cost of long-term care.

What happens during your lifetime directly impacts what you leave behind. That's why a strong estate plan is built on a solid financial foundation, one that prioritizes sustainability, efficiency and protection.

The three pillars that support every estate plan

Before drafting legal documents, it's critical to address three foundational financial areas: your investment strategy, your tax strategy and your long-term care plans. Together, these pillars determine whether your estate will be preserved and protected.

1. Investment strategy: Sustaining income without running out

Your investment strategy isn't just about growth; it's about sustainability.

Growing your assets matters, but as you approach retirement, the focus shifts. Your portfolio now has to do two things at once: Continue to grow and provide reliable income.

That balance is where things can become tricky.

If you take on too much market risk while also withdrawing more income than your portfolio can support, you create a scenario in which your assets can be depleted faster than expected. Market downturns combined with withdrawals can accelerate losses, increasing the risk of running out of money.

If that happens, your estate plan could suddenly be in jeopardy.

A well-designed investment strategy accounts for both growth and income, ensuring that your assets can support your lifestyle over time, not just in ideal market conditions.

2. Tax strategy: Keeping more of what you earn

Taxes are one of the most overlooked threats to retirement and long-term wealth.

Over the course of your lifetime, inefficient tax planning can erode a substantial portion of your assets. That's money that could support your lifestyle or be passed on to future generations, which is why tax planning shouldn't be reactive. It should be proactive and forward-thinking.

Strategies such as Roth conversions and tax diversification can help reduce your lifetime tax burden while also creating more flexibility in retirement. They can also improve the tax efficiency of what you leave to your heirs.

The key message is: It's not about how much you accumulate over your lifetime; it's about how much you get to keep. What you keep plays a major role in what you ultimately pass on.

3. Long-term care: The risk that can undo everything

Long-term care is one of the largest financial landmines people face in retirement and, unfortunately, one of the least planned.

Whether it's in-home care, assisted living or a nursing home, the cost can be substantial. Without a plan, those expenses often come directly from your assets, quickly reducing the value of your estate.

There are generally two approaches: Self-insuring by relying on your own assets or transferring some of that risk through insurance-based solutions, such as life insurance policies with long-term care benefits. Either way, the key is having a plan.

Without one, even a well-built portfolio and solid tax strategy can be undone late in life. Long-term care costs have the potential to drain assets when you least expect it and when you're least likely to recover from the impact.

Build the life first, and the legacy will follow

These three pillars don't just support your financial life; they determine the outcome of your estate plan. They answer some of the most important questions: Will your assets last? How much will be left? Will it be transferred efficiently?

Legal documents don't create wealth; they organize it. If the underlying financial plan isn't strong, even the most carefully drafted estate documents won't achieve their intended purpose. In many cases, a lack of planning during your lifetime can lead to the very worst-case scenarios people try to avoid in the first place.

Estate planning is often framed as preparing for the inevitable, but it's about something much bigger. It's about making thoughtful and intentional decisions throughout your life so that your money supports you the way it should, so that when the time comes, there's something meaningful to pass on.

A will can distribute your assets, a trust can control them, but neither can replace a well-planned financial life. If you want to leave a lasting legacy, start by building a plan around your life. The rest will follow.

Conversations around your finances and estate should never occur separately. At Blue Ridge Wealth Planners, we take the complexity out of financial planning, helping clients create a plan for everything, from investments, income, taxes, healthcare and your legacy.

In the next article of this series, I'll explain the three-step process (Design, Structure, Funding), highlighting the critical but often-missed "Funding" step to make a trust legally effective.

Blue Ridge Wealth Planners is an investment adviser registered with the Securities and Exchange Commission. SEC registration is not an endorsement by the SEC nor does it imply a certain level of skill or training.

Related Content

• 5 Estate Planning Things You Need to Do Now, From a Financial Planner
• Protect Your Family's Future: Avoid These 12 Common Estate Planning Mistakes
• I'm a Wealth Planner: These 3 Steps Can See You and Your Heirs Through a Wealth Transfer
• The Middle Wealthy Are the Goldilocks of Retirement, But Where Do You Find the Financial Advice That's 'Just Right'?
• With Your Investments, Think Location, Location, Location

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

I've worked with enough successful business owners to know that almost every one has the same gap in their plans.

Take a scenario I see all the time: Dave built a widget company from nothing into a $30 million business. He's sharp, disciplined and completely focused on growth.

But when I ask him what his plan looks like after the company's sale, he stares at me like I've asked him to solve a riddle in an unknown language.

Dave isn't unusual. Most successful entrepreneurs pour every ounce of energy into building a business and almost none into planning for what happens when it turns into liquid wealth.

It's not carelessness. Building the company is the priority. If it doesn't succeed, there's nothing for which to plan.

The problem is that by the time the exit is real and there's a signed contract and a closing date, the biggest wealth-building opportunities have already passed. The cost of that timing gap can run well into the millions.

Three things business owners aren't considering

The same three blind spots come up again and again:

• The first is business structure. How the company and the owner's personal stake are organized for tax purposes. Whether you're a C corp, S corp, LLC or LLP affects not just annual income taxes but the tax treatment of any future sale. Get this wrong at formation, and you could be locked in for decades.
• The second is succession planning. For a business to command a strong valuation, it needs to be transferable. This means there is management in place, client relationships are institutional rather than personal, and operations can run without the founder. Buyers pay a premium for businesses they can take over immediately.
• The third is exit and estate planning. This one costs families the most money. A successful sale creates a massive tax event. Without years of advance planning, your options to reduce that burden shrink dramatically.

Why the math gets worse as the business grows

Valuation multiples expand as revenues grow. A company with $200,000 in EBITDA might sell for five times, or $1 million. Scale to $3 million in EBITDA and a 10-times multiple puts the value at $30 million. At $35 million in EBITDA, a 20-times multiple can push it to $700 million.

Industry and revenue quality directly impact these numbers, but the pattern holds: The bigger the exit, the bigger the tax event.

The federal estate tax rate above the exemption is 40%. The current lifetime exemption is $15 million per person ($30 million per couple), which is the most generous in U.S. history.

But Congress can change that number. A sale that pushes your estate above the exemption can trigger an enormous tax bill for your heirs if you haven't planned ahead.

What early planning looks like

If a business owner shows up with a signed purchase agreement and asks what can be done to reduce the tax hit, the honest answer is: Not much. The valuation is set. The structure is locked. The die has been cast, as we say.

The difference between the business owner who plans five years out and the one who plans five months out can easily be eight figures.

Let's revisit Dave's scenario. Five years before his planned exit, we started working on a strategy. Dave created an irrevocable trust for the benefit of his wife and children and transferred 50% of his company, valued at $15 million at the time, into that trust.

When the company sold for $60 million, the trust's half was worth $30 million, and that $30 million was outside Dave's taxable estate.

He paid long-term capital gains of 20% on the sale rather than ordinary income rates of 37%, and by moving assets out of his estate at a much lower valuation years earlier, he avoided what could have been $12 million in estate taxes on the growth alone. All told, early planning saved Dave's family north of $20 million.

Two types of trusts come up most often in these conversations:

• A spousal lifetime access trust (SLAT) is an irrevocable trust that names the spouse as beneficiary during their lifetime, then passes to children and grandchildren. It works well when the business owner might still need access to income or assets from the trust.
• An intentionally defective grantor trust (IDGT) skips the spousal access and goes directly to children and grandchildren.

Both of these options share the same critical advantage: The assets are valued when they go into the trust. For a growing business, that means transferring at a relatively low valuation years before the exit and letting all that appreciation happen outside the taxable estate.

Charitable strategies can strengthen the plan further. Donating appreciated stock to a donor-advised fund — or, for private company shares, to an organization that accepts them — delivers meaningful tax benefits over donating cash. These tools work best when built into the strategy early.

Four things to do now

If you own a business and think you might sell it someday (even if "someday" feels like a decade away) here's where to start.

1. Find the right wealth manager. Look for someone who works specifically with business owners and can help you build a long-term plan that connects your business goals to your personal financial picture. This isn't a one-meeting exercise, it's an ongoing relationship.

2. Assemble your full team and get them on the same page. Alongside your wealth adviser, you also need an attorney and an accountant, all working from the same playbook. These professionals shouldn't be operating in silos. The value comes from coordination. To ensure this, I encourage you to ask your team four questions:

• What is the plan?
• How are we going to get there?
• Who else needs to be involved?
• What are we not thinking about? This is the one most people forget.

3. Start three to five years before any potential sale. This is the window when the most powerful strategies, including trust planning, ownership restructuring, estate tax reduction, are still available to you. If you wait until a deal is on the table, most of those doors close.

4. Execute aggressively. An unexecuted plan is worthless. Once the strategy is in place, move on it. Every year of delay is a year that asset values grow inside your taxable estate instead of outside it.

The future will arrive faster than you think. Time is your single greatest ally in wealth planning but only if you use it.

The entrepreneurs who start early, build the right team and execute with urgency are the ones who keep the wealth they spent a career creating.

The ones who wait? They pay for it.

Related Content

• 4 Retirement Risks Business Owners Often Overlook
• When Starting a Business, the End Is a Very Good Place to Start
• The Entrepreneur's Exit: How to Sell (or Pass on) Your Business Without Losing the Family
• Planning to Leave Your Business? How to Find the Right Buyer
• To My Small Business: Well, I've Been Afraid of Changin', 'Cause I've Built My Life Around You
• The Most Important Number for a Business Owner Considering a Sale

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The estate planning field has developed an impressive sophistication when it comes to carrying out a person's final wishes.

Virtually without fail, estate planning documents work as intended, accounts transfer, and instructions are followed to the letter.

When it comes to the orderly dispersal of a person's estate, lawyers and estate planners almost always have the process well in hand. But what they might not fully understand is the reasoning behind the directives.

When a loved one passes, his or her directives might be followed to the letter. But it's not uncommon for family members to be confused about the thinking behind those directives. Why was an asset allocated in a certain way? What priorities shaped those choices?

While the written directions might be clear, the thinking behind those directions could be murky, even hurtful.

So much more to account for today

For decades, estate planning has focused, appropriately, on the orderly transfer of assets, even as the process has grown more complex. Today's plans must account not only for bank accounts and property, but also for online financial tools, subscription services, digital files and, increasingly, cryptocurrency holdings.

In response, a range of tools has emerged to handle those new logistics, such as Apple Digital Legacy and Google Inactive Account Manager allow designated individuals to access accounts after a period of inactivity or death.

Digital vaults and estate organization platforms help centralize passwords, documents and key information.

These are important advances that help loved ones find and manage assets that have been left behind.

While those tools work as intended, they fail to make clear what the deceased person might have been thinking when he or she prepared the final will. I've seen families receive everything they need to administer an estate, but struggle to make sense of it.

The legal framework might be intact, but the human context is missing. Without that context, even well-designed plans can create confusion, tension or second-guessing among those left behind.

This is what I think of as the "context gap" in estate planning.

Why were certain choices made?

A will can distribute assets, but it rarely conveys the reasoning behind those decisions. A trust can outline conditions, but not the personal considerations that shaped them. Even the most detailed plan can't fully capture a person's intentions, relationships or values.

As a result, families are often left to interpret those decisions on their own. Sometimes that interpretation is straightforward. Other times, it isn't.

Siblings might wonder why certain choices were made. Executors could feel uncertain about how much discretion they should exercise. Adult children might struggle to reconcile what they see in documents with what they believed about a parent's wishes.

These are not failures of planning. They are limitations of the tools we've traditionally used.

Even so, estate planning is beginning to evolve into two parallel tracks. The first is the familiar transfer of assets, the management of taxes and the legal structures that ensure everything is handled properly.

The second is communication of intent. This includes messages people might want to leave behind — explanations of key decisions, expressions of gratitude, guidance for future choices or simply words that help loved ones understand not just what was done, but why.

Preserving the meaning behind estate planning

Up to now, people have tried to address this informally. Some have written letters to be opened after death. Others recorded videos or left notes with attorneys or family members.

But these have often been inadequate. They have been difficult to update, and they have not always delivered their messages at the right time — or even at all.

New tools are attempting to address this need more systematically. Platforms focused on what is sometimes called "digital inheritance" aim to complement traditional estate planning by preserving not just assets, but the meaning behind it.

Systems such as OneFinalMessage.com allow individuals to store messages alongside important documents and update them as circumstances change.

Features make it possible to ensure such messages reach the intended recipients when they're needed and not be overlooked or lost. These new products are aimed at recognizing that a complete estate plan may require more than legal precision.

For individuals, this raises a simple but important question: If something were to happen tomorrow, would the people who matter most understand not just what you left them, but why?

For financial advisers and estate planning professionals, all this suggests an opportunity to broaden the conversation. It encourages planners to ask clients how they want to be understood, and whether their plans reflect that.

Related Content

• Digital Estate Planning Guide: Get Your Digital Assets in Order
• How to Tackle Digital Estate Planning in Four Easy Steps
• How to Store Your Financial Documents the Right Way
• 10 Things You Should Know About Estate Planning
• 5 Estate Planning Things You Need to Do Now, From a Financial Planner

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

As children reach adulthood, many parents assume they'll still be able to step in when needed. In reality, that dynamic often changes quickly. Once a child turns 18, parents can lose both visibility and influence in ways they may not expect.

That's why I suggest having two difficult conversations that can make a meaningful difference: The first helping your children build financial literacy, and the second ensuring you can support them effectively in a medical emergency.

Neither is especially comfortable, but both are far easier to have now than after something goes wrong.

Conversation one: Talk openly about money

Parents are often reluctant to be transparent about money with their children. Some think they're shielding their kids from stress; others are just trying to practice good manners. But in practice, silence creates confusion.

When parents don't explain what's happening financially, children tend to fill in the gaps on their own. And those assumptions are often negative.

In my work with clients in their 20s and 30s, I see the long-term effects of this all the time. Some develop a persistent fear that they'll never be financially secure, even when they're doing well. Others assume a certain lifestyle is easily attainable, only to find themselves living far beyond their means.

Much of this comes down to a lack of context. Income and lifestyle are not always aligned in obvious ways. Some high earners live modestly, while others stretch their budgets to maintain a certain standard of living. Without visibility into the numbers behind those choices, children can develop a distorted understanding of what things actually cost.

That's why it's important to start talking about money earlier, and more specifically, than many families are comfortable with. If you start with simple conversations in the early teenage years, and let the discussions become more detailed as the child grows up, they should have a working understanding of how money functions in day-to-day life by the time they prepare to leave for college or turn 18.

That may include not just opening a bank account, but also:

• How to use debit or credit cards responsibly and build strong credit
• How to budget for fixed and variable expenses
• How student loans, interest and repayment work
• The importance of saving early and how compounding works
• The difference between gross and net pay (including taxes and benefits)

This doesn't mean sharing every detail, but it does mean giving your children a clearer picture of how financial decisions are made. That can include discussions around income ranges and career paths, the cost of housing and day-to-day expenses, savings and investment priorities and trade-offs, and financial setbacks.

Be candid about the full picture, and your children will begin to develop a more intuitive understanding of how money works.

You might also consider bringing a third party into the conversation. If you work with a financial adviser, your child could sit in on a meeting. Hearing these discussions from an objective professional can make the information feel less charged and more credible than when it comes directly from a parent.

Over time, this kind of exposure can reduce anxiety and build confidence. Instead of reacting to money problems with fear or avoidance, your children can begin to see it as something they can understand and manage.

Conversation two: Prepare for a medical crisis

Once your child turns 18, you may assume you'll still be able to step in if something goes wrong. Legally, that's no longer the case.

Under federal privacy laws, doctors and hospitals generally cannot share medical information with you without your child's written consent. That means parents can find themselves in the ER unable to get updates, speak with physicians or understand what's happening in real time.

Consider an unfortunately common scenario: A student experiences a severe mental health episode away from home. Without prior authorization, parents may not be able to speak with providers, review treatment plans or even confirm what care is being given. But with the right documents in place, they can stay informed and provide support when it matters most.

This is why the conversation needs to happen early. You might even make it part of the college send-off, alongside setting up a bank account.

The most important step here is signing a Health Insurance Portability and Accountability Act (HIPAA) authorization form, which authorizes medical providers to share information with you. While HIPAA is a federal law, the specific forms and requirements can vary by state, so it's also important to confirm local requirements.

But remember that this is a conversation. Your adult child may have their own concerns about privacy or independence. Framing this as a way to support them, not control them, can make the discussion more productive.

Don't wait until something goes wrong

These are not conversations you want to delay until something goes wrong. Financial habits are far easier to build early than to correct later, and in a medical crisis, preparation may determine whether you can step in at all.

Discussing both proactively can give your children a stronger foundation for navigating adulthood. These conversations may feel uncomfortable in the moment. But they are far less difficult than the confusion and stress that can arise when these issues are left unaddressed.

Related Content

• Protecting Family Wealth Means Allowing Your Kids to Get Involved — and Letting Them Make Some Mistakes. Here’s Why
• What Financial Lessons Are Your Kids Learning by Watching You? 5 Ways to Help Them Develop Healthy Money Habits
• I'm a Financial Literacy Expert: Schools Can Teach Kids About Money, But Guess Who They Learn From the Most?
• I'm a Financial Pro: This 5-Step Plan Can Help High Earners Pay Off Significant Student Loan Debt in 5 Years
• Trusts for Child Influencers: What Families Need to Know

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at five tax questions on inherited property, including the tax basis upon death. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Inheriting gold and silver

Question: I own highly appreciated gold and silver bars and coins. When I die, will my children get a stepped-up basis in this property?

Joy Taylor: Under the tax law, a decedent’s unrealized gains aren’t hit with federal income tax at death, and heirs step up or step down their basis in the assets they receive, equal to fair market value on death. So yes, your children would take a stepped-up tax basis to fair market value in the gold and silver bars and coins that they inherit from you.

2. Inheriting property with a built-in loss

Question: I own stock that currently has a built-in loss, meaning I paid more for the shares then what they are now currently worth. If I die tomorrow, what tax basis will my heirs take in the stock?

Joy Taylor: Under the tax law, a decedent’s unrealized gains aren’t hit with federal income tax at death, and heirs step up or step down their basis in the assets they receive, equal to fair market value on death. Not many people are aware that when they inherit loss property, they take the lower fair market value at the time of death as their tax basis in the property. That's because most estate planners and tax advisers focus on stepped-up basis for appreciated inherited assets.

If you die tomorrow, your heirs' basis in the stock would be the fair market value of those shares upon your death, which would be a lower tax basis then what you actually paid for the stock. This means that the built-in capital loss in your shares is gone forever. You may want to think about selling the loss property before you die, so that you can take advantage of the capital loss, especially if you have other capital gains that the loss could offset.

3. Tax rules for a jointly-owned home

Question: My spouse and I jointly own our home, which has substantially appreciated. How do the tax basis rules work if one of us dies?

Joy Taylor: With regards to your house, which has appreciated, if you don’t live in a community property state, half of the home will get a step-up in basis upon the death of the first-to-die spouse. The rules are more generous if the house is held as community property. The entire basis is stepped up to fair market value when the first spouse dies.

4. Inheriting rental property

Question: I own rental property that has appreciated since I first bought it. When I die, I plan to leave it to my child. Does he get a step up in basis in the property upon my death? Also, what happens to the depreciation that I had previously deducted on the property?

Joy Taylor: The answer to your first question is yes, your beneficiary would take a stepped-up tax basis in the rental property when you die. That means your child's basis in the inherited property would be its fair market value on the date of your death.

I haven't looked at the depreciation issue before, but it is my impression that your depreciation essentially disappears when you die. Again, your beneficiary takes a stepped-up tax basis in the property. If he decides to keep renting the property, he would depreciate it over 27.5 years, beginning in the year he inherited it and using the stepped-up tax basis.

5. Tax rules for co-owned stock

Question: My mother bought shares in a company in 1987 for $2300. The stock is now worth over $400,000. At some point between 1987 and 1997, she added my name to the shares as joint tenancy. She died last month, and now I own all the shares. What is my cost basis in the shares?

Joy Taylor: I don't know for certain, but I will give you my thoughts. I think when your mom added your name to the shares as joint tenancy, it is treated for tax purposes as if your mom made a gift of half of the stock to you. If it is considered a gift, then I would think your tax basis in the shares equals half of your mom's original cost basis plus half the value of the shares on your mom's date of death.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not, and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

More Reader Questions Answered

• All Ask the Editor Q&As
• Ask the Editor: Will I be Audited by the IRS?
• Ask the Editor: Deductions for Self-Employed Retirees
• Ask the Editor: 10-Year Rule for Inherited IRAs
• Ask the Editor: Tax Questions on Roth IRA Conversions
• Ask the Editor: Reader Questions on QCDs

If you're like me, you love your children more than anything.

You spend years, even decades, crafting a life centered around protecting and supporting them. You work thousands of hours building a successful career, growing investments, purchasing a home, saving for your future and creating opportunities you might not have had yourself.

Every decision is made with the hope of creating more security, stability and possibilities for the people you love most.

But surprisingly, few of us spend enough time preparing our families for what would happen if something unexpectedly happened to us.

Instead, we leave our loved ones scrambling to locate accounts, untangle financial assets, manage legal paperwork and guess what our wishes are during an already emotionally devastating time.

The chaos families face when nothing is organized

When my father died two years ago, I was at a loss and didn't know where all his accounts were held, what bills to pay and what insurance he had, if any.

Even spouses can struggle to access passwords, manage digital accounts or determine which advisers to call first.

As Francis Financial's "Because I Love You: A Legacy Planning Companion" explains, organizing your affairs is an act of love that provides your family with clarity, guidance and support during one of life's hardest moments.

If you truly love your family, one of the greatest gifts you can give them is organization.

Veronica, a dear friend of mine, spent nearly a year trying to locate all her mother's savings and investment accounts after she died. Veronica struggled to figure out where the insurance policies were, and she also missed paying several bills because the utility statements were difficult to track down.

Instead of having space to grieve, Veronica was buried in paperwork, overwhelmed, frustrated and emotionally exhausted.

What made the situation especially painful was that Veronica's mother had been incredibly organized in every other area of her life.

Her mom never realized how difficult things would become if all the important financial information stayed locked inside her head instead of being written down.

That's why one of the most important parts of legacy planning is creating a clear roadmap your family can follow.

This includes organizing:

• Financial accounts
• Insurance policies
• Healthcare directives
• Legal documents
• Contact information for trusted advisers

Your digital life matters, too

Credit cards, banking, investments and brokerage accounts, retirement plans, cryptocurrency, as well as health, life and long-term care insurance, subscriptions, utilities, even family photos often exist entirely online. Without usernames, passwords and access instructions, loved ones can spend months untangling financial information.

One of the easiest and most secure ways to organize all your usernames and passwords is through a password manager. You can securely store banking logins, investment accounts and other sensitive information in one encrypted location rather than relying on handwritten notes or scattered spreadsheets.

Many password managers also allow family members you list to gain access if something happens to you.

The conversations families avoid — but shouldn't

Many people assume inheritance disputes only happen in dysfunctional families. In reality, confusion and unclear expectations are often the true source of tension, conflict and lawsuits between even close family members.

Do you really want your kids to guess the answers to questions such as:

• "What did Mom want?"
• "Who is responsible for handling the finances?"
• "Why was one child treated differently in the will?"
• "Why was this never discussed?"

Communication becomes especially important in blended families or when children have different financial needs or levels of maturity.

Fairness and equality are not always the same thing. One child might have received more financial support throughout life, while another might have provided caregiving for aging parents or run the family business without proper compensation.

How to start a conversation without making it awkward

Many mothers avoid these conversations because they feel uncomfortable or fear upsetting their children. The best approach is simple and straightforward.

You might say:

• "I've been organizing our family finances, so things are easier if something happens to me."
• "I want to make sure you never have to guess about my wishes."
• "I've been updating important documents and want you to know where everything is."

You don't need to discuss every dollar immediately.

Start with the basics:

• Where documents are located
• Who your advisers are
• Who would make medical decisions
• How you would want your family to work together

I recently had this conversation with my own children. I really was surprised by how much they were quietly worrying about things. A close family friend recently died, and the kids were left totally on their own.

After seeing that happen, my kids wanted to know what would happen if my husband and I died unexpectedly, as well. Their questions were not really about money. They wanted reassurance that there was a plan and that they would be OK.

That conversation made me realize how much comfort and security clear communication can provide. I explained how much life insurance we had and shared who our trusted advisers are, as well as who would step in to help support them.

Then I walked them through the succession plan we had in place for my business. The kids were really worried about taking care of my staff, which is so sweet. I could see the visible relief on their faces.

The greatest gift you can leave your family

Many families never discuss aging preferences, long-term care wishes, healthcare decisions or end-of-life care because the conversations feel too uncomfortable.

However, avoiding those discussions often leaves loved ones carrying enormous uncertainty, stress and even guilt during some of the hardest moments of their lives.

Francis Financial's "Because I Love You" legacy planning companion helps create space for these conversations by organizing important information surrounding medical care, caregiving wishes, living arrangements, trusted decision-makers and personal comforts.

That kind of clarity becomes an extraordinary gift during emotionally difficult moments.

When my mother was nearing the end of her life, one of the greatest comforts I had was knowing the decisions we were making were truly what she wanted. She had made it clear she didn't want to remain on life support simply to prolong the inevitable. We didn't have to spend those final moments questioning ourselves or wondering whether we were making the wrong decisions, because she had prepared us.

Instead, I was able to sit beside her and hold her hand as she took her last breath. I was at peace knowing we were honoring her wishes exactly as she intended.

That preparation was one of the greatest acts of love she ever gave our family.

Related Content

• An Estate Planning Guide for Women: 5 Essential Moves to Prepare for When Life Happens
• I'm a Financial Planner: This Is Why Your 2025 Tax Bill Shocked You (Plus, 5 Tips to Keep This Year's Taxes Under Control)
• Your 5-Step Guide to Financial Freedom After Divorce, From a Financial Planner
• When Can Tax Planning Be an Act of Love? This Family Found Out
• Divorce and Your Home: An Expert's Guide to Avoiding a Tax Bomb

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The financial professionals who contribute to Kiplinger's Adviser Intel are always here to make sure you have the information you need to make critical decisions about your retirement planning, estate planning and tax planning.

Annuities are a regular topic. Because of their complexity, they're often misunderstood.

This quiz is designed to test what you've learned about annuities. Let's see what you know! (And don't worry if you miss an answer: You can follow the links below the quiz to brush up on your knowledge.)

Please note that this quiz has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or financial advice.

READ MORE

• The Truth About Annuities: The Question Isn't 'Are They Good or Bad?' It's 'Are They Appropriate for You?'
• What are Annuities? The Different Types and How They Work
• Annuities: Do You Need Guaranteed Income In Retirement?
• The Key to Choosing the Right Annuity: Do Your Homework
• Why So Many Experts Consider Annuities a Win for Retirees

Many closely held family-owned businesses don't have well-architected succession plans.

Children often choose to go in different directions, building lives outside the family business, and unaddressed succession issues can create uncertainty and family stress.

Even when there are apparent successors — such as adult children who grew up in the business — there's still a distinct need for open communication and careful planning.

Take the example of Tom, a septuagenarian sole owner and CEO of a sales representation and distribution business, who learned the business at the foot of his father, the founder and original owner.

During his tenure, Tom landed exclusive relationships with several powerful national brands and grew the business into a locally well-known brand with more than $20 million in annual sales, one year reaching more than $5 million in EBITDA.

Tom's sons each showed interest in working alongside him. They nurtured and developed sales contacts, met with the company's accountant, hired and fired employees — they learned the ropes. Tom's daughter expressed no interest in the business; she became a successful professional and moved across the country.

Tom expected one of his sons would eventually emerge as the clear leader, fall away or become interested in something different. Tom also thought that his daughter, busy with her own successful professional practice, would have no real interest in any of it.

He decided he'd figure out the business's succession "when the time comes."

In retrospect, what eventually played out was foreseeable, avoidable and not at all uncommon.

What wasn't going to work

The brothers devolved into rivals. Each son had important valuable skills that could help the business, but dividing leadership in a shared power arrangement wasn't going to work.

Then, as it turned out, Tom's daughter and her children had quite a significant interest in the business. While she never had any interest in running the business, it became clear that Tom's daughter had always carried an interest in what she perceived as "her share" of the finances. Her perception of fair didn't necessarily align with anyone else's.

The results? First, customers heard of possible uncertainty in the ranks. Management saw there was no clear designated leader. Tom's daughter? Things devolved to the point where she threatened to sue unless "her rightful share" of the business was clearly delineated.

This was not only a terrible mess for this family's relationships, but also a very challenging set of facts for the business and a clear threat to its continued success.

With closely held businesses, especially those that are family owned, it's rare that the primary owners haven't at least thought about succession.

But knowing the possibilities for difficult conversations, trying to avoid "playing favorites" and having a parental desire to see healthy relationships among their children all encourage procrastination.

Dodging issues postpones the inevitable

Unfortunately, avoiding the issues doesn't make them disappear; it just postpones facing them — and frequently, there is a very real cost.

Not only do unresolved issues tend to worsen and positions tend to entrench during periods of silence and no communication, but the business at the heart of these situations incurs substantial additional risk from the banked uncertainty.

There are several obvious problems:

• When family is involved, whatever happened at dinner last Christmas inevitably gets inseparably intertwined with why someone made a particular strategic business decision for the company.
• The company — which technically only speaks through its officers, directors and owners — suffers from the uncertainty and the potential picking of sides among key stakeholders.
• Instead of uniting a family around all the work that was done and the successes created, uncertainty in succession planning fosters divisiveness through infighting over control and economics, and legacy suffers.

Avoiding procrastination

The most successful family-owned/operated businesses share one common characteristic: Its key stakeholders communicate openly, honestly and often about the business.

These families openly acknowledge that they might have differing — often competing — interests when it comes to the business, and doing so can successfully compartmentalize these business issues. A few tactics can help.

Leverage the advisers. A trusted lawyer and a trusted accountant can carefully explain to all involved that they're working for the business. When representing the company — not any particular individual's — interests, they can be present to put the business first.

Having these advisers present and speaking for the business is a great way to encourage individuals to openly voice their own personal interests, knowing that it's the advisers' job to represent the company.

Focus on distinct business roles. Trying to avoid amorphous, subjective perceptions such as "That's not fair!" and instead relying on objective qualifications, skills and the business's needs can be very helpful.

Considering what characteristics the CEO should best display vs perceptions of "what's fair" to each of the owner's children can help with this. The subjective outcome of a scenario will always be present, the soft issues will always need to be addressed, but that's much easier to do after conducting a clear, logical, defensible analysis on the objective issues.

Once parties agree on the characteristics defining the best qualified candidate, they can then address the implications. "What's fair" has a place in the overall discussion about the business, but it should not be the guiding principle.

Write the plan and share it. Writing down conclusions and consensus — even directional consensus if the group hasn't finalized every specific detail — can be effective for some. The act of meeting with advisers and writing down outcomes goes miles toward the perception of a shared, well-vetted solution.

An experienced business lawyer partnering with an experienced accountant makes a perfect team to help closely held businesses navigate and address succession issues.

While every situation is unique and challenging — especially when family is involved — there's a common thread among successful ones: open, early communication.

Assembling professionals, scheduling a meeting (or a series of them), encouraging open and frank conversation, and documenting the progress and outcomes can help families work through succession planning effectively, considering what is best for both family and business.

Don't wait to figure it out later.

Related Content

• I Found Out What It Takes for a Family Business to Thrive
• Succession Musts: Thoughtful Planning and Frank Discussions
• The Secret to a Seamless Business Handover: Combined Estate and Succession Planning
• The Entrepreneur's Exit: How to Sell (or Pass on) Your Business Without Losing the Family
• Financial Planning Tips for Business Owners Raising Kids

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

A client of mine, a woman in her 50s, lost her husband without warning. He had handled every financial detail for the family: The investments, the insurance, the bill payments.

He managed it all through his work email on his work laptop. When he died, she lost access to their entire financial operating system overnight.

She didn't know which checking accounts were used to pay the bills or whether they were paid by auto-debit, bill pay or check. She didn't know where the investments were or whether life insurance existed. She knew they were financially secure in a general sense, but had no knowledge of the specifics. And she had to piece it all together while grieving and unable to think clearly.

The stress left her paralyzed.

I share that story not to alarm you, but to make a point: The life events that do the most damage to a financial plan aren't market downturns. They're the personal ones. Job loss. Illness. Divorce. The death of a spouse. A parent who can no longer live alone.

These events hit harder than a bear market because the financial impact is often larger, longer lasting and tangled up in emotions that make clear thinking almost impossible.

And yet most financial plans barely account for them.

Starting the conversation: A framework

The most effective preparation I've seen isn't a product or a policy. It's a series of conversations, held regularly, in calm moments rather than a crisis. I call it the what-if framework.

It starts with a simple question posed to the people who matter most: "If something happened to me tomorrow, would you know what to do?" For most families, the honest answer is no.

The framework has three parts:

1. Have frank conversations before a crisis forces them

Bring up the difficult topics (incapacity, long-term care, what happens if a spouse dies first) during ordinary moments, not emergencies. Lead with empathy, not urgency.

Use what-if questions to ease into the discussion: "If you couldn't stay in the house safely by yourself, would you want full-time caregivers, assisted living or to move in with family?"

The goal is alignment. When everyone knows the plan and agrees on the direction, the stress of an unexpected event drops dramatically.

I practice this myself. Every time I visit my mother, who lives alone, we review her goals considering her current physical abilities. Because we've had this conversation so many times, it's become a predictable part of our visits. That routine is what makes it easier to talk about difficult topics. If we only brought them up during a crisis, the conversations would be 10 times harder.

2. Build a financial inventory that someone else can actually use

Both spouses (or an adult child, or a trusted person) should have access to a complete picture of the family's finances. That means an inventory of what is owned and owed, what the income sources are and how much living expenses total, a list of investment and bank accounts and how to access them and a clear description of how bills get paid.

I keep a file saved on my desktop that my 20-year-old son knows to access if something happens to me. It includes family contact information, where to find important papers, specific instructions to follow, and how to access my bank and brokerage accounts.

This doesn't have to be complicated. A single document in a known location can prevent weeks of confusion and thousands of dollars in unnecessary costs.

3. Stress-test your plan for specific scenarios

Ask yourself these questions:

• If I lost my job next month, how long could I cover expenses?
• If a spouse died, could the surviving partner manage the finances independently?
• If a parent needed full-time care, what would it cost and where would the money come from?

An emergency fund covering three to six months of expenses is a starting point, but it's not the whole answer. Think about liquidity beyond savings. Is a home equity line of credit in place? Do both spouses have credit cards in their own name? Are insurance coverages adequate, including disability income protection?

Each of these questions has a financial answer that's relatively straightforward to plan for in advance. The cost of not planning is far steeper: Credit card debt, payday loans or a surviving spouse left to figure out the family's finances while grieving.

Who starts the conversation?

The hardest part of this entire framework isn't the planning. It's figuring out who brings it up first. Nobody wants to be the one at Thanksgiving dinner who says, "So, let's talk about what happens when Mom can't live alone anymore."

In my experience, the best opener comes from someone slightly outside the family dynamic — for example, a financial adviser, an estate attorney or even a trusted family friend. Not because the family can't do it themselves, but because an outside voice removes the emotional charge. It turns a loaded topic into a planning exercise.

If that's not possible, this alternative works well: "My adviser brought this up at our last meeting, and it got me thinking about whether we've covered our bases." That framing makes it feel collaborative rather than confrontational.

Most importantly, the conversation needs to happen before a crisis makes it unavoidable.

Don't plan in silos

The biggest blind spot I see isn't a missing document or a forgotten account. It's a lack of coordination between the pieces that already exist. Estate planning, tax strategy, insurance coverage and investment allocation all affect one another, but most families treat them as separate line items handled by separate people at separate times.

I've seen a surviving spouse discover that the estate plan hadn't been updated after a move to a new state, which meant the will didn't hold up the way the family expected.

There have been instances where retirement accounts and life insurance policies weren't updated with accurate beneficiaries and therefore included deceased family members or an ex-spouse.

One of the more heartbreaking situations was when a family had not named a guardian for minor children, leaving a court to decide. All these examples illustrate one critical lesson: Ignoring key elements of your financial plan can have significant consequences for your ultimate goals.

This is where a family meeting pays for itself. Sitting down with everyone who touches your financial picture (your tax preparer, your estate attorney, your insurance agent, your adviser) and walking through a "what happens if" scenario will expose gaps that none of them would catch alone.

What it really comes down to

If there's a single idea I'd want every reader to take from this, it's that the most important financial planning tool you own isn't a spreadsheet or a software program. It's a recurring conversation with the people who will be affected if something changes.

Start it today. Keep it going. Make it routine. The families I work with who do this aren't just better prepared financially. They're more confident, more connected and far less likely to be blindsided when life does what life does.

Related Content

• Estate Planning Checklist: 5 Tasks to Prioritize to Make Things Easier for Your Family
• Protect Your Family's Future: Avoid These 12 Common Estate Planning Mistakes
• Caring for Aging Parents: An Expert Guide to Easing the Financial and Emotional Strain
• Six Ways to Make Talking With Family About Estate Planning Easier
• 7 Questions to Help Kick Off an Estate Planning Talk With Your Parents

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Dear Wealth Wise: We retired at 57 due to a quick succession of inheritances and tax consequences, but are still too young to access our own retirement savings. We did manage to leave our children with no debt from college or graduate school. Now our 25-year-old wants to attend law school to do public interest law, but the changes to federal loan programs and the loan rates would leave over $180,000 in student loans at graduation. Should we consider providing a low-interest personal loan? What implications for our retirement should we consider?
— Retired But Still Parenting

Dear "Retired But Still Parenting": It's not always easy for young adults to know what professional path they want to follow off the bat. And it's pretty common for college students to major in something that ends up having little to nothing to do with their careers.

There's nothing wrong with being 25 years old and realizing you want to pursue a law degree. And the return on investment could end up being outstanding.

Georgetown University reports that median earnings, net of debt payments, are $72,000 four years after graduation for all law school graduates. And for graduates of top schools, they can exceed $200,000.

But financing a law degree can be daunting, especially in light of student loan changes under the One Big Beautiful Bill Act. Now, law students are generally limited to $50,000 per year in federal loans and $200,000 in total. (While the average cost of law school is about $50,000 per year, elite schools may charge over $80,000 per year, bringing the total cost of a three-year law degree to over $240,000.) Even if these new caps cover all costs, it can still be a lot of debt to graduate with, despite the strong earnings potential.

Of course, for people going into public interest law, the earnings potential may be more capped. On the plus side, public interest lawyers may be eligible for student loan forgiveness down the line.

The Public Service Loan Forgiveness (PSLF) program forgives federal student loan balances for qualifying professionals after 120 monthly payments. Also, almost all law schools offer a Loan Repayment Assistance Program (LRAP), which provides grants or forgivable loans to help qualifying lawyers make their 120 loan payments toward forgiveness.

The catch? A private family loan is not eligible for the PSLF program, and in some cases, a parental loan might also disqualify a student from LRAP support. The result is that the family might saddle their son with a $180,000 private loan when getting a qualifying loan would yield lower out-of-pocket costs through school grants and federal debt forgiveness.

Still, incoming law students should not bank on forgiveness; they may have a change of heart on their career path, or the rules on forgiveness may change. That means the daunting math of financing a law degree may largely stay the same.

Here, we have a couple who retired at 57 due to a series of windfalls. They're still a few years away from accessing their retirement savings penalty-free, and they're wondering whether it makes sense to write their son a low-interest $180,000 loan rather than have him borrow at higher rates.

Given that the going rate for federal Direct Unsubsidized Loans is 7.94%, a parent loan with an interest rate in the 3%-4% range, consistent with applicable federal rates, could yield significant savings. But will granting that loan introduce complications? Here's what the experts have to say.

Figure out where the money is going to come from

It's certainly noble to want to help your son finance a law degree more affordably. But before you start handing out money in any shape or form, make sure you know where it's going to come from, says Patrick Simasko, estate planning attorney at Simasko Law.

"Any assistance you provide should be structured so it protects your retirement," he says. "Since you retired at 57, tapping your own 401(k) could trigger a 10% early withdrawal penalty."

Simasko also points out that there are more affordable borrowing options for law school than for retirement expenses. So before you give out so much as a dime, make sure your retirement plan can handle it, and that you won't be compromising your ability to pay your bills.

Also, don't count on an IOU from your son to make up for the money you hand over today.

"While your child may promise to help you financially once they become a lawyer, they might find other ways to spend their money," Simasko cautions. Instead, make the loan official so your son is obligated to repay it.

Seth Friedman, Sr. Managing Director at Abacus Finance, has similar guidance.

"Retiring at 57 means that you might go a number of years without total access to certain retirement assets, so the preservation of liquidity during that window becomes an important question," he says. "I suggest that you stress-test your retirement plan as though [the loan] will never be paid off. If that does not diminish your long-term financial security, then helping may be justifiable."

Understand the pros and cons of writing a loan versus paying tuition directly

If you're trying to help make law school more affordable for your son, paying tuition directly could be a more tax-efficient way to go about it. When you pay tuition directly, it doesn't count toward your annual gift tax limit (which is $19,000 in 2026) or your lifetime exemption.

That said, Simasko says there's a big benefit to giving your son a loan rather than covering tuition bills: He'll have some skin in the game.

"I've seen situations where parents pay the entire cost of professional school only to have the child decide halfway through — or shortly after graduation — that they no longer want to practice in that profession," he says. "Having some financial responsibility helps ensure everyone remains committed to the plan."

Friedman says that if you're going to lend your son money, it's important to make it a part of your estate plan.

"In the event that you choose to lend out the cash, be sure to document it, charge a realistic interest rate, and set up an appropriate repayment schedule according to your kid's career plans," he says. "One of the most frequent errors I see is parents unofficially loaning money, which slowly morphs into an impromptu gift."

Make sure to keep things equitable for your other children

The fact that you've managed to give all your children debt-free educations thus far is commendable. But if you're now considering $180,000 in aid for your son, it's important to make sure you're being fair to your other children, Simasko says.

"If this child receives substantial financial help from you for law school, will their other siblings expect the same assistance in return? Many families either document the assistance as a loan or treat it as an advance on that child's future inheritance to avoid misunderstandings later," he explains.

If you decide not to lend out the money and instead pay your son's tuition directly for the tax advantages, make sure to document that and be transparent with your other children about it. If you talk things through and make it clear that you're willing to offer similar assistance to your remaining children, there should be no need for resentment.

A word from Wealth Wise

There are additional reasons the couple may want to tread carefully as they consider how to support their child's law school ambitions.

First, they should estimate their son's actual earnings and ability to repay a loan after law school. Georgetown University provides a searchable database of median earnings of graduates of over 100 U.S. law schools. Then they should take into account their son's desire to go into public-interest law, which typically pays less than private practice.

Finally, the job market for law school graduates is in flux, so there's no way to predict whether or how quickly their son might secure a public-interest legal position. With rising applications to law school and AI disrupting entry-level positions for new graduates, their son may find fewer entry-level legal jobs just as he starts his career. In that case, the parents may have to accept that the $180,000 loan is really a family gift.

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our writers and experts, in this advice column, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial adviser regarding any questions you may have in relation to the matters discussed in this article.

Read More

• We Want to Give Our Daughter $200K for a Home. We Already Paid for Her Wedding, and Our Sons Say We Are Being Unfair.
• I Have Two Homes, But Three Kids. Can My Estate Plan Be Fair?
• We're 54 With $1.8 Million. My Wife Wants to Start a College Fund for Our Grandson, but I Think We Should Keep Funding Our Retirement.

Editor's note: This article is the first in a three-part series on the benefits of taking a more thoughtful and proactive approach to financial planning.

For decades, wealth planning has revolved around obvious life milestones, such as marriage, birth, retirement and death. These moments trigger conversations, necessitate action and carry a sense of urgency.

But the most complex planning challenges rarely begin with these milestones. In fact, they begin in the quieter moments well before the event takes place. I would even argue that these milestones are often the period at the end of a sentence, as opposed to the start of one.

This three-part series focuses on those quieter moments — the transitions that happen gradually, often without a clear starting point, and have lasting consequences if they are not addressed early. The first of these moments is when children transition into adulthood and become financially aware.

The knowledge problem

Many families treat wealth education as something that begins at the time of an asset transfer. Often, real conversations only happen when a significant monetary event is about to occur, such as the termination of an UGMA account, a distribution from a trust, or an unexpected inheritance.

By that point, families are often trying to rush a single conversation about wealth that should have been done gradually.

Meanwhile, children often create their own narrative in the absence of knowledge. They may assume that the existence of wealth means future financial guarantees. The opposite can also be true: They may develop resentment for well-meaning parents who worry that wealth will spoil them.

In the absence of communication and guidance, children fill in their own blank space with what they think they know. Once those expectations and sentiments harden, they can be difficult to change.

Unfortunately, many young adults have never had the chance to practice decision-making around money in a meaningful way. We often say we want the next generation to be responsible, but responsibility is not taught through one conversation or one podcast — it is learned and developed over time.

Responsibility comes from exposure, repetition and the chance to make choices while the consequences are still manageable. It also includes making mistakes when the stakes are low and parents are still around to help course-adjust if necessary.

Learning by doing

Families can begin by giving the next generation something concrete to engage with —something small but real. That can mean involving children in the discussion around family philanthropy, where they can learn to evaluate causes, priorities and trade-offs.

A donor-advised fund can be a particularly useful training ground for both financial management and philanthropy.

Alternatively, it might mean letting them sit in on an investment review meeting with the family adviser, so they can see how decisions are discussed and made. It may make sense to include a child as a non-voting participant in the next family investment.

Other families may prefer to give children a small sum of money to manage, not necessarily to seek a certain return, but for the experience itself.

A simple investment account that the child can access with an app can be a good way to learn about investing and the markets.

All these experiences create meaningful opportunities to learn by doing.

The family trust

In the right circumstances, an adult child may even serve as a co-trustee of a trust alongside a more experienced individual or institution. All these create meaningful opportunities to learn by doing.

A trust can be more dynamic than people assume. Historically, many families thought of a trust as a static legal vehicle. It held assets, imposed guardrails and produced distributions. Increasingly, families are recognizing that a trust can do more. It can also support development.

If drafted thoughtfully, a trust can create structure around the use of funds for purposes the grantor values, such as education, entrepreneurship or the purchase of a first home.

It can also create a framework where a beneficiary becomes familiar with the process, accountability and responsibility over this stewardship of wealth.

Depending on the structure of the trust, the beneficiaries may include future generations. The trust then becomes not just a wealth transfer tool, but a teaching tool for a family legacy.

However, a lack of understanding of roles and responsibilities within a trust structure can lead to surprises.

For example, beneficiaries are often surprised by how much discretion a trustee actually has, and the conditions attached to the assets imposed by the grantor in the trust agreement. They often also lack the appreciation of the fiduciary responsibility that a trustee has.

This is why families need to talk not only about the "what," but also about the "who" and the "how."

• Who will play what role in the family structure?
• How will decisions be made?
• How should a beneficiary think about access versus ownership?
• If one child is expected to take on more responsibility, is that because of geography, expertise, availability or family dynamics?

If not explained, role assignments can easily be misinterpreted as judgments about love, trust or fairness.

Advisers have an important role to play here as well. Information is more accessible than ever, but information is not the same as understanding or judgment.

Families do not just need someone to explain what a trust is — they need someone who can help translate the purpose of a structure, think through the behavioral implications, and coordinate the legal, fiduciary and educational aspects of the plan.

In many cases, the adviser also serves as a neutral voice, helping parents discuss difficult topics with children in a way that is objective.

Shaping the next generation

A child's transition from financial dependence to awareness does not show up in a single defining moment. It is one of the hardest shifts a family will navigate. Every child is different, even within the same family.

By the time assets actually change hands, the mindset, habits and expectations of the next generation are already taking shape. Getting ahead of this early, and adopting a "growth mindset" on the parents' part is critical — some conversation, even if not perfect, is better than no conversation at all.

In the next article, I will turn to another quiet transition: The period when parents are still healthy, but planning for old age has not yet begun. Like this transition, it is far easier to address before it becomes urgent.

Related Content

• A Financial Planner's Tips for Teaching Kids About Wealth Without Creating Entitlement
• Will Millennials' Attitude Toward Money Put the Family Wealth at Stake? A Wealth Adviser Explains How Families Can Find Common Ground
• Legal Advice for Parents with Kids in That ‘Awkward Stage’ of Semi-Adulthood
• 'Drivers License': A Wealth Strategist Helps Gen Z Hit the Road
• Three Ways Parents Can Transfer Wealth to Help Their Kids

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

For years, the message has been simple: Max out your 401(k), take the tax deduction, and let it grow.

To be fair, that advice has helped a lot of people build meaningful retirement savings.

But for many higher-income, consistent savers — especially those now sitting on large IRA or 401(k) balances — that same strategy is starting to show a different side, not during the working years, but later, when they use money … or they're forced to withdraw it.

What looked like smart tax planning along the way can quietly turn into a tax problem on the back end.

When big balances become a different kind of asset

By the time many people reach their 60s or early 70s, their largest pool of money isn't in a brokerage account or even real estate — it's in pretax retirement accounts.

On paper, that feels like a win.

But unlike a taxable account, where gains might be taxed at favorable capital gains rates, every dollar in a traditional IRA or 401(k) is eventually taxed as ordinary income. There's no step-up in basis, no preferential treatment.

While the balance might read $1 million, $2 million or $5 million, that's not really the amount you "own" in the same way you would in a taxable account. A portion of it — sometimes a significant portion — belongs to the IRS.

If you don't need the money for spending, the situation can get more complicated, not less.

The RMD issue — even if you don't need the income

One of the biggest surprises for many retirees is how required minimum distributions (RMDs) actually play out.

Starting in your early 70s, the government requires you to begin pulling money out of those accounts. It doesn't matter whether you need the income or not.

For someone with a modest balance, this might not be a big deal.

But for someone with a large IRA — those required withdrawals can be substantial — and every dollar is taxable.

We've seen situations in which retirees are forced to take income they don't need, only to find themselves:

• Bumped into a higher tax bracket
• Paying more tax on Social Security
• Crossing thresholds that increase Medicare premiums

It's an odd outcome: After years of careful saving, they're now managing around a tax problem they didn't expect.

The part most people miss: What happens to the kids

For a long time, there was at least a partial workaround. If you didn't use all your IRA, your children could inherit it and stretch the distributions over their lifetimes.

That changed with the SECURE Act.

Today, in most cases, non-spouse beneficiaries have to empty an inherited IRA within 10 years.

That sounds simple enough, but the tax impact can be significant — especially depending on when those withdrawals happen.

Picture a scenario in which a couple leaves a $2 million IRA to two adult children. Each inherits $1 million. Those children are likely in their peak earning years, already in relatively high tax brackets.

Now they must layer in distributions from that inherited IRA over a 10-year window. However they time it, those withdrawals are taxed as ordinary income.

Not capital gains, not at a reduced rate — it's just straight income, on top of everything else they're earning.

In many cases, a meaningful portion of that inheritance goes to taxes in a relatively short period of time.

The irony: You might not even need the account

What makes this more frustrating is that the issue tends to show up most clearly for people who saved well and lived within their means.

A lot of higher-net-worth retirees don't rely heavily on their IRAs for their lifestyles. They might have other assets, or don't spend at a level that requires tapping those accounts aggressively.

But the structure of pretax accounts doesn't really allow you to ignore them. Between RMDs during your lifetime and the 10-year rule after death, those dollars are going to be taxed one way or another.

What many people thought of as a long-term asset often behaves more like a delayed tax liability.

A better way to think about it

This isn't about saying 401(k)s were a mistake. They've been incredibly effective accumulation tools.

The issue is concentration.

Just as you wouldn't want all your investments in one stock, having the majority of your wealth tied up in one tax category can create limitations later on.

More planning today is focused on building a mix across different "tax buckets":

• Pretax (traditional IRAs and 401(k)s)
• After-tax / tax-free (Roth accounts)
• Taxable accounts

That mix gives you options. In retirement, options matter.

Being able to choose where income comes from — rather than being forced into one source — can make a noticeable difference in how much you pay over time.

The window to fix it

The good news is this is something that can be managed, particularly in the years leading up to RMDs.

That might involve gradually shifting some assets into Roth accounts, being more intentional about withdrawals earlier in retirement, simply coordinating income more carefully year to year or insuring the tax liability to an extent.

"Max out your 401(k)" is still good advice. It's just not complete advice — at least not for everyone.

For those with larger balances, especially those who might not need the funds, the conversation needs to shift from just saving to how those savings will eventually be taxed.

At the end of the day, it's not just about how much you've built.

It's about how much of it stays in your family or flows in accordance with your wishes.

Related Content

• I'm a Financial Planner: This Is How the Tax Torpedo Targets Wealthy Retirees (and How You Can Step Out of Its Path)
• Will Taxes Shred Your 401(k) or IRA During Your Retirement? It's Very Likely
• Is Your Retirement Plan Built for 2026 — or Stuck in 2006?
• Three Essential Strategies for Managing Your Inheritance
• 3 Mistakes Business Owners Can't Afford to Make When Planning Their Exit Strategy

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

If you filed your taxes last month, you know the pain of capital gains is real and often a surprise come April.

I recently wrote two surprisingly long and complicated columns on strategies to minimize the tax hit that comes when you press the "sell" button on an appreciated stock.

In one of those columns, I talked about the "gift up" strategy, which is incredibly effective if executed properly. Short version: You give assets, typically to your parents, and when they pass, they (as long as all goes according to plan and you follow the rules) pass them back to you with a step-up in basis.

This is a similar idea, but the gift is down, i.e., to your kids.

We work with folks in or near retirement, which is typically the sweet spot for such a strategy. We also work with people who tend to be comfortable financially, when they can say with a level of confidence that they'll be OK. That allows the flexibility to think about how they can help their kids.

Make sure you're financially secure first

When you give stock to a child, it's considered a completed gift, which means you're not getting that money back.

You should double-check your financial plan to make sure you're going to be financially secure before considering this.

If you don't have a plan or want to double-check the one you have, you can access a free version of the software we use.

The idea here is simple. Want to give your kids money for a down payment? Want to help cover daycare expenses? Instead of writing a check, transfer stock into their account.

When you transfer stock, there is a carryover in basis. That means if you bought XYZ stock for $50 and now it's worth $250, there is still a $200 unrealized gain that will be realized when they sell.

Why do it? This works in a situation of tax arbitrage. In English, this works if their capital gains rate is lower than yours.

What to know about tax rates

There are several income tax brackets, and most people have a general sense of their progressive nature. People might not realize that the same sort of thing exists on the capital gains side.

While many people fall into the 15% capital gains bracket, you can end up paying 0%, 15%, 18.8% (net investment income tax) or 23.8%, depending on what your taxable income is.

Many states also apply their income tax rate to capital gains. In an ideal scenario, you're giving to kids who are in school or at the beginning of their careers and have capital gains rates of zero.

However, it's still a win if their rate sits anywhere below yours.

Here are the capital gains brackets without the net investment income tax, which is what adds that 3.8% for the top two brackets:

It's important to point out that these thresholds are based on taxable income, which is gross income less deductions. If your unmarried daughter is making $75,000, there still might be an opportunity here.

If you're nodding, raising your hand or both, press pause.

What's the gift's purpose?

I often caution clients that giving money can be a rope, or it can be quicksand. Most of this depends on the child, and you probably know which it is.

However, it also depends on the gift's purpose. I am a fan of helping with one-time expenses or expenses on a finite timetable. That's why I mentioned down payments and daycare.

I am not a fan of gifts without an intended goal. Those tend to disappear or reappear in the form of something that gets parked in a garage.

Related Content

• How Do I Gift Stocks?
• Three Ways to Give to Your Kids Tax-Free While You're Still Alive
• I'm a Financial Planner: If You're a Wealthy Retiree Who Ignores These 3 Retirement To-Dos, You're Courting Significant Financial Risk
• I'm Retired and Hate Being a Landlord. Should I Sell My Rental Property?
• 5 Options for That Stock You Have Too Much Of (Plus, the Risks to Know)

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

For families with a child or grandchild who has special needs, a properly drafted special needs trust (SNT) can be one of the most powerful planning tools available.

It can preserve eligibility for government benefits, provide supplemental support and create long-term financial stability.

But there's a mistake I see far too often — one that can quietly undermine everything a family is trying to accomplish: Naming a special needs trust as the beneficiary of tax-deferred retirement accounts.

At first glance, it seems logical. You want to protect your loved one, so you direct your IRA or 401(k) to their trust. Done, right?

Not quite.

In many cases, this creates a significant — and often unnecessary — tax burden that reduces what ultimately benefits your loved one.

Let's walk through why.

The problem: Tax-deferred accounts come with a bill

Accounts such as IRAs, 401(k)s, 403(b)s, SEP IRAs and deferred-compensation plans all share one thing in common: They've never been taxed.

Every dollar in those accounts is subject to ordinary income tax when distributed. When you're alive, you control when and how those taxes are paid. But after your death, that control shifts to your beneficiaries — and the rules change.

Under current law, most non-spouse beneficiaries must withdraw the full balance of an inherited retirement account within 10 years. That means the IRS is effectively saying: "We've waited long enough. Pay up."

Now imagine that the beneficiary is not an individual, but a trust.

When a trust becomes the beneficiary

When a special needs trust is named as the beneficiary of a retirement account, things get more complicated.

Trusts reach the highest federal income tax bracket — 37% — at extremely low levels of income (slightly more than $16,000 in many cases). That means that if retirement distributions are retained inside the trust, they can be taxed at very high rates very quickly.

Even if distributions are passed through to the beneficiary, the timing and structure of those distributions might still create inefficiencies.

The purpose of a special needs trust is not just to hold money; it's intended to stretch and protect it over time.

Large, accelerated taxable distributions can work directly against that goal.

The real risk: Losing a chunk of the legacy

Let's look at a hypothetical example.

A parent passes away with a $1 million IRA and names their child's special needs trust as the beneficiary.

Over the required 10-year period, that money must be distributed — and taxed.

Depending on how those distributions are handled, it's entirely possible that:

• Hundreds of thousands of dollars go to taxes
• The trust is forced into high tax brackets early
• The long-term growth potential is significantly reduced

In other words, a portion of what you intended for your loved one ends up going somewhere else.

Why this happens so often

This mistake is rarely intentional.

It usually happens because two separate planning tracks aren't coordinated:

• Estate planning (attorney). Create a special needs trust to protect the beneficiary
• Retirement planning (adviser or custodian). Assign beneficiaries to accounts

Both are done correctly — individually.

But without coordination, the result can be suboptimal.

A better way to think about it

Not all assets are created equal.

When you're planning for a special needs beneficiary, it's critical to understand that:

• Tax-deferred accounts (IRAs, 401(k)s) carry a future tax liability
• After-tax assets (brokerage accounts) might receive a step-up in basis
• Roth accounts are potentially tax-free to beneficiaries

From a planning standpoint, you want to be intentional about which assets go where.

Smarter strategies to consider

Every situation is different, but here are several strategies worth exploring:

1. Use tax-efficient assets to fund the trust.

Instead of naming the SNT as the beneficiary of a traditional IRA, consider funding the trust with:

• After-tax investment accounts
• Life insurance proceeds
• Roth IRA assets (in some cases)

These assets can often pass to the trust with less tax friction.

2. Leave tax-deferred accounts to other beneficiaries.

If you have multiple heirs, you might choose to:

• Leave IRAs or 401(k)s to individuals in lower tax brackets
• Use other assets to equalize inheritances

This can help improve overall tax efficiency across the family.

3. Consider Roth conversions during your lifetime.

Strategic Roth conversions can:

• Help reduce the future tax burden on inherited accounts
• Create more flexibility for beneficiaries
• Potentially allow tax-free distributions to the trust

You'll pay taxes now — but you might be doing so at lower rates than your beneficiaries would face later.

4. Coordinate your estate plan and beneficiary designations.

This is where many plans fall apart. Your attorney, financial adviser and tax professional should all be working from the same playbook.

If your special needs trust is central to your plan, your retirement account strategy should reflect that.

The goal: Protection without unintended consequences

A special needs trust is designed to provide stability, protection and dignity for someone you care deeply about.

But if it's funded inefficiently, it can also introduce:

• Higher taxes
• Faster asset depletion
• Less long-term flexibility

That doesn't mean you shouldn't use a trust. It means you should use one intentionally.

A simple question to ask: If you already have a special needs trust — or are planning to create one — ask, "Which assets are best suited to fund this trust, and which assets are not?"

That single question can help you avoid a costly mistake.

Final thoughts

Planning for a loved one with special needs is one of the most important — and emotional — financial decisions you'll ever make.

You're not just managing money.

You're building a system of care that could last decades.

By aligning your tax strategy with your estate plan, you can help ensure that more of what you've built serves the person it was meant for.

That's the outcome that matters most.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

Related Content

• Estate Planning: A Special Trust for a Special Need
• A 5-Step Plan for Parents of Children With Special Needs, From a Financial Planner
• The Illinois 'Cliff Tax': A Single Dollar Could Cost Families Hundreds of Thousands
• 8 Thrift Savings Plan Mistakes: What Not to Do With Your TSP
• Nearing Retirement? Ditch 'Hidden' 401(k) Fees

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Estate planning is complicated enough when both partners are U.S. citizens, but for couples where only one person is American, the rules change significantly at the border. For many affluent couples, the "unlimited marital deduction" is a cornerstone of estate planning — a guarantee that assets can pass to a spouse tax-free. However, if your spouse is not a U.S. citizen, that guarantee vanishes.

Without the right structures in place, the IRS will view a noncitizen surviving spouse as a "flight risk" for taxable assets, often resulting in a massive, immediate estate tax bill. To protect your legacy and ensure your spouse’s financial security, you need a specialized tool: the Qualified Domestic Trust, or QDOT.

Here, we will be focusing on noncitizen spouses who are domiciled in the U.S. It is worth noting that the rules for noncitizen spouses who aren't domiciled in the U.S. are even stricter.

What is a QDOT, or Qualified Domestic Trust?

When planning for a noncitizen spouse, the primary hurdle is the absence of the unlimited marital deduction. For U.S. citizen couples, assets can pass between spouses at death entirely tax-free, regardless of the amount. However, if the surviving spouse is not a U.S. citizen, the IRS generally denies this deduction to ensure that assets don't leave the country before estate taxes are paid. That is where the QDOT (Qualified Domestic Trust) comes into play.

A QDOT is a specific type of trust authorized by Section 2056A of the Internal Revenue Code. The QDOT allows a U.S. citizen spouse to transfer assets to a noncitizen spouse without having to pay federal gift tax or estate tax at the time of the transfer. The name itself highlights its two primary legal requirements:

• Qualified: The trust must meet strict IRS criteria to "qualify" for the marital deduction that is otherwise denied to noncitizens. You can read more about those qualifications below.
• Domestic: The trust must be governed by U.S. law and have at least one U.S. trustee (a citizen or a domestic corporation) who has the power to withhold estate tax on any distributions of principal.

Understand that a QDOT is designed to defer, rather than eliminate, the federal estate tax when a non-citizen spouse inherits assets. The trust is a way to provide for the noncitizen spouse and preserve the estate.

Also, note that the QDOT operates to defer estate tax at the federal level, but states with an estate tax require additional planning considerations.

Why gift and estate planning is different with a noncitizen spouse

Because the IRS views a noncitizen spouse as a "flight risk" for taxable assets, the generous unlimited marital deduction is unavailable. The government assumes the noncitizen spouse might take those assets outside the reach of U.S. taxing authority — avoiding or delaying the federal estate taxes normally due upon the citizen spouse's passing.

Two main restrictions apply to gifts and bequests to noncitizen spouses:

• At death: Assets left directly to a noncitizen spouse that exceed the federal estate tax exemption ($15 million in 2026) are subject to immediate estate tax. Without a QDOT, the tax is due within nine months of death.
• During lifetime: While you can gift an unlimited amount to a citizen spouse, gifts to a noncitizen spouse are capped. In 2026, you can gift up to $194,000 annually without triggering a gift tax return or tapping into your lifetime exemption.

Even if a QDOT is in place, the assets are eventually taxed at the original deceased spouse's marginal tax rate, not the survivor's rate, effectively treating the assets as if they never left the first spouse's estate. This type of trust (QDOT) is part of a bigger estate plan that anticipates and prepares for the distribution of the assets after the noncitizen spouse passes.

Estate tax treaties with foreign countries. The U.S. has estate/and or gift tax treaties with some foreign countries. These agreements provide nonresident spouses with more generous exemptions that can also provide significant reductions to U.S. estate tax obligations. You can find a list here on the IRS website.

How a QDOT helps the noncitizen spouse

A QDOT essentially "tricks" the system into allowing the marital deduction by keeping the assets under U.S. jurisdiction. This way, the surviving spouse can maintain their standard of living while avoiding estate taxes that would deplete the estate.

Here's how a QDOT functions to the benefit of the noncitizen spouse:

Tax deferral: By moving assets into a QDOT instead of leaving them to the spouse outright, the estate functions as if it qualified for the marital deduction. No estate tax is paid at the first spouse's death. Instead, the tax is deferred until the surviving spouse receives principal from the trust or passes away.

Income: The surviving noncitizen spouse can usually receive all income generated by the trust, such as dividends or interest, estate-tax-free. However, withdrawing principal typically triggers the estate tax at that moment, unless the distribution qualifies under a strict IRS hardship exemption for an immediate and substantial health or maintenance need.

The citizenship "escape hatch"

If the surviving spouse becomes a U.S. citizen before the estate tax return is filed, usually within 9 months of the citizen spouse’s death, the assets can pass via the unlimited marital deduction, therefore bypassing the need for a QDOT.

However, simply holding a green card as a lawful permanent resident (LPR) authorized to live and work permanently in the U.S. will not qualify the spouse for this tax relief.

Because timing is so important, the executor must formally elect QDOT status on the estate tax return. Once made, this choice is an irrevocable election that cannot be undone.

The rules and requirements of a successful QDOT

For a trust to qualify as a QDOT, the IRS requires it to meet specific structural and administrative standards under Section 2056A. These criteria ensure that the federal government can eventually collect estate tax, even if the surviving spouse is not a U.S. citizen.

The requirements generally fall into three categories: structural basics, administrative and distribution rules, and security measures.

Structural, administrative and distribution rules:

• The U.S. trustee rule: At least one trustee must be a U.S. citizen or a domestic corporation, such as a U.S. bank.
• The power to withhold: The trust document must explicitly state that the U.S. trustee has the right to withhold estate tax from any distribution of principal. If the trustee cannot withhold this tax, the trust fails to qualify.
• U.S. jurisdiction: The trust must be maintained under the laws of a U.S. state or the District of Columbia. All trust records (or copies) must be kept within the U.S.
• Irrevocable election: The executor of the deceased spouse's estate must officially elect QDOT status on the federal estate tax return (Form 706). This election is permanent.

Enhanced security measures (The $2M rule):

Preserving your legacy and protecting your family

Protecting a noncitizen spouse requires a delicate balance of technical precision and long-term vision. The QDOT remains the gold standard for protecting a noncitizen spouse, but it's a strategy that requires ongoing maintenance and precise execution.

While the QDOT involves specific administrative hurdles, the trade-off is the preservation of your family’s financial foundation. Whether your goal is to fund a grandchild’s education or pass down a family business, this specialized trust ensures that your legacy remains under your family’s stewardship. Consult with a qualified estate professional to ensure your plan is 2026-compliant, giving you the peace of mind that your loved ones are protected across every border.

Related Content

• Is Your Estate at Risk? The 5 Trusts You Need to Understand
• 6 Reasons to Disinherit Someone and How to Do It
• 10 Things You Should Leave Out of Your Will, According to Experts
• 15 Estate Planning Terms You Need to Know

Editor's note: This is the final article in a five-part series about all-asset retirement planning that covers such topics as using lifetime annuities and housing wealth, making the most of tax benefits, and managing investment portfolio risk. See below for links to the first four articles.

In writing this series, we saved the topic of managing investment risks in a retirement plan for last. Not because it's either least or most important, but rather, it's an area where things could get complicated, particularly if it got into security selection or hedging strategies that go beyond our retiree's — and even our — expertise.

The reality is we have reduced the investment risk challenge through all-asset planning even before we get to this point.

Market volatility

Let me give you some context and background. Just as we did in the article Treat Home Equity Like Your Other Retirement Investments, we measure how investment markets perform by using the historical performance of benchmark portfolios over the past 30 years. No measure can predict the future, so we're comfortable with historical.

During the past 30 years, the S&P 500 index has twice dropped more than 20% for the entire year. So, with, say, $1 million in the market invested in an index fund of S&P 500 stocks, that would be a more than $200,000 reduction in market value in a single 12-month period.

Now, we know stocks recover, but if you were newly retired or late in retirement, this would be very upsetting and might cause you or your adviser to pull back on stocks — and lose the opportunity to regain that market value.

This is particularly an issue if you're liquidating a portion of your portfolio each year to fund, for instance, withdrawals/distributions (RMDs) from your IRA account.

The graphs below show the volatility of the S&P 500 using compound annual growth rates for five- and 20-year periods ending in the calendar year indicated.

Note in particular how the returns tend to stabilize as the holding period lengthens. The key appears to be to "stay the course," even in the face of adverse short-term performance.

But just as important is the understanding of how market performance could drive your plan's results.

How an all-asset plan already reduces investment risk

Let's see how all-asset planning has already reduced this risk — and made it more manageable. The first step in our planning is to combine the S&P 500 portfolio with a fixed income bond portfolio to create a Balanced Portfolio used in the rollover IRA account.

There is no return or tax reason to keep these investments separate for a rollover IRA account, and it also has the advantage of reporting a blended return. These graphs show the blended returns for those same five- and 20-year periods.

While reducing the risk over the long term by allocating to a fixed income portfolio, there is still stock market risk.

Steps to manage the investment risk

Despite the lowering of risk with a Balanced Portfolio, your plan is impacted by the stock market returns, and you may want that risk reduced.

Here are some preliminary steps already in place in an all-asset plan and covered in our first four articles of this series.

• Include housing wealth in planning. By taking a portion of income in a HECM (home equity conversion mortgage) drawdown, you're reducing IRA withdrawals. At the same time, you're building up liquid savings from, say, the HECM line of credit.
• Include lifetime annuities. While taking care of longevity risk through a SPIA (single premium immediate annuity) and a QLAC (qualified longevity annuity contract), you're reducing IRA withdrawals and, at the same time, reducing investment risk. These annuities provide fixed payments and are backed by highly rated insurance companies.
• Reduce income taxes. As described in our fourth article in this series, The 9% Solution, these first two steps in our example are reducing income taxes by as much as 50% in the first year.
• Use high-dividend portfolio for personal savings. If you're including personal savings in your plan, using this portfolio to increase cash flow from higher dividends also benefits from lower volatility and lower tax rates on dividends.

How much risk is left?

A lot of the work has already been done. For our sample investor ($1 million each in a rollover IRA, personal savings and the value of the home), about $420,000, or 14% of total net worth, is in an S&P 500 index and subject to liquidation to cover withdrawals. (If no personal savings, then it represents 21% of net worth.)

Here are two pie charts that show the allocation of all sources of income, and then focuses on those that are "safe" and not dependent on stock market performance.

The charts show that for our sample investor, a 67-year-old man, 76% of the income is not based on stock market performance.

Managing risks through plan adjustments

Whatever the protections from other assets, how do we deal with any residual risk? First, here's what we don't do in our planning:

• We don't use the HECM line of credit as a planned backstop for the stock market volatility. We have earmarked that for long-term care and unplanned expenses.
• We don't accelerate the income under the QLAC — that's already part of the planned income.
• We don't build in hedges to protect the portfolio.

What we do is look at two time frames:

• The initial five to ten years of the plan when a sharp drop in the market could reduce your retirement savings and upset your long-term plans. That's called a sequence of returns risk.
• A period of long-term underperformance where you literally might not have funds to cover the planned-for IRA withdrawals.

For the first time frame, we suggest thinking about allocating a portion to a money market fund. Our current model suggests an allocation into a money market fund of about two to three times the average IRA withdrawal during this initial five- or ten-year period.

This will be sufficient if we make withdrawals from the fund in adverse markets over the initial period.

Based on our early tests with historical performance, it pays for itself and, in particular, addresses the sequence of returns risk.

For the second long-term underperformance, we suggest you consider updating your plan and see how it works with an allocation of the reserve income to current income needs. This action may cut the amount you planned on for long-term care or to pay down your HECM loan to create a larger legacy. You'll be the judge of these options.

While the elements of the all-asset plan are correct, the allocations among asset classes should be set to meet your objectives.

If you have a chronic illness, you might skip the lifetime annuity or at least elect beneficiary protection. And if you have a favorite investment opportunity beyond our planning, then exclude it from your retirement plan and possibly accept a lower income or legacy.

About the recent news regarding inflation

With the announcement last week that inflation had jumped to 3.8% in April, we thought it necessary to address the inflation risk as one that needs management.

To put it in perspective, over the 30-year period ending in December 2025, there have been 11 five-year periods where inflation exceeded a compound average of 2.5%.

One straightforward approach would be to increase the assumed inflation rate built into the plan from 2.0% to 2.5%.

With this change, our sample investor (a man age 67) with $2 million in retirement savings and $1 million in the value of his house would see starting income drop from $131,000 to $124,000.

Now, what to do about short-term inflation jumps like the current 3.8%? You can accept the inflationary adjustments as they occur. Or, to avoid any income reduction, draw on, say, the HECM line of credit or other sources of savings.

Alternatively, you could set aside a slightly larger amount in the money market fund designed for stock market volatility and draw on it when needed to deliver the higher income.

Notably, since the most recent five-year period had a compound average of nearly 4.5%, it's smart to keep an eye on inflation.

Why now?

For decades, retirement planning has focused almost entirely on investment portfolios. The implicit assumption is that a well-diversified portfolio — managed prudently — can solve every retirement challenge.

Maybe it used to be true, but that assumption no longer holds. As suggested above, the construction of an all-asset plan can reduce the risks and the impact of adverse effects of the stock market.

Just remember, the all-asset plan is delivering the highest levels of income and liquid savings. It also has the lowest early tax rates and market risk. To find out for yourself, you can order a complimentary plan.

The other articles in this series

• It's Time to Redefine Retirement for Retirees With $500,000 to $5 Million
• Unlock Housing Wealth and Tax Benefits by Adding Lifetime Annuities to Your Retirement Plan
• Does Your Retirement Plan Ignore Half of Your Net Worth?
• The 9% Solution: An Expert Guide to Retirement Tax Breaks That Could Cut Your Tax Rate Nearly in Half

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Wealth Wise is Kiplinger's advice column on navigating retirement-related dilemmas. Questions from real people, for real people. Got a question? See below for how to send it to us.

DEAR WEALTH WISE: We are both 61, still working, and earn $400k a year. We've accumulated substantial unsecured debt and want to pay it off using an equity loan from our primary home. However, because of our debt-to-income ratio, we can't get approved for an equity loan from our credit union. We have a second home (the reason for our high debt ratio), which we bought with our single daughter and that serves as her primary home. My husband holds the power of attorney and manages his 90-year-old father’s finances and assisted living expenses.

Should we use money from his father’s account to pay the unsecured loans — improve our DTI — and then get an equity loan to pay back what we took from his father’s account? — Up to Our Ears

Dear "Up to Our Ears": It's not a given that earning a high salary makes debt easy to manage. Even with a generous income, you may find yourself overwhelmed with monthly debt payments.

Here, we have a 61-year-old couple earning $400,000 who needs help managing their debt. A home equity loan is commonly a great consolidation tool for unsecured debts because it can offer a considerably lower interest rate.

But this couple has a high debt-to-income ratio (DTI). That means they may struggle to get approved for a home equity loan. And even if they do get approved, they may face a less favorable interest rate due to their borrower profile.

The couple wants to know if borrowing the money from the husband's father's account is a smart course of action. The husband has power of attorney and can easily access that money. But while theft is clearly the last thing on this couple's mind, as they've expressly stated their intent would be to repay every dollar, this approach raises a few red flags.

It's a very slippery slope

When a person gets power of attorney over another person's finances, it's often because they've become incapacitated due to illness, injury, or dementia. As such, they're not in a place to make clear-headed, informed financial decisions.

The person holding power of attorney is often a relative and a trusted person by nature. But here, borrowing a lump sum of money may breach that trust.

"The power of attorney from an elderly father to his son only allows the son to act for his father’s benefit, and it also includes a fiduciary duty that the agent, the son, owes to his father," explains Asher Rubinstein, estate planning attorney and partner at Gallet Dreyer & Berkey.

"Using the elderly father’s money to pay off the son’s loans is a definite breach of the fiduciary duty, as it only benefits the son and depletes the father’s assets. It may also cross the line of criminality."

Kerri Koen, estate planning attorney at Modern Legacy Law Group, agrees.

"Whenever your strategy depends on 'we’ll pay it back later,' you can be sure there are legal and ethical red flags," she says. "Using an elderly parent’s funds under a power of attorney to solve your own debt problem, even temporarily, is almost always a breach of fiduciary duty that will create legal exposure for you and risk to your parent’s care, not to mention the possibility of significant family conflict."

Jonathan Codispoti, Founder at Legacy Wealth Strategies, says the repercussions of taking an unauthorized loan could be significant.

"I understand the logic," he says. "You see a pool of money, you have every intention of paying it back, and nobody technically gets hurt. But the law, the ethics, and the practical risks all point in the same direction."

Codispoti also says that in this situation, the collateral damage could be enormous.

"Your husband could face criminal charges, civil suits from other heirs, and an Adult Protective Services investigation triggered by his father's assisted living facility, which is a mandated reporter," he explains. "If his father is on Medicaid or might apply within five years, the transfer creates a 'look-back' problem that can disqualify him from benefits and leave your family personally responsible for care that easily runs $8,000 to $12,000 a month."

Additionally, Codispoti points out that if you were to move forward with your plan and apply for a home equity loan, you may be asked to document the source of the funds used to pay off your debts.

"Misrepresenting that on a loan application is itself fraud," he says.

An authorized loan may be a different story

It's clearly illegal to borrow from a parent's funds without their consent. But an authorized loan may be acceptable, provided the father is capable of making that determination.

"If they are borrowing from the father and he has the capacity to agree to this, then that would be a better approach," says Koen.

Rubinstein agrees, but with a strong caveat.

"Is the 90-year-old father capable of gifting to his debtor son himself, or giving the son written, notarized permission to use the power as anticipated? If not, then it would be over-reaching for the son to use the power in the way he is considering," he insists.

However, Rubinstein cautions, "Even if the father makes a gift to the son, if the father is frail, someone — another potential beneficiary — could try to argue that the son over-reached and unduly influenced the father to make the gift."

You have other options for addressing your debt problem

Since using the father's funds in any capacity is potentially problematic, a safer move may be to address your debt on your own. The good news, says Codispoti, is that you may have more options than you think.

"Shop the loan," he says. "Credit unions are often conservative on DTI. A mortgage broker can place you with banks or non-bank lenders that underwrite high-income borrowers with elevated DTI from a second property more flexibly. Cash-out refinances and non-QM HELOCs are worth asking about."

Codispoti also suggests addressing the root cause of your issue.

"The second home is driving your DTI," he says. "Hard as the conversation may be, explore whether your daughter can refinance it into her own name, whether you can restructure ownership, or whether selling is the right call."

Take the ethical route

You may technically be able to get a loan from your husband's father without crossing a legal line. Whether that's the right thing to do is very questionable.

"Your father-in-law is 90," Codispoti says. "The money in his account exists to ensure his dignity, comfort, and safety in the final chapter of his life.... Diverting it, even briefly, puts his welfare at risk to solve a problem he didn't create."

A word from Wealth Wise

We know that many Gen X readers, like this couple, struggle to provide support to their adult children and aging parents, all while planning their own retirement. In many cases, something's got to give. As our article explains, selling the second home that the daughter lives in might just be the best long-term option.

Moreover, an unspoken (or perhaps unconscious) implication of the reader's question is that the father, at 90, won't be around much longer. That would free up his assets and make paying back the loan moot. That's a dangerous assumption, given that the Social Security Administration's Life Expectancy Calculator estimates that someone born in 1936 will likely live another four years and that more Americans are living to 100.

So, play it safe: Live with the resources you have now and know that your inheritance will be a welcome windfall someday.

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our writers and experts, in this advice column, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial adviser regarding any questions you may have in relation to the matters discussed in this article.

Read More

• How an Elder Law Attorney Can Help Protect Your Aging Parents From Financial Mistakes
• We're 60 with $550K saved and will inherit $3 million. Can we retire now, even if we can't afford it?
• What you Learn Becoming Your Mother's Financial Caregiver
• I Am 55 With a $1.5 Million 401(k). Should I Take a 401(k) Loan to Pay for a Home Improvement Project?

The One Big Beautiful Bill Act (OBBBA) opens up several planning opportunities that could make a real difference in what you keep in your pocket — not just this year, but for years to come.

If you're like our clients, whom we call Midwestern Millionaires — hardworking, frugal and diligent savers with $1 million or more saved (I wrote a book on this that you can request here) — these are five of the most important provisions to understand for how they may affect your long-term tax strategy.

1. Lower tax rates aren't going away (for now)

One of the biggest concerns we hear from clients is whether today's historically low tax rates are about to disappear. Current legislation signals that lower marginal tax rates are likely here to stay longer than previously expected, at least for now.

This creates a great window of opportunity for both retirees and pre-retirees to execute strategies such as:

• Roth conversions
• Accelerating income into lower-tax years
• Capital gains planning

If tax rates continue to remain relatively low, planning proactively and implementing various planning strategies now can dramatically reduce your lifetime tax liability.

This is especially important for those with significant IRA balances and/or pensions that will increase their income in the future.

2. A higher standard deduction — and bonus deductions

The standard deduction has already simplified filing for millions of Americans, and the OBBBA has increased the already large standard deduction once again.

For many households, this means that itemizing deductions will become even less common. But with the OBBBA comes an additional bonus deduction opportunity on top.

Specifically, the law introduces an enhanced deduction of $6,000 for taxpayers aged 65 and older. This additional deduction phases out at higher income levels, so it's most impactful for retirees and near retirees in moderate-income ranges.

This makes it more crucial than ever to revisit your tax strategy each year, rather than assuming your situation remains the same.

For those in or approaching retirement, the potential savings here are too significant to overlook.

3. A new charitable deduction for non-itemizers

Historically, if you did not itemize your deductions, you likely have seen no benefit from any charitable giving you have done over the years, but the OBBBA has changed that.

The law introduces a charitable deduction that's specifically designed for non-itemizers, so you can finally see a tax benefit for the giving you're already doing, even if you elect to take the standard deduction.

Those who file married filing jointly can deduct up to $2,000, and those who are single can deduct up to $1,000.

4. An expanded SALT deduction

The state and local tax (SALT) deduction cap has been a sticking point for years, particularly for higher-income households and those in high-tax states.

The OBBBA has increased the deduction cap, potentially allowing taxpayers to deduct more of their:

• State and local income taxes
• Property taxes

While the impact will vary depending on where you live, this could be a meaningful change for those who have felt limited by the previous cap of $10,000.

For some households, it may even make itemizing deductions viable again, especially when combined with mortgage interest, medical expenses and charitable deductions.

5. Trump Accounts for newborns

One of the more unique provisions in the bill is the introduction of so-called Trump Accounts, which are tax-advantaged savings accounts established for newborns.

These accounts are designed to create a financial head start for future generations.

While details will continue to evolve, the broader theme is clear: Early investing is being incentivized.

For parents and grandparents alike, this could be a great thing to do for their children/grandchildren. To find out more and to sign up your newborn, visit www.trumpaccounts.gov.

The bigger picture: Opportunity requires action

Tax legislation always creates winners and losers, but more importantly, it creates planning opportunities. The common thread across all five of these tax changes is flexibility:

• Lower rates extend planning windows
• Higher deductions simplify filing while adding targeted benefits
• Expanded deductions and new account types create new ways to reduce taxes over time

But none of these matters without a strategy. The households that benefit most won't be the ones who simply react — they'll be the ones who proactively adjust how and when they recognize income, take deductions and plan for the next generation.

Related Content

• 'We Have Food at Home': The 'Midwestern Millionaire' Mentality That's Built a Fortune
• Are You a 'Midwestern Millionaire'? 4 Retirement Strategies
• If You're the Millionaire Next Door, You May Be a Terrible Spender
• Do You Have at Least $1 Million in Tax-Deferred Investments?
• The Secret to Reducing Lifetime Taxes for Retirees in the 2% Club, From a Financial Planner

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

We're often told about the importance of seeking financial advice, but what isn't talked about as much is how to prepare for your first meeting with an adviser.

• What information should you have on hand?
• What questions do you ask?
• And how can you determine if an adviser is the right fit for you?

Understanding what to expect and how to prepare can make the process much easier.

Prepare basic paperwork

Before heading into the first meeting, do some preparation on your own. Knowing what documents to bring depends on your specific situation, but financial statements and recent tax returns are a great place to start.

If you're struggling with debt or budgeting, know your monthly income and your monthly expenses.

Having all of this information on hand will help the adviser get a better idea of your current circumstances.

Bringing whatever information you feel is important for the adviser to know will help you receive more specific and meaningful guidance.

Do your own background checks

Doing your own research into the adviser and their firm beforehand will also help you feel more confident. Before making an appointment, visit the firm's website to learn more about their services. Reviewing testimonials and media clips can also be very helpful.

You can also check advisers on sites such as FINRA's BrokerCheck, which lists certifications and disclosures. Asking those around you for their recommendations can be helpful, but it should be paired with additional independent research.

Don't hesitate to ask questions

It's easy to feel like you're being interviewed in that first meeting, but remember, it's a two-way street. You should be evaluating the financial adviser equally.

Both sides are determining whether it makes sense to move forward. Taking the time to meet with more than one adviser can also help you find the right fit.

Knowing the right questions to ask will help you better understand how a particular adviser works. Ask about their financial philosophy. What's their area of expertise or approach to financial planning?

It's also important to know what services are provided, how the adviser is compensated, any fees that are included and how often you can expect to meet. Asking these questions early can help you better identify alignment from the start.

Don't ignore red flags

Knowing what to look out for is equally as important. Firms that focus on investment returns alone can be a red flag. Financial planning is much more than simply investing. It also includes tax management, estate planning, income strategy and long-term goals.

If an adviser is talking only about returns, they could be overlooking the bigger picture, operating more like a salesperson than an adviser.

Look out for firms or advisers who say they offer limited services. This means advisers may be restricted in what products they can offer, even if a better option exists.

For example, a financial adviser may suggest keeping all of your money invested for growth, but may not address how to withdraw that money once you retire, or discuss tax planning strategies to minimize your bill. You could be receiving advice that's incomplete.

Prioritizing transparency in your search matters, too. If you don't know how the adviser gets paid or why they're recommending a certain product, how can you evaluate whether it's in your best interest?

Hidden service fees can eat into your returns, and conflicts of interest can influence recommendations that may or may not be the right solution. You should always know what you're paying for and the reasoning behind it. If the answers to those types of questions are unclear, that's a problem.

Be open to learning

As you're heading into the first meeting, know that the main focus will be on understanding your current situation and identifying areas of concern.

Over time, these conversations should develop into a more individualized, comprehensive plan. Financial planning is an ongoing process that should evolve with your life.

It's completely normal to feel hesitant or overwhelmed by the thought of meeting with a financial adviser for the first time. The fear of being judged, uncertainty about expectations, or negative financial experiences from your past can easily push you away from seeking guidance.

You don't need to have everything figured out before you go. Being open to learning and receiving guidance is enough. But taking the first step can give you clarity, confidence and a better understanding of your financial future.

Related Content

• 5 Quick and Dirty Questions to Pick a Financial Adviser
• 8 Rules for Choosing the Right Financial Adviser
• 5 Ways to Help Sort the Best From the Rest When Hiring a Financial Adviser
• Will a Financial Professional Always Act in Your Best Interests? 1 Question Will Tell You — and It's Not 'Are You a Fiduciary
• 'Fee-Only' and 'Fiduciary' Are Not the Same: A Financial Pro Sets the Record Straight

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

You've worked hard and spent decades building something significant, and, naturally, you want it to have a lasting impact for your family.

Earning, saving and investing have been your focus over the years, and you've probably also taken most or all of the typical estate planning steps.

Last year at Catalyst Advisory, we surveyed 1,000 American adults and found that 90% hope to have something to leave behind for future generations. It's clear that legacy matters to most of us.

Unfortunately, 70% of wealthy families lose that wealth by the second generation, and 90% of it by the third. Those who successfully maintain family wealth are in the minority.

The myth: 'A good estate plan is enough'

As a wealth transfer adviser, my work is all about helping families protect and preserve their wealth. And before I started my firm, I spent seven years in a family office role, working with ultra-wealthy families.

If you have a will, life insurance, beneficiary designations and an asset inventory, and followed other typical estate planning advice, you might feel like you're all set. But families who successfully preserve their wealth do a few specific things most people never consider.

Three things families that preserve their wealth do differently

While these lessons were learned by observing ultra-wealthy families, you don't need a massive fortune to apply these principles. Families with much more modest wealth will also benefit by taking these proactive steps.

1. They write a family constitution

A family constitution is a living document that defines the family's shared values, the purpose of the wealth, and guidelines for how future generations should steward that wealth. It is not a legal document and doesn't replace a will or trust.

There's nothing legally binding about a family constitution, and yet it's incredibly effective for alignment. Without a shared understanding of why the wealth exists, heirs often default to spending it or using it in ways the previous generation wouldn't have wanted.

Family constitutions usually include a family mission statement, clear expectations about work ethic, guidelines for decision-making and an overview of succession principles.

Since it's an unofficial document, the family constitution can include whatever is important to you, such as philanthropy and guiding principles for giving.

Creating the family constitution is the first step, but it's not a document that you create once and file away for your heirs to read after you're gone. For it to be effective, the family constitution should be a living document that's reviewed, discussed and updated if necessary.

Get your kids or heirs involved as early as possible to increase buy-in. Many families have occasional meetings to discuss their values and go over the details covered in the family constitution. The more the next generation is involved in the process, the more effective it will be.

2. They play defense before offense

When it comes to retirement planning and building a portfolio, investing and growth are usually the focus. High returns are the goal.

But families who successfully preserve their wealth typically spend more time and energy on tax strategy and protecting their wealth than selecting the right investments. It's a completely different mindset.

In estate planning, what you pass on is far more important than what you accumulate. Taxes at death, capital gains on inherited assets, and estate settlement costs can quickly gut a family's wealth before the heirs ever see it.

Here are a few strategies that benefit many families.

Irrevocable trusts. When structured properly, irrevocable trusts remove assets from your taxable estate, meaning your heirs will receive more. The trade-off is that you give up some control.

They're not right for everyone, but irrevocable trusts can be effective if you hold illiquid assets or if your portfolio will grow quickly (so the future growth occurs outside of the estate).

Life insurance as a wealth transfer tool. Life insurance can offer much more than just a death benefit. A permanent life policy held in an irrevocable life insurance trust (ILIT) can give your heirs a tax-free lump sum outside of your estate. It provides excellent liquidity so your heirs can pay taxes without selling assets (very important if you own a business or a real estate portfolio).

Harvest tax advantages while you're alive. Annual gifting within exclusion limits, Roth conversions during lower-income years and charitable remainder trusts can significantly reduce your taxable estate over time.

These efforts typically compound, so the more attention you give them now, the more money your heirs will have later.

3. They consolidate rather than divide

Estate planning typically involves splitting everything evenly among the heirs, so they can do with their inheritance as they please. While that seems fair, it actually may not be in their best interest.

Dividing assets, especially illiquid ones like real estate and businesses, often forces a sale. Fire sales usually result in family conflict and erosion of the estate.

Families who successfully preserve generational wealth often use structures designed to keep the capital in one place. This may involve a family LLC, a trust or shared governance of family assets. Heirs can benefit equally from a pool of assets without dividing and splitting everything apart, which often results in lost value.

The legacy isn't the money

Families who preserve generational wealth aren't successful because they have more to begin with. They maintain their wealth because of their intentional approach. You don't need tens or hundreds of millions of dollars to benefit from the same mindset and actions.

Family constitutions, a defensive-oriented mindset and consolidated structures aren't just for the ultra-wealthy. You may have never considered these strategies, but they could make a difference that lasts for generations.

Related Content

• Six Ways to Make Talking With Family About Estate Planning Easier
• I'm an Estate Planning Attorney: These Are the Estate Plan Details You Need to Discuss (And What to Keep Private)
• Is Your Estate at Risk? The 5 Trusts You Need to Understand
• Protect Your Family's Future: Avoid These 12 Common Estate Planning Mistakes
• Five Strategies to Keep Your Heirs From Blowing Their Inheritance

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Question: I am 73 and healthy, but my beloved husband has early-stage dementia. His diagnosis was a shock, but on reflection, I realize that he was starting to repeat himself and had forgotten to pay a few bills. He is doing well, yet I know he could already jeopardize our $1.6 million in savings. How can I restructure our financial plan and estate and pay for his long-term care?

Answer: I'm so sorry about your husband's diagnosis, but you are certainly not alone. Dementia is something many American families are either coping with now or might face someday. Over 7 million people in the U.S. are living with Alzheimer's, and several million more live with vascular dementia, Lewy Body and other forms of dementia or mild cognitive impairment. The total economic burden of the disease was an astounding $781 billion in 2025, according to USC.

If you're in your 70s and your spouse is starting to show signs of dementia, you may be worried about your future as well as your finances. And it's important to put protections in place for both of you. Here's where to start.

Put a durable power of attorney in place

Even if your husband is functioning fairly well now, you don't know how quickly he'll deteriorate. One major issue with dementia is that your husband might end up making reckless financial decisions due to diminished capacity. That's why it's important to protect the $1.6 million in savings you've worked hard to build.

Evan Farr, a certified elder law attorney at Farr Law Firm, says that for dementia patients, the dangers lie not just in potentially making poor investment choices but also in being vulnerable to scams and simply forgetting to pay bills. So he suggests taking steps to make sure you're empowered to make financial decisions on your husband's behalf.

"In this stage, rather than taking away control, the goal is to provide guardrails so that you can intervene should your husband lose more capacity," Farr explains. "You will want a comprehensive durable power of attorney that takes effect immediately, allows you to manage all of the bank accounts that either of you owns individually or jointly, changes the beneficiaries on any life insurance policies that you own, and establishes or modifies any trusts appropriately."

In addition to covering the financial end of things, Farr recommends updating healthcare directives so you'll have the right to make medical decisions for your husband as well. Most older types of durable power of attorney are "either limited in their scope or only take effect once your husband loses capacity," Farr explains.

Restructure your accounts carefully

You may have a number of different financial accounts, from retirement plans to brokerage accounts to a checking account where you receive Social Security benefits.

Shane O’Hara, CFP, Principal, Executive Vice President, and COO at ProVise Management Group, says, "With $1.6 million at stake, I would also look carefully at how your accounts are titled and who has access to move money."

As a starting point, O'Hara recommends setting up automated bill payments to reduce the opportunity for financial mistakes.

"Your financial adviser can also add a trusted contact designation to your investment accounts, which allows them to flag unusual activity. It is a simple but meaningful guardrail," he explains.

Farr agrees that restructuring accounts could be critical at this stage of the game.

"Account consolidation and simplification are the best ways to minimize potential vulnerabilities," he says. "Consider changing to joint ownership or other forms of account ownership where you have express permission to handle transactions."

Farr also says it's a good idea to restrict your husband's direct access to larger amounts of money. But that doesn't mean you should take it away fully.

"You do not have to completely cut him off financially," Farr says.

Instead, you may want to give your husband a small checking account for daily expenses, but keep your larger accounts restricted. You can also phase in these changes rather than implement them all at once.

The key, Farr says, is to "gradually increase your role in controlling his finances so that a single poor decision will not ruin years of savings."

O’Hara says it's a good idea to make sure your monthly Social Security benefits are deposited into an account you control directly. He also recommends reading up on the program's survivor benefits.

"If your husband were to pass before you, survivor benefit rules may change your income meaningfully. Your cash flow plan should account for that possibility," he says.

Plan for long-term care

You may reach a point where you can't care for your husband on your own. It's crucial to plan for long-term care given the very high costs.

"At $1.6 million, you have meaningful resources, but a prolonged care stay could change your picture significantly," O’Hara warns. "Your adviser should model out those scenarios so you're not making decisions in a crisis. If you have long-term care insurance, review it now and understand exactly when and how benefits trigger."

Farr explains that if you expect to become reliant on Medicaid to pay for long-term care, "timing is everything."

"Any transfers made today could subject you to a five-year lookback period under the long-term care Medicaid program," he warns.

Farr also says the time to focus on Medicaid planning is now.

"Medicaid is funded through a means-tested program that has strict transfer rules governing who can qualify for coverage," he warns. "Unless planning for long-term care takes place proactively, many individuals who are in your situation will find themselves using a significant amount of their lifetime savings prior to qualifying for Medicaid."

It's a good idea to consult a financial adviser and estate planning attorney to review these issues and make a plan.

More on Planning for and Preventing Dementia

• Your Estate Plan Needs an Advance Directive for Dementia
• The Surprising Way to Lower Your Dementia Risk
• Mom Needs a Nursing Home. Should I Spend Down Her Assets So She Qualifies for Medicaid?
• Average Cost of Health Care by Age and US State

Children. Parents. Pets. Mortgage. School projects and work projects. Charitable endeavors. Sneaking in a workout during Little League practice.

Our lives leave no room for our lives, and it seems that we are all trying to balance these obligations simultaneously, with varying degrees of success.

It's no surprise we feel like a juggler, constantly adding items to the mix while trying to keep everything from crashing down.

I have been a financial adviser for nearly 20 years and have engaged clients at all stages of their lives. Some I meet when they hit a milestone, whether it's the birth of a child or accumulating enough assets to need help in investing or management.

I meet others in times of misfortune, whether it's divorce, the death of a spouse or the loss of a parent. Often, these clients are women.

What I constantly hear from these clients is that they never took the time to create a financial roadmap because it was just one more thing to do.

This is a huge misconception. That "one more thing" could align your life in a way that feels more organized and appropriate to your goals. And typically, you're most likely spending energy on it already. As Eleanor Roosevelt said, "It takes as much energy to wish as it does to plan."

Financial planning is one of the most important endeavors you can pursue, not only for your own sake, but also as a service to loved ones.

Don't be reactive — take control

As a wife, parent and member of the sandwich generation, I can attest that the mental load, often an overload, is real. The constant struggle of daily life makes women default to a reactive stance. Some call it survival mode.

The downside is that taking a reactive approach to financial planning means goals and desires often get pushed to a rarely addressed to-do list.

Financial advisers can become invaluable collaborators who share the planning burden, but it makes sense to bring them in before a life-altering event occurs.

Engaging a financial adviser early provides room to learn, consider advice or conduct research. That's exponentially more difficult during a disaster or tragedy. In these moments, springboarding into a financial decision is rarely the right choice.

Take it from someone who was hunkered down as Hurricane Helene ripped through our Asheville, North Carolina, neighborhood. Financial planning is the last thing on your mind when faced with a disaster. This is a time for grieving, rebuilding, self-care and loving connections with those who are important.

Own your 'one more thing'

Emergencies are not the ideal time to establish a new relationship either. They are times to leverage and lean on existing ones. Make time to engage a financial adviser sooner rather than later because having a long-term relationship can turn that "one more thing" into one less thing in times of crisis.

And having a trusted, familiar advisory team to guide and assist with critical financial decisions during these periods really takes more than one thing off your list.

Think of your experience with other personal and professional long-term relationships. There is a sense of ease and familiarity that only comes with time and energy spent together.

Once a relationship is established with a financial adviser, which includes a mutual understanding of your goals and values systems, that engagement can operate on autopilot for you, while your adviser does the work.

Create your support team

Developing the right advice team now makes everything easier, whether it's navigating an unexpected medical situation or buying a car.

Importantly, you must allow that team to work for you and be something that enhances your life. If you have the best adviser, lawyer and accountant, but you don't like them, it won't matter much if they are good at what they do.

Find people who share your values, see you authentically, laugh at your jokes and understand your wishes well enough to tell you the hard truths. Finding these people — your people — will get you through the hard times.

Adding this task to your to-do list and crossing it off in the very near future will make your life better. And easier. Take it from someone who has seen the rewards of doing it sooner and the risks of engaging at an emotionally challenging time. Remember, "it takes as much energy to wish as it does to plan."

Related Content

• My 4 Pieces of Advice for Women Anxious About Handling Money
• Women Play It Too Safe With Money: Are You One of Them?
• How Money Guilt Holds Women Back (and How You Can Send It Packing)
• 5 Simple Steps to Financial Power for Every Woman
• Death or Divorce: How Women Can Prepare for Possibilities

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Do you wonder how you can save on taxes while giving more to charity? As you reflect on your 2025 tax bill, it's an ideal time to consider your charitable, financial and tax planning for 2026.

To help start your planning, we'll answer three questions:

• What tax rules affect charitable giving in 2026?
• What are some charitable giving strategies that can be used to reduce taxes?
• Why is a donor-advised fund (DAF) a tax-smart way to give to charity?

You'll walk away with ideas on how to pay less in taxes and have more money to give to charity, whether you choose to itemize deductions or take the standard deduction for your 2026 taxes.

The tax rules that affect charitable giving in 2026

Two new rules for itemizers. Under the One Big Beautiful Bill Act (OBBBA), only aggregate charitable contributions that exceed 0.5% of your adjusted gross income (AGI) will be deductible.

If your AGI is $300,000, for example, you can deduct any contributions in excess of $1,500 ($300,000 times 0.5%).

Additionally, if you're in the 37% income tax bracket ($640,600 and higher for single filers or $768,700 and higher for married couples filing jointly), the OBBBA caps the value of your itemized deductions, including charitable deductions, at 35%.

Charitable deduction limits for itemizers. Overall deductions for contributions to public charities, including DAFs, are generally limited to 50% of your AGI. The limit increases to 60% of AGI for cash contributions. For appreciated non-cash assets held more than one year, the limit is 30% of AGI.

If your charitable deduction exceeds your AGI limit in 2026, you can carry the excess deduction amount forward in up to five additional tax years (while still staying within your AGI limit for each year).

Standard deduction amounts for non-itemizers. Itemizing makes sense if your total itemized deductions exceed the standard deduction. For 2026, the standard deduction amount is $16,100 for single filers and $32,200 for married couples filing jointly.

If you'll take the standard deduction for your 2026 taxes, the OBBBA allows you to deduct an additional amount for your cash contributions to qualified operating charities: up to $1,000 if you're a single filer or $2,000 if you're a joint filer.

Note that a DAF is not an operating charity, so the charitable deduction can't be used for DAF contributions. (Read more about tax law changes.)

Charitable-giving strategies that can reduce taxes

Potentially eliminate capital gains taxes by donating appreciated non-cash assets. You can have stock shares, real estate, crypto or another non-cash asset that has gained a lot of value relative to your original cost.

While you could sell the asset and give cash to charity after the sale, donating an appreciated non-cash asset held for more than one year is tax-smart and can unlock additional funds for charity in two ways:

• First, you potentially eliminate the 15% or 20% capital gains tax you would incur if you sold the assets and donated the proceeds, which may increase the amount available for charity by up to 20%
• Second, you could potentially claim a fair market value charitable deduction for the tax year in which you make the gift, assuming you itemize (donation deduction is subject to certain AGI limitations)

Offset unexpected income with a charitable contribution and deduction. You may have a financial windfall in 2026 — a large bonus at work, conversion of a traditional IRA to a Roth IRA or equity-compensation awards. This income is taxable and could push you into a higher-rate tax bracket.

One way to reduce your taxable income is to donate to charity and claim a deduction, if you itemize, in an amount that entirely or partially offsets the additional income.

Bunch charitable contributions to maximize deductions. You may find that your total itemized deductions for 2026 are below your standard deduction amount. If you frequently give to charity, you may wish to explore a bunching strategy:

• Consolidating two years of charitable contributions (2026 and 2027) into this year to exceed your standard deduction amount
• Itemizing deductions for 2026 taxes
• Taking the standard deduction for 2027

This strategy maximizes both itemized and standard deductions and can result in larger tax savings than two years of standard deductions.

In addition, if you itemize deductions for 2026, bunching your 2026 and 2027 charitable contributions into 2026 could help you exceed the 0.5% of AGI deduction floor cited in the tax rules section above.

Why is a donor-advised fund (DAF) a tax-smart way to give to charity?

A DAF is a charitable-giving vehicle offered by a 501(c)(3) public charity. It can be used with many of the tax strategies above and provides these tax benefits:

• You contribute cash, securities or other appreciated assets to a DAF account and could be eligible for a current-year tax deduction if you itemize
• If your contribution consists of appreciated non-cash assets held more than a year, your deduction generally is the fair market value of the assets (subject to certain AGI limitations), and you can potentially eliminate capital gains taxes on the appreciation
• You may recommend how contributed assets are invested for potential growth that's tax-free, with the goal of having more money available for grants to charity

Once assets are contributed, you can use the assets for recommending grants to the charities of your choice immediately or over time.

What you can do next:

• Talk with your financial and tax advisers
• Open a DAF account
• Use the strategies above to contribute to your DAF account

Related Content

• 3 Major Changes to the 2026 Charitable Deduction
• How the One Big Beautiful Bill Will Change Charitable Giving
• A Financial Planner Takes a Deep Dive Into How Charitable Trusts Benefit You and Your Favorite Charities
• One Big Beautiful Bill, One Big Question: Will We Keep Giving?
• How to Donate Your Life Insurance Policy to Charity

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Question: We are in our 60s and comfortably retired. Our daughter wants a $200K advance on her inheritance to buy a home. We're not opposed, but what's the cleanest way to proceed to avoid resentment? We already paid $75K for her wedding and chipped in much less for her two brothers' weddings. To our horror, her brothers say we are being sexist! But she earns less than them.

Are they right, or are we just recognizing that daughters may need more financial help than sons?

Answer: One of the most crucial things you might have to do as a parent, both when your kids are young and when they're grown, is avoid favoritism. If it seems like one sibling is receiving preferential treatment, your kids may come to bear ill feelings not just toward you, but toward each other.

If your daughter is asking for a $200,000 advance on her inheritance to buy a home, and it's money you can afford to part with, you may be eager and willing to help out. But if you're worried about backlash from your two sons, that's understandable — especially if you already paid $75,000 for her wedding and chipped in considerably less when your sons each got married.

It's true that women typically earn less than men and struggle to save as much due to breaks for childcare and caretaking, but that may not be the case for your adult children. Moreover, your daughter is married and, like your sons, is in a partnership with another adult who can presumably earn an income.

Here's how to navigate a situation like this so no one gets hurt and relationships aren't soured.

Be mindful of biases and patterns

It's natural to want to help all of your children financially, and your daughter may have more pressing needs right now. One trap you don't want to fall into is favoring your daughter, even if unintentionally, because you perceive her to require more financial assistance due to her gender.

Surprise: It's all about the grandkids.

A Rutgers study found that during tough economic times, parents tend to be more generous financially with daughters than with sons. Part of that, though, may boil down to a desire to become grandparents. Since daughters are statistically more likely to produce grandchildren than sons, parents may subconsciously throw more support their way toward that goal, especially when the economy is shaky.

"When resources are scarce, parents prefer females because they have a larger reproductive payoff," according to the study's author, Joseph Redden. "Almost every female child will produce some offspring, but many male children end up having zero offspring."

The bias may be unconscious.

More recently, the American Psychological Association published research indicating that parents tend to favor daughters over sons.

But parents may not be favoring their daughters on purpose. A recent Ameriprise survey found that among parents with multiple kids, 72% plan to provide financial assistance to their children equally.

Tradition may dictate unfairness.

In this situation, it's not surprising that $75,000 was spent on a daughter's wedding and less was spent on her brothers' nuptials. As SoFi confirms, it's common practice for a bride's family to cover major wedding expenses.

This tradition can be particularly tough in some communities. For example, a more lavish Indian-American wedding can run between $150,000 and $300,000, with the bride's family expected to cover everything but the reception and gifts.

That said, Fidelity reports that times have changed, and that it's become more common for the bride and groom's families to split wedding costs more equally in the U.S. But ultimately, that decision is made on a case-by-case basis.

You may not be inclined to count the money spent on your daughter's wedding toward her inheritance if your sons' in-laws chipped in the equivalent amount toward their big events, as per tradition. But if your goal is to make things fair, tally up what you spent on their weddings versus the $75,000 you paid toward your daughter's event and equalize things in your estate documents.

Transparency and documentation are key to fairness

A major reason family conflicts tend to erupt during estate planning and financial matters is a lack of communication. That's why Barry E. Janay, principal and owner of The Law Office of Barry E. Janay, says open communication is essential.

"When parents are considering giving one child a significant advance on their inheritance in a situation where prior gifts have already been unequal, transparency is the most powerful tool available," he insists. "An undisclosed gift of this magnitude almost always causes resentment among siblings. But a properly documented advance, communicated openly to everyone, can be managed equitably."

Here's how Janay says this could work in practice: The $200,000, along with the prior $75,000 wedding contribution, should be formally documented as a lifetime gift to be debited from that daughter's share of the estate.

For example, if the estate is worth $1.2 million and is to be divided equally among three children, the daughter's share would be reduced by $275,000. In this case, if each child would normally be entitled to $400,000, $275,000 would be deducted from the daughter's share, and the remainder would be redistributed proportionally among all beneficiaries.

"This should be communicated to the other children — not as a punitive measure, but as a matter of fairness and family trust," Janay says.

Janay also recommends that you make it clear to your sons that the same accommodation would be available to them if they faced a similar need.

"That framing shifts the conversation from favoritism to a flexible, need-based approach applied consistently," he says.

Janay also thinks it's a positive thing that the request is being framed as an advance on an inheritance rather than an outright gift, calling it a "healthy instinct." To him, it's a sign that the daughter isn't looking to take advantage. She's simply looking for help meeting a near-term goal, with the intent of making everything fair at the end of the day.

Be mindful of tax consequences

Giving your daughter an advance on her inheritance may not be problematic if everything is well-documented and discussed openly. But T.L. Turnipseed, head of personal trusts at Alta Trust Company, says that before you make that gift, you should think about the potential tax repercussions.

"The cleanest path is to decide whether the $200,000 is meant to be an advance against your daughter’s eventual inheritance or a bona fide loan that will be repaid," he says. "Either can work, but trouble starts when a family calls something a loan and treats it like a gift, or calls it an advancement and never ties it back to the estate plan."

Turnipseed cautions that if you treat this as an advancement for inheritance purposes, a $200,000 transfer with no repayment obligation is generally classified as a gift for federal tax purposes.

"That means the parents should expect federal gift tax reporting for the year of the transfer," he says.

Now that doesn't mean having to pay extra taxes in the near term per se. But it does eat into your estate's lifetime exemption, which is currently $30 million for a couple.

If you don't have a massive estate, using up $200,000 of your exemption may not be an issue. But if you're worried about exceeding that exemption limit down the road, you may want to consider a loan, Turnipseed says.

A loan, he explains, "may be preferable if the parents want repayment or want to preserve transfer tax exemption for later planning. But it needs to be documented and administered like a real loan."

If you're going to structure the $200,00 transfer as a loan, Turnipseed suggests creating a signed promissory note, charging interest at least at the applicable federal rate, and mapping out a repayment schedule.

"Otherwise, the IRS can re-characterize some or all of it as a gift," he warns.

Read More

• The 7 Worst Assets to Leave to Your Kids or Grandkids
• I Have Two Homes, But Three Kids. Can My Estate Plan Be Fair?
• Estate Planning Checklist: 13 Smart Moves
• Is Your Will 'Fair'? Estate Planning Is About More Than Money
• Holding Wealth: Why Retirees Shouldn't Focus on Leaving an Inheritance

Most grandparents think of gifting in terms of birthday checks or holiday envelopes. But for those looking to make a transformative impact, the real opportunity lies in "seed capital." By leveraging specific IRS rules — such as funding a custodial Roth IRA to jumpstart decades of tax-free growth — you aren't just giving money; you are giving the gift of compounding. By initiating these strategies while your grandkids are young, strategic gifts can effectively "fund" a child's most significant future milestones.

How well do you know the rules governing these sophisticated wealth-transfer tools? Take our 10-question quiz to see if your current strategy is maximizing the legacy you intend to leave behind.

More on Retirement

• Estate Planning Checklist: 13 Smart Moves
• 15 Estate Planning Terms You Need to Know
• Estate Planning for Millionaires
• Six Reasons to Disinherit Someone and How to Do It
• Revocable vs Irrevocable Trusts: It Comes Down to Control vs Protection

Question: We still work at 65 and have $2.6 million saved. One daughter married an attorney with a $600k income. The other married a teacher earning $80k. They're both stay-at-home moms to toddlers. How do we help our less wealthy child without creating resentment?

Answer: As a parent, it's natural to want to treat your children fairly. That includes not favoring one over the other. But sometimes, that's easier said than done.

If you're still working at 65 and have a $2.6 million nest egg, you might have the flexibility to assist your adult children both now and in the future. But what if your two stay-at-home-mom daughters are in completely opposite financial situations?

If one is married to an attorney earning $600,000 annually and the other is trying to get by on her spouse's $80,000 teacher salary, it's pretty fair to say that the latter daughter needs help the most in the near term. But if you don't feel comfortable sending money her way without offering your other daughter the same assistance, that's understandable.

On the other hand, with $2.6 million to your name, you're in a strong but limited financial position. You might have some funds to spare each month, but you might also be looking to grow your savings before ending your career. Once you stop working, your ability to provide financial support might become even more limited, forcing you to make hard choices.

It's not an easy situation. But here's how to navigate it.

Put your financial needs first

It's generous to want to help your grown daughter who's raising a family on what's probably a shoestring budget. But Renata A. Mizak, partner at Schenck, Price, Smith & King, says you should first make sure you can afford to offer financial support.

"Before taking any action," she says, "the most important first step is to ensure that your own financial security is protected. You must have sufficient assets, income, and resources to support yourselves."

Evan Farr, certified elder law attorney at Farr Law Firm, also cautions that while you might think you can afford to help your grown daughter, you never know what long-term care needs you might have in the future. He says that giving gifts to one child or both could create problems.

"It's a Medicaid planning decision, whether they realize it or not," he explains. "If either of the parents require long-term care within five years, those gifts will cause penalties that delay access to Medicaid-funded nursing home care or home-based care. This is not hypothetical. It occurs frequently, and families are often surprised."

Before you make gifting plans, reconcile how your generosity might impact your access to long-term care, especially if you don't have insurance.

Spell out your intentions

Assuming you feel comfortable moving forward financially, Farr says the next most important step is to structure your gifts fairly.

"Providing unequal levels of financial support can lead to resentments among children if not discussed openly with the family," Farr says. "Even though the high-income household may not require additional financial support, they may compare the outcomes over time."

That's why Farr insists that open communication is clear. To that end, he says, first clearly define your intentions regarding your reasons for providing financial support. Next, communicate your intentions to both children before handing over any money.

Finally, he says, figure out whether lifetime financial transfers will be equalized upon death.

"Clarity of intention is what causes disputes, not the amount of money being exchanged," he says.

Mizak agrees and says that if your goal is to equalize things over time, there's a pretty clean way to do it.

"One option is to provide financial assistance to the child in need during your lifetime while also including provisions in your estate planning documents, such as your will or revocable living trust, that equalize your children," she says.

"This can help ensure that over time, the total amounts received by each child both during your lifetime and after your death are as fair and balanced as possible."

Another approach, Mizak says, is to establish a trust now for the child who needs support.

"A trust offers significantly more protection and control than an outright gift," she says. "It allows you to set parameters around how funds may be used, appoint a trustee to oversee distributions, and adjust future planning if you intend to maintain balance among your children."

Offer financial support efficiently

No matter what approach you take to offering support to your children, Farr says the structure is important.

"Making outright gifts is typically not the best course of action," he insists. "If you wish to provide short-term support, consider using documented loans instead of gifts. Documented loans allow you to remain flexible and preserve assets that would otherwise be subject to potential Medicaid penalties."

Farr also says that in some cases, it could make more sense to pay your daughter's expenses directly rather than gift her the money. For example, if she needs help paying school tuition, it's better to write a check to her child's school than to give her the equivalent amount in cash.

"Paying expenses directly reduces tax liability and establishes clear boundaries," Farr insists.

Finally, Farr says, make sure to keep good records at all times.

"Document every lifetime transfer and include them in your overall estate plan," he says. That way, every gift is accounted for when distributing your assets, which could help reduce conflict and bad feelings.

Read More

• We're 68 With $6.8 million. I Give Our 'Kids' $1K a Month, Though They Earn a Good Living. My Husband Wants Me to Stop.
• We're 65 With $3.9 Million. Should We Give Our Adult Children Their Inheritance Now to Pay for Daycare and Buy a Home?
• I'm Treating My Kids and Grandkids to a Greek Cruise, But My Son Can't Go. Do I Owe Him a Check to Keep Things Fair?

The Great Wealth Transfer is estimated to comprise $124 trillion in assets by 2048, according to the CFA Institute.

Now that we are over halfway there, we can see how differently the new wave of ultra-high-net-worth (UHNW) Millennials approaches investing, saving and overall values around wealth compared to previous generations.

Baby Boomers, for example, have been known to value legacy, privacy and long-term stewardship. As a result, their wealth plans have been rooted in building wealth through hard work and typically lean towards structured estate planning and cautious investments.

In contrast, recent spending habits among UHNW Millennials indicate a shift toward values such as personalization, flexibility and personal expression. They prefer flexible options, such as access to subscription-based luxury items, bespoke travel experiences and even tailored investment strategies.

When it comes to financial planning, there's a growing preference for customization rather than a one-size-fits-all approach.

For this generation, wealth is increasingly seen as a matter of curation rather than mere accumulation. And this departure from the philosophy of previous generations raises a new question: How is legacy being recontextualized, and how can these two groups work together to bridge their differences?

Bridging values

Values are shaped by lived experiences, both social and personal, and it's only natural that they differ across generations. The world that built the wealth of many first-generation creators is no longer the same one their children or grandchildren inherit.

For wealth to endure, it must evolve, and that evolution depends on adaptability and cooperation.

Today's wealth holders came of age during periods of economic volatility when preservation and self-reliance were paramount. Even for those not directly affected by hardship, their values were rooted in preparation: Work hard, save diligently and build a cushion for uncertain times.

In contrast, Millennials have come of age in an era of exponential change. Shaped by social media and globalization, they prioritize authenticity, purpose and social impact. They want to make their mark on the world, not just maintain what's been built.

Bridging these differing value systems requires one critical skill from financial advisers: Relationship management. Advisers can encourage wealth creators to use storytelling — sharing how their wealth was built, the challenges they faced and the lessons learned — to help younger generations appreciate both the responsibility and the privilege of it.

Equally important, advisers should invest time in understanding what the rising generation values most and guide them on ways to integrate those priorities into their financial strategies. It may take years for ideas to become investments, but every conversation starts the process.

Ultimately, it's the adviser's role to facilitate these exchanges, helping both generations articulate what matters, find common ground, and ensure no one is "missing each other" along the way.

Managing each generation as a collective

The current playbook has been shaped around the preferences of a generation focused on preservation, privacy and long-term control. But for younger UHNW clients, wealth isn't just something to grow, it's something to shape.

They're looking for strategies that reflect who they are and what they care about, not just what they have inherited.

This shift in mindset can be challenging to navigate, but it's also an opportunity for advisers to connect with and guide a new generation. When families and advisers make space for evolving priorities, they're not just preserving wealth — they're creating a legacy that actually resonates.

What does this mean for family offices tasked with guiding evolving wealth conversations?

Family offices will need to work to bridge generational gaps by helping families align on values.

This means creating space for changing priorities and designing strategies that reflect what wealth means to each generation, not just what it has meant historically.

A few ways to support this shift:

• Invite younger clients into planning conversations. The earlier they can be involved, the more they understand the process and shape the legacy they are a part of.
• Start with values. Ask the younger generation: What does legacy look like to them and why?
• Offer flexible planning tools that allow for evolution over time. This way, everyone has the opportunity to express themselves and feel heard.
• Revisit strategies annually to ensure there is still alignment across all parties. Interests and priorities change, and an annual pulse check provides the opportunity to facilitate productive and meaningful conversations.

The role of customization in building generational continuity

When financial plans feel outdated, it's easy for people to check out. However, when the approach reflects who they are and how they live, it becomes something they want to preserve.

Customization can serve as a strategic bridge that keeps families engaged in their long-term plan. A prepared financial adviser will curate strategies and recommendations that meet the needs of both generations so that, when it comes time to pass on wealth, it feels like a continuation of shared intent — not something suddenly imposed.

This might be done by:

• Designing strategies that invest assets, transfer wealth, manage risk and maximize philanthropic impact
• Supporting UHNW families to deepen connectivity to institutional resources, financial analysts, industry leaders and like-minded peers

Together, these two factors can support a comprehensive and personalized plan that adapts as the family evolves.

But families are not one-dimensional, and neither are the challenges that come with preserving values and wealth across generations. Strategic planning alone cannot account for individual family members' lifestyle differences.

That can only be managed on a personal level, and Lifestyle Advisory by Morgan Stanley can be complementary in supporting each family member's individuality. (Note: I am a managing director at Morgan Stanley and serve as head of Family Office Resources Platform & Partner Management.)

Through a curated network of specialists, families can access guidance across leisure and experiences, health and wellness, home and security, and personal pursuits and enrichment, offering them a chance to bring the practical realities of daily life into the broader legacy conversation as they experience them.

Similarly, Morgan Stanley Trust Services provides families with highly customized, multigenerational wealth transfer strategies through a carefully selected platform of corporate trustees, coupled with investment management expertise and personalized service.

Corporate trustees are objective and professional in executing the wishes of the grantor and take family dynamics out of the equation when one family member is appointed to serve as trustee.

These tailored lifestyle solutions and trust services exemplify how Morgan Stanley integrates personal interests with sophisticated wealth planning to support families in every aspect of their legacy.

When individual interests and lifestyles are acknowledged, customization becomes less about complexity and more about inclusion. Customization might mean letting the next generation take ownership of one element of the wealth plan — such as philanthropy, alternatives or sustainability — or simply building in optionality across trusts, investments and giving strategies. The goal is to use customization as a tool for inclusion, not division.

Getting everyone on the same page requires more than good intentions. Both generations need to be part of the conversation early and often. That means creating room for honest discussions, not just making decisions after the fact.

Advisers can help families identify shared goals, capture points of overlap and return to them when differences inevitably arise to turn potential tension into continuity.

Related Content

• You've Built Your Wealth, Now Make Sure Your Family Keeps It
• Debunking the Myth of the Silver Spoon
• Why the Ultra-Rich Still Lose Sleep Over Money
• In Family Philanthropy, Embracing Differences Can Pay Off
• Investing in Fine Wine: Six Trends Affecting the Market

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Question: I'm a 74-year-old widower with about $1.5 million in my retirement account. About a year ago, I brought home a Chihuahua named "Peanut," who has given me great joy and become my constant companion.

Unfortunately, I can't say the same for my two adult children, who quite honestly can't stand Peanut. Since Chihuahuas can live up to 20 years, and I don't trust my kids to take care of Peanut when I'm gone, I'm worried about what will happen to her. How can I make sure Peanut is cared for when I pass? I'm willing to pay someone if that's what it takes.

Answer: First of all, congratulations on joining the 87 million dog owners in America, who find happiness and companionship through pet ownership. Understandably, you are worried about Peanut's well-being if she outlives you. Caring for a pet is a big responsibility and an expensive one, so you can't blame your adult children for not wanting to take on the burden.

That's particularly true of Chihuahuas, which are known to break bones, suffer from dental disease and experience knee dislocations. Plus, they tend to be high-energy and require a lot of attention.

At the last check, the average cost to care for a dog, including food, supplies and veterinary care, is about $1,937 per year, although it can vary by breed, according to Chewy.

Designate a caregiver for your beloved pooch

The good news is that there are ways to protect Peanut and keep the family harmony intact. But first, you have to decide who outside your children you can trust to take care of her.

"Is there anybody else in your life that would want to take care of the dog? It could be friends, family or sometimes a pet sitter you cultivated a relationship with, " says Patrick Schultz, senior wealth planner at Clark Capital Management.

If you don't have anyone on the list, there are organizations like local ASPCA chapters, state and city-run programs and private pet sanctuaries and shelters that will take care of your pet in the event something happens. Often, they charge an upfront endowment fee or require a provision in your will to cover the cost of the pet's lifetime care.

You can also appoint a professional trustee or a corporate fiduciary to designate a caregiver and oversee Peanut's care when you pass, but that can get pricey and is usually for people who own a stable of horses or a large collection of animals that require significant, ongoing financial management.

Create a pet trust within a revocable trust

Once you identify Peanut’s caregiver or caregivers, Wendy Sheinberg, a partner at Rivkin Radler LLP, advises establishing a pet trust within your existing revocable trust, if you have one. While you can create a standalone pet trust, it is often more cost-effective to incorporate it into your existing estate plan.

"If you go and set up a separate trust today, and if the pet is no longer with you, you'll have this free-standing pet trust that you paid a lawyer to set up that you no longer need. It's an unnecessary expense," says Sheinberg. "For most people, it makes more sense to do it within a revocable trust." When structured this way, the pet trust provisions typically activate only upon your passing, provided the pet is still alive.

You can name a caregiver in your will, but without a trust, it could end up in probate court, which means your pet's care and funding could languish for weeks or months while the courts work things out. In that case, your pet could end up in a temporary shelter, placed in an unsuitable home or without the medical care they need.

The devil is in the details

The pet trust is where you outline all the specifics: who will care for your pet, how much of a stipend you’ll provide annually and how long the trust should last. Being specific and detailed is crucial, says Schultz.

He recalls a case from his early days as an attorney where a client had established a pet trust for a cat that paid the caregivers $25,000 a year. The trust lasted for 27 years, and the caregivers eventually admitted they had replaced the original cat with a lookalike three times over.

"We no longer paid for that cat. Nobody wanted to litigate that, but the trust wasn't paying for Fluffy Number 3. That was not the woman's intent," he says.

While $25,000 a year to care for a cat may be excessive, when creating your pet trust, calculate how much care really costs, including food, supplies, grooming and vet bills.

If your caregiver is a little reluctant, you can offer additional compensation for their time and effort. Just make sure the estate can cover it, and also set a time frame.

Sheinberg said the trust could include language such as: "I [would] like to have the trust end on the earlier of the trust exhaustion, the death of the pet or 20 years and 364 days after the grantor’s death."

Because it is time-limited, it helps prevent someone from repeatedly replacing the pet. The trust could also require that bills be presented and that a microchip registered in your name be implanted in the pet to confirm its identity. "But at the end of the day, if you think someone might try to swap in a different pet, you need to choose other people," she says.

Do something to protect your pet

The last thing you want is to do nothing. Your pet is treated as an asset under property law, which means if you don't designate a caregiver, it goes to your beneficiaries, and if it's your adult kids, they can do with Peanut what they want. I'm sure they would care for Peanut, but they may do it begrudgingly. It's better to have a plan so everyone is happy.

If you don't have a will or a trust, your assets pass to your heirs according to state intestacy laws, or default rules set by the state. If there is no executor, no will and no obvious family member willing to take the pet, the probate court oversees the distribution of your assets, including the pet. If no one steps up, the court may ultimately authorize the executor to surrender the pet to a shelter or rescue organization.

With a little planning and preparation, you can ensure Peanut is protected without causing any undue stress or family strife. A few hours spent with an attorney now will provide peace of mind for years to come. It is the best gift you can give both yourself and your loyal companion.

Related content

• Why Your Pet Should Be In Your Estate Plan
• Is Pet Insurance Worth It?
• We're Retired with $1.5 Million, but My Wife Won’t Stop Shopping. Am I Being Cheap, or Are We Going Broke?
• Retiring Without Heirs: 4 Ways to Protect Your Wealth and Spend It Your Way

A historic Great Wealth Transfer is reshaping the American landscape. Cerulli Associates projects that a staggering $124 trillion will change hands through 2048. More immediately, McKinsey estimates that over the next decade, Gen X households could inherit $14 trillion, with millennials receiving another $8 trillion.

For the typical Baby Boomer or Gen X reader, these aren't just macroeconomic headlines — they are deeply personal inflection points. You likely find yourself at a crossroads: Either preparing for a legacy that could redefine your own retirement, or staring at your balance sheet wondering how to pass the baton without tripping up the next generation — or yourself — in the process.

As an adjunct professor exploring the intersection of wealth and happiness, and a financial planner who facilitates these conversations daily, I have learned one thing: The technical "how-to" of estate planning is rarely the hardest part. The real challenge lies in the "when," "how much" and the "why."

Defining your philosophy

Before looking at your net worth, you must look in the mirror. Most parents fall into one of three philosophical categories. Understanding your "type" is the first step toward a coherent plan.

• The Maximizers: These parents view themselves as stewards. Their goal is to grow and protect assets to ensure their children and grandchildren have the most robust financial foundation possible to fully actualize their potential.
• The "Joyful Remainder" Group: These parents believe they've worked hard and intend to enjoy the fruits of that labor. They prioritize travel and hobbies, operating under the mantra, "I'll help where I can, but whatever is left at the end is what the children get."
• The "Last Check Should Bounce" Crowd: A small but vocal group that believes children should forge their own paths, just as they did. They intend to spend their last dollar on their last day.

While nearly all of my clients fall into the first two camps, there is no wrong answer. Your legacy is simply a reflection of your life's philosophy. However, even the most well-intended "Maximizers" often find themselves paralyzed by four critical questions.

The transfer dilemma in four questions

Before signing a single trust or asset transfer document, you must find clarity here:

• The safety net. What do I truly need? In an era where a semi-private room in a nursing home can exceed $112,000 a year, "enough" is a moving target.
• The threshold. How much can I transfer today without jeopardizing my independence tomorrow?
• The impact. Is this gift "assisting" or "enabling"? Will it fuel your child's ambition or extinguish it?
• The efficiency. With the 2026 IRS annual gift tax exclusion at $19,000 and the lifetime exemption reaching $15 million per individual, how do you move money with maximum tax efficiency?

A framework for giving

To move from awareness to action, I encourage families to look past the numbers and evaluate four human variables: Estate size, child status, financial need and relationship depth.

1. The "95% probability" rule
Financial security is a probability, not a static number. I find that clients achieve peace of mind when their plan shows a 95% probability — even in a secular bear market — that they can give away a significant portion of their assets without ever having to sell their primary residence. Once the math indicates you are likely safe, the question shifts from, "Can I afford to give?" to, "When and how much should I give?"

2. The "productive adult" metric
It seems that parents are naturally more comfortable sharing wealth when they see their children being responsible. If your adult children are working hard but struggling with the soaring cost of living, helping them isn't enabling — it's empowering. It's an investment in their stability and long-term growth.

3. Equality vs equity
This is the most controversial topic in my office. Most parents feel an instinctive need to divide everything equally. But "equal" is not always "fair."

Consider two siblings: One is a successful cardiologist with a multimillion-dollar portfolio. The other is a dedicated middle-school teacher in a high-cost city.

A $500,000 inheritance to the cardiologist is a nice bonus.

To the teacher, it is a life-altering event that provides a home and permanent security.

If the reasoning is communicated transparently, many "successful" siblings are remarkably supportive of an unequal split that helps a brother or sister find their footing.

4. The "effort" factor
What about the child who lives five miles away, attends every doctor's appointment and spends weekends with you, versus the child who calls once a quarter from the opposite coast? Should the caregiving child receive the same share as the detached sibling? While there is no easy answer, ignoring this disparity often leads to deep-seated resentment after the parents are gone.

Putting wisdom into practice: Four ways to give now

If your children are doing their best and value your happiness, waiting for the "estate event" may be a missed opportunity. Money is far more impactful to a 40-year-old raising a family than to a 65-year-old inheriting it in retirement.

• The strategic home purchase. Help with a down payment. This allows your children to benefit from the power of leverage and build equity during their peak years.
• The "giving while living" yearly gift. Use the $19,000 annual exclusion ($38,000 for couples). These gifts can fund 401(k) contributions, pay down high-interest debt or cover educational expenses, creating a massive compounding effect for their future.
• The experience dividend. Pay for family vacations. We don't remember the brokerage balance — we remember the weeks spent together. These experiences are the true "wisdom wealth" that binds a family.
• The 529 "superfund." You can front-load five years of 529 contributions into a single year ($95,000 per individual). This removes assets from your taxable estate while ensuring your grandchildren's education is fully funded.

The bottom line

The Great Wealth Transfer is coming, whether families are ready or not. The most successful families won't necessarily be the ones that transfer the most money. They will be the ones that do three things well:

• Protect their own independence
• Help the next generation at moments that truly matter
• Use wealth to enhance life experiences and deepen relationships

Legacy is not just what your estate documents say after you are gone. It is what your money makes possible while you are still here to see it. Wealth is the tool; wisdom is what tells us how to use it.

For those who would like to explore the concept of Total Wealth — the integration of financial security, purpose, and wise decision-making — my book, The Wisdom and Wealth Solution, can be ordered at www.wisdomandwealthsolution.com or on Amazon.

Related Content

• What Would You Like to Leave Behind? A Financial Planner's Guide to Family Wealth Discussions
• Will Inheriting the Family Money Make You or Break You?
• Will Your Children's Inheritance Set Them Free or Tie Them Up?
• Longevity Disrupts Asset Allocation Rules: Here's How to Think About the Right Stock-Bond Split for You
• Why 2026 Could Be the Year to Reconsider Global Diversification

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

There is a time when "tough love" isn't appropriate. And when a spouse, family member or friend is dealing with the consequences of bladder cancer, that is certainly not what is called for.

While space limits any in-depth description, bladder cancer can go from something that is easily treated, to requiring removal of the bladder (cystectomy). Urine is then emptied in several ways, one of which is an ileal conduit (urostomy) diverting it to an external pouch the patient wears and empties several times a day. That is the basis of today's story.

"Mr. Beaver, I am a member of a bladder cancer support group — all older, former military, as are many of our wives. Your recent articles on putting off estate planning are so relevant to people like us who suddenly face a world turned upside down, where a power of attorney for health care, and so many of the topics in your columns, are instantly important.

"We appreciate your compassion for the people you write about and would like you to discuss the emotional consequences of losing your bladder, and often other organs, to bladder cancer — and what family members and spouses need to understand.

"There are so many times when 'tough love' isn't what we need. Often, those closest to us do not realize that when 'accidents' occur — and we leak or wake up soaked in our own urine — emotionally, we go from adult to a three-year-old in an instant, fighting to hold back tears. Thanks, 'Teddy,' Atlanta."

I phoned Teddy. His story matches that of thousands of men and women, I've learned, who, like most of us, were focused on tomorrow — making plans for the future, putting savings to good use on a European cruise long envisioned, studying brochures, watching YouTube videos — when suddenly it all changed.

As Teddy described, "It all began when I stared at the toilet bowl and realized that I was urinating blood, a common first symptom of bladder cancer."

"This led to the removal of my bladder, the surgeons creating 'plumbing' to collect urine," Teddy told me on a speakerphone call with members of his support group. "It is the most unnatural thing you could ever envision. Suddenly, your life is changed in such a dramatic way."

Other members of the group described their own grief and distress at losing control over their body:

"When I am alone, I look at myself in the mirror and cry, a hideous red bulge sticking out over which I have to place this pouch, change it twice a week and [use] a night bag in the evening."

"They removed my prostate, making me less of a man. I am so ashamed of myself, and guilty of what I am putting my wife through. You can't imagine how it feels when you are watching TV with your wife and feel wet. Anger, frustration — not again! And so you race to the bathroom, take off your clothing, throw everything in the tub, and get the materials ready to replace the pouch. I just hate it!"

I don't want tough love

What moved me most of all during our lengthy conversation was the emotional disconnect from their wives, so I got in touch with Singapore-based psychotherapist Bernadette Chin, who has worked with bladder cancer patients.

I started our conversation by asking what ostomy and bladder cancer patients need most from their spouses or caregivers during difficult moments.

"The most crucial thing is a compassionate presence as opposed to an analytical, problem-solving presence," she explained. In moments of shame and grief when an accident occurs, and the person is left soaked and vulnerable, they have an immense need for physical comfort, like a hug. They want help with cleaning up without any fuss, and to be surrounded by empathetic and validating smiles.

Tough love, or comments like, "just get over it," amplify their shame, while a soft, gentle touch and an empathetic presence reinstates safety.

What other responses from partners feel hurtful or dismissive, even when well intentioned? Hearing, "be a man," or "there are bigger issues," can suggest your emotions and grief are being dismissed, Chin said, and can erode the bond of confidence between you as a couple.

One of her clients, a veteran, said that the advice from his wife to "pick yourself up by the bootstraps" was a gut punch — it resonated with the military conditioning that was present, while also being ignorant of the fact that he felt helpless.

We also discussed the dynamic shifts in marriages with military backgrounds or "tough it out" communication styles. "These couples many times thrive on the value of stoicism, yet when it comes to facing the life situation of having undergone a cystectomy, it flips the script," she told me.

When a "strong" partner becomes dependent, this creates a role reversal that can foster an emotional withdrawal or resentment. Men may hide accidents from their spouses as a way of protection, Chin explained, and this creates secrecy and emotional distance within the relationship.

"In military background couples, the element of being highly independent clashes with their sense of vulnerability. However, with therapy, many are able to reframe this emotional vulnerability so that it becomes a shared strength."

I am here with you

What else can help those who've lost their bodily autonomy? Patients often talk about losing their dignity, Chin said. This loss can often lead to depression, anxiety and withdrawal from intimacy.

But the process of rebuilding their identity can be broken down into simple steps. One of those steps is the use of mindfulness — staying anchored in the "now" rather than dwelling on the past or worrying about the future, she explained. "It is also very important that the spouse demonstrates the same acceptance."

And how can spouses and partners show up better, even when they don't know what to say? "Listen and don't try to fix," Chin said. "You can do much when you say, 'I am here with you.' It could be a calming hand on the shoulder in silence that supports and is a form of consolation more than all the words."

Bernadette Chin's website is www.innerchildclinic.com and is well worth spending some time on.

Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.

Related Content

• Wake Up, Jerry: Your Wife Wants You to Stop Snoring and Read This Before Launching Your Landscaping Biz
• These Real-World Examples of Societal Impact Can Inspire College Students for Their Next Chapter
• Your Retirement Needs a Sketchbook, Not Just a Spreadsheet: This Book Focuses on Your Life Goals Rather Than the Math
• Think You're Too Busy to Do an Estate Plan? In 3 Hours (Seriously), You Could Save Your Heirs Months (or Years) of Stress and Heartache
• Snail Mail vs Email Fail: How E-Billing Has Led to Missed Payments and Fraud Risks (What Can You Do?)

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Question: We're 68-year-old retirees with $6.8 million. Our two adult kids never ask for money, but I give each of them $1,000/month to make their lives easier and to help with daycare and summer camp. My husband thinks it's silly. They earn a good living. Should I stop?

Answer: If you retired with $6.8 million, it's fair to say that you're probably in a pretty good position. Last year, 25% of retired Americans lost sleep over money worries, according to the Schroders 2025 US Retirement Survey.

But with $6.8 million saved, you probably have enough money to not only cover your own needs, but share the wealth. That could mean giving your grown kids $1,000 a month each, even if they don't need it.

If your kids are grappling with high costs like daycare and summer camp, they can probably put the money to great use, even if they technically earn enough to swing those bills themselves. But why force them to stretch their budgets when you have money to spare?

Your husband may see things differently, though. He might think that such support for grown kids who have good incomes is mollycoddling.

The reality is that there's nothing wrong with helping your kids out financially, even if they can make it on their own. The key is to make sure you're not sacrificing your own needs along the way or sending the wrong message.

Your kids could probably use the money now more so than later

Many people with large nest eggs spend their money and leave whatever's left over to their kids. But your approach may be a better way to do things, says Tyler Qualio, JD, CFP, and managing director and partner at Rothschild Wealth Partners.

"Most adult children are unlikely to receive their inheritance [until] well into their 60s and perhaps even their 70s," he says. "Gifting during your lifetime can allow you to see your children and grandchildren enjoy the money." And, Qualio says, gifts given earlier may be more impactful.

Of course, Qualio cautions that being overly generous has its risks.

"This, in turn, brings up concerns of not demotivating your children by giving them too much too early," he says.

But if your kids are functional adults with good jobs and a solid handle on their finances, and the purpose of your monthly gifts is to allow them some breathing room, then there's nothing wrong with it. Your children are unlikely to quit their jobs or suddenly become careless with spending over $12,000 a year you send their way.

Giving incrementally makes sense from a tax perspective

You may not realize it, but giving your grown kids $1,000 a month is actually a smart move from a tax perspective, says Joseph Fresard, attorney at Simasko Law.

"As to whether you continue or stop is entirely up to you, but there is actually a possible tax advantage to gifting this way," he explains. "Currently, the federal annual gift tax exclusion is $19,000 per recipient, so these gifts you are giving do not need to be reported to the IRS."

As Fresard explains, gifts exceeding the annual exclusion reduce the lifetime exemption for estate taxes. But this isn't the case here. And, it offers some protection in case estate tax exemption rules change.

"At $6.8 million currently, it is not very likely that your estate will need to pay taxes, as currently a married couple can leave $30 million before they set in," Fresard says. "However, you never know if this number will be lower in the future. Leaving it in small increments during your lifetime can be a good way to make sure more money goes to [your children]."

Make sure your gifts don't offend

Many people with young kids would be thrilled to receive a $ 1,000-per-month gift, even if there's no urgent need for the money. But Steven Conners, founder and president of Conners Wealth Management, says it's important to ensure your money is truly well-received.

"I think it depends if they are going to get upset or angry at you for giving them $1,000 a month," he says. "If it’s not a personal issue with a son or daughter, you are essentially gifting them the $12,000 a year, and it’s allowed according to tax rules."

You may, however, want to make it clear that the money isn't a sign that you lack faith in their ability to manage their finances, but rather, that you're simply trying to help take a load off. Explaining this to your husband might help him get on board with the gifts, too, even if they technically aren't necessary.

Make sure you're not putting your retirement at risk

With $6.8 million in savings, you have far above what the average retiree has saved, and you have a lot of leeway to give generously. But Qualio cautions that you shouldn't just hand out money without thinking things through.

"The other side of the coin, of course, is making sure you and your own retirement are not compromised by over-gifting too early," he says.

Qualio says it's a good idea to assess your annual spending needs and compare that to your various income streams. You may have money coming in from sources other than retirement plan withdrawals, such as Social Security benefits, that give you even more leeway to be generous.

On the other hand, you may have certain unanticipated needs, such as home repairs or long-term care. If you decide to continue or increase your giving, make sure to keep these potential costs in mind.

Qualio says you can easily give more than what you're giving now without exceeding the annual gift tax exclusion. And you can probably increase your gifts without risking your own financial stability. But it's important to run the numbers to make sure.

Read More

• I'm Treating My Kids and Grandkids to a Greek Cruise, But My Son Can't Go. Do I Owe Him a Check to Keep Things Fair?
• We're 65 With $3.9 Million. Should We Give Our Adult Children Their Inheritance Now to Pay for Daycare and Buy a Home?
• We Retired at 70 With $4.3 Million. My Wife Won't Spend 'Our Grandkids' Inheritance,' but I Want to Travel.
• I Want to Retire, but I Have to Keep Working so My Adult Kids Have Insurance

For much of the past several decades, investment success has been commonly measured by returns. Growth was the primary indicator that a strategy was working, and market performance often dominated financial decision-making.

That definition is changing.

After years of building wealth, priorities evolve. The focus shifts toward preserving what's been built, maintaining flexibility as circumstances change and ensuring that today's decisions will hold up over time.

In that context, performance is no longer defined solely by upside potential; it's increasingly defined by durability.

This shift is reshaping how protection fits into long-term planning. Rather than being viewed as a conservative counterweight to growth, protection is becoming an important part of how growth is sustained.

Make sure growth assets aren't doing all the work

One of the most practical steps to improve long-term performance is to clearly define the role each major pool of assets is meant to play.

Growth-oriented assets — such as stocks, equity-based funds and other market-driven investments — are designed to take risk over time.

Other assets, such as cash, bond portfolios, annuities and insurance products, might be intended to support liquidity, income needs or future estate goals.

When these roles aren't clearly delineated, growth assets often do too much heavy lifting. They're expected to fund spending, provide flexibility and support legacy outcomes, all while absorbing market volatility.

Creating clearer distinctions might help reduce that strain. Assets intended for long-term growth can remain focused on growth, while assets tied to more time-sensitive or non-negotiable needs can be positioned to offer greater stability.

This approach doesn't require abandoning growth; it requires being more intentional about where growth risk belongs.

To put it simply, it's not just what you invest in that matters, but where those assets live. Asset location, or the vehicles used to hold investments, such as brokerage accounts, retirement accounts, annuities or insurance policies, can be just as important as asset allocation in shaping outcomes.

Create flexibility that holds up in volatile markets

Flexibility matters most during periods of market stress, when selling assets can feel particularly costly. Long-term strategies typically benefit from having at least one source that doesn't depend on favorable market conditions.

This means identifying where access to capital would come from if circumstances changed unexpectedly. Plans that rely entirely on liquidating market-based assets can feel constrained when volatility is elevated. Incorporating components designed to behave differently can help reduce that dependency and preserve choice.

For some, this includes exploring protection-oriented solutions, such as indexed insurance policies and index-linked annuities, that are designed to limit downside exposure while still allowing for some participation in market growth.

When used appropriately, these tools aren't meant to replace traditional investments. They're meant to provide flexibility when markets aren't cooperating.

Position part of the plan specifically for legacy protection

Legacy planning is no longer just about how much wealth is transferred. When spreading wealth across from one generation, one way to measure success is in how reliably and efficiently that transfer occurs.

Some assets are designed to be passed on with clarity and predictability. Others can introduce complexity, timing risk or tax friction for heirs. Reviewing which assets are most likely to support a smooth transfer can materially improve estate outcomes.

This might involve favoring assets that offer defined benefits, built-in tax efficiency or simplified administration for beneficiaries. It might also involve ensuring that at least part of the legacy strategy is insulated from market timing risk, so outcomes are not overly dependent on conditions at a single point in time.

Well-designed protection strategies — such as cash-value life insurance — can play a meaningful role here by helping create transferable value that is easier for heirs to understand and use as intended.

Take inventory of protection that already exists

Before adding new elements, it's worth taking stock of what's already in place.

Most long-term plans evolve over time, layering in guarantees, risk-management features and growth assumptions at different stages. Individuals should review their plans every three to five years, or when a major life event occurs, and consider the inventory of protection in place and/or what needs to be added, as some of those elements might no longer align with current goals, time horizons or estate priorities.

Reviewing where protection already exists and what it's designed to do can uncover opportunities to rebalance risk more intentionally. In many cases, the most effective changes involve refinement rather than overhaul.

The aim is not to eliminate uncertainty, but to ensure that risk is being taken where it makes sense and reduced where it does not.

A more durable definition of performance

Performance today is about more than return. It is about confidence.

• Confidence that a plan can adapt as conditions change
• Confidence that volatility doesn't force unwanted decisions
• Confidence that wealth can support both present needs and long-term legacy intentions

Protection plays a central role in building that confidence. Not as a retreat from opportunity, but as a way to make opportunity more sustainable.

In that sense, protection is redefining what performance means in a world where flexibility, resilience and long-term outcomes matter.

Jared Nepa is SVP and head of Insurance Solutions Distribution for Lincoln Financial, where he leads national distribution for the company's life insurance, executive benefits, and MoneyGuard® businesses. Lincoln Financial is the marketing name for Lincoln National Corporation and its affiliates, including issuing insurance company The Lincoln National Life Insurance Company, Fort Wayne, IN, and wholesaling broker-dealer, Lincoln Financial Distributors, Inc., Radnor, PA. He works closely with financial professionals to develop strategies that help address clients' protection, retirement, and long term care planning needs. He holds FINRA Series 6, 26 and 63 designations, as well as his Pennsylvania Producers Life Accident and Health license.

LCN-8820022-031226

Related Content

• The Retirement Risk No One Likes to Talk About: You, Still Here
• Fix Your Mix: How to Derisk Your Portfolio Before Retirement
• Five Ways to Safeguard Your Portfolio in Market Downturns
• Protecting Your Nest Egg Matters as Much as Building It
• How to Spring Clean Your Portfolio

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Most people assume a simple will is enough, but technicalities can derail even the best intentions. Estate planning isn't just about what you leave behind — it's about how easily your loved ones can access it. This quiz exposes the common administrative and legal oversights that could leave families in probate court for years.

And don't worry if you miss an answer; you can use the links below the quiz to brush up on estate planning ins and outs.

More on Estate Planning

• Protect Your Family's Future: Avoid These 12 Common Estate Planning Mistakes
• The Basics of Estate Planning
• 15 Estate Planning Terms You Need to Know
• Estate Planning for Millionaires
• Six Reasons to Disinherit Someone and How to Do It
• Is Your Estate at Risk? The Five Trusts You May Be Missing
• Estate Planning Checklist: 13 Smart Moves

Question: We're 75-year-old retirees with $3.2 million. Our son's pressuring us to help pay for our granddaughter's college so she can avoid loans. It's not our fault she picked a school that's $90k a year! What should we do?

Answer: It's hardly a secret that obtaining a college degree is an expensive prospect.

The average cost of college today is $38,270 per student per year, which includes books, supplies, and living expenses, according to the Education Data Initiative. The average borrower with federal student loans today owes $39,547. Moreover, the full annual cost of attending a top school can, shockingly, top $90,000. It's understandable that your grandchild wants to avoid graduating with burdensome debt.

If you're well-off retirees, you may be asked to help cover your grandkids' education costs so they don't graduate with debt. But if you have a granddaughter who's chosen a school with a $90,000-a-year price tag, that ask may not be reasonable, even if you have a $3.2 million nest egg to fall back on.

Here's how to handle what could be a tricky situation without hurting your loved ones or putting your own retirement at risk.

You need to be comfortable helping out financially

As grandparents, it's natural to want to help your granddaughter out. But even with a generous nest egg, you may not feel ready to start writing large checks just yet.

Mike McCracken, president and founder of Wealth Guide Financial, says, "Having $3.2 million at age 75 is a great position, but that doesn't mean you should automatically write a big check for a $90,000-a-year school tuition."

McCracken says that before you hand out so much as a dollar, ask yourself whether helping out with college will leave you with enough money to live comfortably for the rest of your lives without the risk of running out of money. Keep in mind that you may have extra costs to contend with, from home repairs to medical bills to long-term care. So the numbers need to work for you.

Brett Bernstein, CFP, CEO and Co-Founder of XML Financial Group, agrees.

"The first thing the grandparents need to do is build a financial plan to ensure that they can maintain their current lifestyle and see how much they can financially help their grandchildren," he says. "Once they have an understanding of the actual number they can contribute, then they have to decide how much of that they want to gift."

Make sure you're treating your heirs fairly

It's one thing to help fund your granddaughter's college education if she's your only grandchild. If not, you risk running into problems if you start cutting her large checks without mapping out a plan.

McCracken says the cleanest way to go about things is to document everything meticulously.

"Have your estate-planning attorney draft a simple amendment to your revocable living trust stating that the amount you paid for college will be subtracted from your child’s or grandchild’s eventual inheritance," he suggests, assuming you have that legal document in place. If not, put something in place before distributing a portion of your assets.

Another option, McCracken says, is to treat the money as an interest-only loan that your granddaughter or their parents will repay.

"This keeps everything transparent, protects the other children’s share, and prevents anyone from being taken advantage of," he says.

Be as tax-efficient as possible with your giving

Unfortunately, there's no easy way to enjoy a tax break in the course of gifting a grandchild money for college. Contributions to a 529 plan may grow tax-free, but you don't get to deduct the sum you put in.

Still, it's important to be mindful of tax implications. To that end, McCracken says that if you're going to help, paying tuition directly to the school is usually the most tax-efficient route. This way, it doesn’t count against your annual gift tax exclusion.

McCracken also warns that giving directly to your grandchildren could reduce their financial aid eligibility.

Bernstein agrees that paying tuition directly is generally the best option, and that eking out tax savings is unlikely.

"The only way for a grandparent to get some benefit is if the school is willing to accept a highly appreciated asset in return for the tuition, or if the school is a qualified charity and the grandparent can [send] part or all of the required minimum distribution directly to the school," he explains.

However, Bernstein says, these strategies typically don't work, so "this comes down to what the grandparent can ultimately afford to gift and their willingness to do so."

Read: Use the 529 Grandparent Loophole to Maximize College Savings

Don't succumb to pressure

Aside from genuinely wanting to help your granddaughter, you may be feeling immense pressure to contribute toward her education. That's why McCracken supports having an honest family conversation and setting clear boundaries up front.

"You can say something like, 'We love you and want to help, but we also must protect our own retirement and want to keep our inheritance planning even among the heirs,'" he suggests.

From there, explain how you're willing to structure the assistance if you feel comfortable chipping in.

"Helping the next generation is one of the most rewarding things you can do," says McCracken. "But it should never come at the cost of your own financial peace of mind."

Read More

• Use the 529 Grandparent Loophole to Maximize College Savings
• We're 62 and Plan to Sell Our $1.2 Million House to Retire, but Our Daughter and Grandkids Live With Us. My Wife Says We Should Stay. I'm Ready to Ask Them to Move.
• I Want to Help Pay for My Grandkids' College. Should I Make a Lump-Sum 529 Plan Contribution or Spread Funds out Through the Years?

Parents who take enormous care in building their estate plan often spend much less time preparing for the emotional impact of revealing it to the family.

Adult children learning about a trust for the first time can feel shock, relief and anxiety in a single meeting. Dramatic inheritance "reveals" have even made headlines (paywall). These reactions stem from a simple lack of common understanding. It's why 70% of wealth transfers fail.

In our family office work, we believe wealth transfer succeeds when it's rooted in three areas:

• Telling a family's unique story
• Defining the purpose behind the wealth
• Communicating consistently

While seemingly simple on the surface, these fundamentals are too often overlooked, especially when talking about money is seen as taboo or a source of conflict. But when incorporated into a family's approach from the start, they become the basis for a smooth transfer.

Tell your family's story and values

Every family has a story. When future generations don't know it — the choices, sacrifices and values that built the wealth they will inherit — they are left to fill in the gaps themselves.

Clients of mine recently sold a business their parents had devoted decades to building. The parents assumed both of their children understood where the wealth came from, but the children's perspectives were very different.

The oldest remembered the early years of monetary uncertainty, long hours and sacrifice, while the youngest had experienced only the stability that came once it was established and thriving.

Capturing a family's story doesn't, by itself, prevent confusion. Still, it does anchor future generations in where they come from and how the family's wealth was created.

The real clarity comes from working together to articulate and define shared family values. When that values-building process is paired with a simple one-page legacy letter, it results in something powerful: A record of the path that brought each family member to this moment, the principles that guide their decisions and the shared hopes for the generations who will follow.

Together, the story and the values are worth telling, sharing and returning to over time.

Conversations build connection. Children and grandchildren understand not just what the family has built, but also who the family is — and how shared values shape how they show up in the world. That clarity becomes a foundation for responsible stewardship long before anyone reads a legal document.

Define the purpose of your wealth

Once their story and values are clear, families can define the purpose of their wealth as it is deployed in the world.

This is not a one-and-done exercise. The process itself brings people together and helps multiple generations grasp how the family approaches money, responsibility and opportunity.

These conversations invite everyone to explore meaningful questions:

• What is this wealth for?
• How do we want to steward it over time?
• What support can it provide, and to whom?
• How do our choices line up with our values?

As Brené Brown reminds us, "Clear is kind." A simple wealth purpose statement, such as "Our wealth exists to support curiosity, education and generosity across the generations," guides gifting, giving and investing.

Purpose work supports a philosophy my firm calls "wealth alignment" — directing one's time and money toward what matters most so subsequent generations might live richer, more intentional lives.

Many families have never articulated these ideas out loud. To be sure, doing so may cause some shifts in the family dynamic.

Partners can see subtle differences in their priorities, and the next generation's response to what's being shared often shakes up how parents think about legacy.

Start talking early and keep going

Conversations about money and purpose are most effective when they begin early and evolve. Younger children respond well to simple, concrete ideas like earning, saving, spending and sharing, which help them understand how money works in everyday life.

As children become teenagers, they're ready for deeper conversations about what money is for, how it reflects their principles and upholds their goals.

Young adults bring inquisitiveness and their own life experience to these discussions. They are capable of engaging thoughtfully with questions about the future, including the intentions behind their family's estate plan and the responsibilities that come with it.

When families invite them into these conversations, young adults are better able to see how an inheritance fits into their lives.

Still, most heirs receive little to no guidance before wealth transfers. Some children assume the family has more wealth than it does and delay saving or take unwarranted financial risks. Others underestimate the support available to them and develop needless anxieties.

Without the right context, children tend to fill in the blanks on their own. Even a single 60-minute conversation each year focused on values, hopes and general expectations can create clarity, reduce uncertainty and build confidence over time.

Four steps to take now

• Tell the full family story — and preserve it. Bring all generations together and invite the wealth creator to share the risks, sacrifices, defining milestones and lessons learned along the journey.
• Articulate your family values. Take a long list of family values and narrow it down to your family's top five to eight, then write short definitions for them.
• Deepen purpose through focused family conversations. Commit to intentional discussions centered on a meaningful themes, such as impact, financial independence or the purpose of wealth.
• Create a structure to build unity and alignment. Establish a structured annual family meeting, supported by trusted advisers, especially during transitions or when updating key documents.

Families that center themselves around story, values and communication pass down more than wealth. They pass down resilience, clarity and connection, too.

This content is for informational and educational purposes only and should not be construed as individualized advice. For individualized advice tailored to your specific circumstances, please consult with your adviser.

Related Content

• Why Wills and Trusts Aren't Enough in the Great Wealth Transfer, From an Attorney Who Knows
• Wealth Transfer Is About More Than Just Money
• Will Your Children's Inheritance Set Them Free or Tie Them Up?
• Will Inheriting the Family Money Make You or Break You?
• I'm a Financial Pro: This Is How You Can Guide Your Heirs Through the Great Wealth Transfer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

For many investors, energy investments represent more than just an income stream. They can become part of a long-term financial strategy that extends well beyond the initial investment.

Oil and gas assets often behave differently from traditional stocks or bonds. In some cases, they may generate income for many years while also offering exposure to physical energy production and underlying resource value.

Because of this, investors who include energy assets in their portfolios may also want to think about how those investments fit into their broader wealth and estate planning.

Planning ahead can help ensure that these assets continue to serve the financial goals of future generations while avoiding unnecessary complexity during a transfer of ownership.

Below are several considerations investors should keep in mind when thinking about long-term planning with energy investments.

Understand the structure of your energy investments

Energy investments can be structured in a variety of ways, and the structure can influence how they are managed or transferred over time. Some investors hold direct interests tied to producing properties, while others participate through partnerships or investment vehicles that develop energy assets.

Each structure may carry different tax characteristics, reporting requirements and ownership considerations. Understanding how your investment is structured is often the first step in determining how it fits into a broader long-term financial strategy.

Working with experienced financial, legal and tax advisers can help clarify these details and ensure investments are aligned with your overall planning goals.

Integrate energy investments into a broader financial plan

Energy assets are often only one component of a diversified portfolio. As with any investment, it can be helpful to consider how they interact with other holdings, including equities, real estate and private investments.

A comprehensive plan may address questions such as:

• How these investments fit into long-term wealth strategies
• How future income streams may support financial goals
• How ownership may transition over time
• How to maintain clarity and organization around investment documentation

Thinking about these issues early can make transitions smoother and reduce confusion for family members or beneficiaries later.

Consider tax and planning implications

Certain energy investments can come with unique tax characteristics that differ from traditional investments. Provisions within the tax code related to energy development, depreciation or resource production can affect how returns are reported and taxed.

Because of these complexities, investors often coordinate with qualified advisers who understand both the financial and tax considerations associated with energy assets. While tax rules and individual situations vary, thoughtful planning can help investors better understand how these investments may fit into long-term financial strategies.

Keep clear records and documentation

Energy investments often involve operating partners, production reporting and ongoing revenue distributions. Maintaining organized documentation can help simplify future transitions and ensure that ownership records, payment structures and investment details remain clear.

Providing future stakeholders with clear information about the investment structure and associated partners can help avoid confusion and allow assets to continue operating smoothly.

Think about the long-term value of energy assets

Energy development is often a long-cycle business. Properties can continue producing over extended periods, and advances in drilling technology have expanded the productive potential of many energy basins.

As a result, some investors view energy assets not only as a source of income, but also as a long-term component of portfolio diversification. With careful planning and thoughtful oversight, these investments can remain part of a financial strategy for many years.

The bottom line

Energy investments offer a unique combination of income potential, resource exposure and long-term value. But like any specialized asset class, they may require thoughtful planning when incorporated into a broader financial strategy.

By understanding how these investments are structured, maintaining clear documentation and working with experienced advisers, investors can help ensure their energy holdings remain aligned with long-term financial goals.

When approached strategically, energy investments can become more than a short-term opportunity. They can be a lasting component of a well-planned financial portfolio.

Related Content

• How a Multi-Asset Portfolio Investing Strategy Can Mitigate Risk
• An Investment Strategist Takes a Practical Look at Alternative Investments
• 5 Mistakes to Avoid in Oil and Gas Investing (Plus, 6 Ways to Stay Focused)
• How Oil and Gas Investing Can Stabilize Returns and Shield Against Market Volatility: Tips From a Financial Pro
• Oil Prices vs Investor Returns: It's What's Beneath the Surface That Counts

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Editor's note: This is the third article in a five-part series about all-asset retirement planning that is covering such topics as using annuities and housing wealth, making the most of tax benefits and managing investment portfolio risk. Articles one and two are It's Time to Redefine Retirement for Retirees With $500,000 to $5 Million: Here's How and Unlock Housing Wealth and Tax Benefits by Adding Lifetime Annuities to Your Retirement Plan.

For most Baby Boomers, their home represents 50% of their net worth, yet retirement planning software and advisers virtually ignore this asset in designing retirement income plans.

A Federal Reserve study shows that the share of net worth in primary residences among households headed by people ages 60 to 69 rose from roughly 40% in 1989 to just over 50% by 2022.

For those age 70 to 79, the share climbed from about 38% to 50% over the same period. In the 15 million mass affluent households led by Boomers from age 60 to 75, the principal residence has an average home equity of $750,000, out of an average net worth of $1.75 million.

In this article, we explore the reasons housing wealth is ignored and why consideration of it can increase retirement income and liquid savings to cover large health-related and uncovered expenses.

Reasons housing wealth is not included in planning

Most retirement planning leaves out housing wealth and ignores the potential of that wealth to generate income or produce liquid savings. This is despite the fact that reverse mortgages, mostly home equity conversion mortgages (HECMs), are heavily marketed.

Our research indicates that planning tools often treat HECMs simply as a "liability for loans made" rather than as a "dynamic liquidity asset" that grows over time. In fact, most planning systems treat a HECM and its growing line of credit essentially as a swap for selling the house to access that cash.

Some reasons for this planning limitation:

Possible objections to HECM. Common arguments include high closing costs and service fees, along with the fear of having the home taken because the loan eats up its value. Also, the "common wisdom" has often been "no mortgages in retirement."

Planning only for income. Income is essential, but full and robust retirement planning should also meet the objectives for liquidity and legacy. The Three L's — Lifetime Income, Legacy and Liquidity — address retiree objectives and should drive planning strategies and tactics.

Just like a business plan, if you prepare and decide first on the objectives of the Three L's, you will significantly improve your chances for a successful retirement.

Adviser licensing. Those advisers doing retirement planning for prospects or clients might be licensed to execute only a portion of a plan, from investments to lifetime annuities and finally to HECM.

They or their firms must form partnerships to implement a plan with all the product solutions that should be considered. That may require one or more large financial firms to create these partnerships or internal organizations that are multi-licensed.

Adviser training and available software. Advisers are often taught to think that housing wealth is a significant but relatively illiquid asset for retirees, which is true if selling the house or borrowing through a traditional home loan are the only approaches considered for accessing equity. Very few planning systems consider the HECM line of credit to provide liquidity.

I've read about these reverse mortgage objections from pundits and heard the same from friends, but as we are focused on providing the best retirement planning results, we had to do our own analysis.

Why housing wealth should be included in planning

Here are some reasons to include housing wealth in your retirement planning:

Addressing unmet needs. As I wrote in the previous article in this series, Unlock Housing Wealth and Tax Benefits by Adding Lifetime Annuities to Your Retirement Plan (link above), a HECM used with lifetime annuities can help mass affluent retirees secure additional lifetime income, tax advantages and liquid savings to cover late-in-life expenses beyond what their 401(k) or IRA savings alone could provide.

Events like long-term care or additional support for children and home renovation when aging in place are unpredictable, which is why an additional source of liquid savings, like a HECM, may be essential.

Cost of accessing liquid savings. There is significant savings in being able to access the value of the home without selling it. The average cost of selling a home is 10% to 15% of its sales price, not to mention the stress involved with moving.

In addition, if the house is sold at a gain, the tax cost can be another 10% to 20% — meaning that selling a house now worth $2 million to generate liquid savings might have a total cost of $250,000 or more.

Special HECM protection. HUD backs every HECM loan, ensuring that the borrower's family will not owe money at the passing of the borrower or eligible surviving spouse, even if the outstanding loan balance is more than the value of the house. HUD insurance covers any difference for the lender.

Consideration of historical results. Assumptions about HECM interest rates and projected housing values are often conservative and misunderstood, particularly if not considered as part of a full range of products.

We did our own study of the past 30 years of house prices and interest rates, available in my article Treat Home Equity Like Other Investments in Your Retirement Plan: Look at Its Track Record. You will see that the results were more positive than generally available projections.

One helpful development is that the National Association of Insurance and Financial Advisors (NAIFA) is building a curriculum that will look at this "most underutilized asset" to better understand how housing wealth fits into retirement planning conversations.

(Breaking news: We just received an invitation to a course on "Learn How to Incorporate Housing Wealth into Retirement Planning" from another organization. Do I spot a trend here?)

Retirement planning that builds in housing wealth

To design the all-asset planning method means thinking about housing wealth differently and aggregating all sources of savings — personal savings, rollover IRA savings and housing wealth — so they all work together during retirement.

Critical to that process is to design a plan with the Three L's guiding your options and using investment portfolios and lifetime annuities to manage taxes and risks. We'll cover those topics in the next two articles.

To start the process of making an informed decision about housing wealth, review one plan "with" and a second "without" that resource. Easier said than done since most planning systems are not enabled to do so.

One can also think of the "with" housing scenario as one suited for retirees who want to age in place (favored by at least 80% of retirees) and the "without" as selling your house to generate income or liquid savings and investment dollars.

The first step in the "with" plan is to access housing wealth through HomeEquity2Income, as described in my earlier mentioned article about unlocking housing wealth, by combining HECM with a qualifying longevity annuity contract (QLAC) to provide not only lifetime income, but also a source of liquidity to pay for unplanned expenses.

For the "without" scenario, we assume the house is held until sold at age 85 with the net proceeds invested as liquid savings along with other savings. A multitude of other scenarios are possible, which should be tested with the retirement planning tool.

Comparing 'with' and 'without' H2I plans

Below is a comparison of two retirement plans for our average retiree, a 67-year-old man with $1 million in each of the three savings sources. The analysis focuses on income, liquid savings and legacy savings.

What we learn from the comparison

The plan "with" H2I is able to support higher starting income ($117,000 vs $131,000) and a higher legacy at age 95 ($7.2 million vs $5.7 million) than the plan "without" H2I.

The primary sources of the "with" H2I advantage:

• HECM drawdowns from age 67 to age 84
• Avoidance of closing costs and taxes on the sale of the home

To be fair, this is a little-explored area and probably needs even more analysis.

Both plans do benefit from the inclusion of lifetime annuities and the reduction of longevity risk, as covered in the unlocking housing wealth article.

The "economic returns on investment" are consistent between the two plans, meaning that the method of aggregating and disaggregating housing wealth is more or less economically neutral.

To me, the advantages of at least considering your home's equity in retirement planning are clear. An asset that amounts to 50% of the savings built over a lifetime can benefit retirees and their families in the near future and in the long term.

Be on the lookout for the next two articles, which will cover tax efficiency and risk management of planning models.

Building a comprehensive retirement plan requires an understanding of what different products and approaches provide — as well as an understanding of how separate advisers on investments, lifetime annuities and HECM might guide you. We believe it's well worth it. To find out for yourselves, order a complimentary plan and let us introduce you to a qualified adviser.

Related Content

• An Expert Guide to How All-Assets Planning Offers a Better Retirement
• This HECM-QLAC Power Move Can Unlock Guaranteed Retirement Income
• For a Richer Retirement, Follow These Five Golden Rules
• Transform Your Retirement Plan With This Powerful Combo
• How Combining Your Home Equity and IRA Can Supercharge Your Retirement

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Question: We're 60 with $550K saved and still paying for one kid's college and our mortgage. We know we'll inherit $3 million when my 92-year-old father passes away. Can we retire now, even though we can't technically afford it?

Answer: By 2048, an astounding $124 trillion is expected to change hands. It's being dubbed the Great Wealth Transfer, and it could be a game-changer for folks who stand to inherit a large sum.

If you're 60 years old with a $550,000 nest egg, you may be on track for a secure retirement, provided you keep plugging away and saving for another five to 10 years. Even without further retirement plan contributions, $550,000 at 60 could grow to about $700,000 by age 65 or about $900,000 by age 70 if invested at a fairly conservative 5% return. With modest expenses and decent Social Security benefits, you could live pretty comfortably.

But retiring at 60 with $550,000 is much riskier. Not only does your nest egg have to last much longer in that scenario, but you may have other expenses eating away at your savings, like a child's college tuition and a lingering mortgage balance.

That said, if you're expecting a $3 million inheritance from your 92-year-old father, that could change the numbers quite a bit in your favor. But is it safe to retire at 60 in your situation? Not necessarily.

The danger of banking on an inheritance

If you're aware of your father's assets and estate plan, then you may be fairly confident that his $3 million in wealth will eventually become yours. But there's a difference between keeping that information in the back of your mind and acting on it in the form of an early retirement.

As Zachary Mineur, CFA, CFP, and Chief Investment Officer at Independence Square Advisors, says, "I generally counsel against using inheritance expectations in a financial plan."

First, Mineur explains that the $3 million estimate may not hold.

"That $3 million could be depleted quickly if the aging parent requires $10,000 to $15,000 a month in an assisted living or memory care facility, doubly so if there is a bear market in whatever securities that cash is invested in while it's being drawn down," he explains.

But that's not the only issue.

"The hard truth is that there is no such thing as a 'sure inheritance,'" Mineur says. "People change their minds, especially near the end of their lives… While the chance may be perceived to be small, banking your retirement on the potential for an inheritance is a dangerous move."

Jonathan White, trust and estate attorney at Jordan & White, LLC, agrees.

"Counting on an inheritance to fund retirement is one of the most common and most dangerous planning mistakes I see," he says. "The problem isn't that people are greedy. The problem is that inheritance is a projection, not a guarantee… A 92-year-old father could live another five years or another 15. That's a wide margin of error when you're building a retirement budget around it."

White says that in this situation, relying on an inheritance is especially dangerous, given that you don't have a particularly large nest egg to begin with.

"If this couple retires now, draws down their $550,000 during a market downturn, and the inheritance is delayed or reduced, they may not have time to recover," he explains. "At 60, they likely have 30 or more years ahead of them. That's a long runway if the plan works. It's an equally long runway if it doesn't."

Factor in your inheritance the right way

It may be that you've looked at your father's estate documents and are certain that you're the designated beneficiary of his estate. There's no need to ignore that information, but you shouldn't necessarily make near-term financial decisions based on it.

"A potential inheritance doesn't have to be invisible in a financial plan," says White. "It just can't be the foundation of one."

He says a reasonable approach is to model two scenarios: one where the inheritance arrives on the expected timeline and one where it doesn't come at all.

"If the second scenario is still workable, you have a real plan. If it isn't, you don’t," he says.

It's also important to understand the structure of your father's estate before planning around it, says White.

"Is the $3 million in a trust, a taxable estate, retirement accounts, or real property? Each of those carries different tax treatment and different timelines for distribution," White insists.

A $3 million gross estate, he explains, may yield something meaningfully different once taxes and probate costs are factored in.

"Getting clarity on that now, with the father's cooperation if possible, is not morbid planning. It's responsible planning," White says.

Mineur says that in these situations, he recommends discussing the possibility of gifting some assets while the parent is alive, or placing assets in a trust that would make the inheritance not necessarily contingent on death.

"Comprehensive financial and estate planning can often provide for many of the what-if scenarios that distributing assets through a basic will cannot," Mineur says.

You may want to delay retirement

You may feel ready to wrap up your career at 60. But unless you can make that plan work on a $550,000 nest with outstanding tuition and mortgage payments, delaying your workforce exit may be a more prudent move.

"The short answer to the question is no, they probably shouldn't retire now," says White. "But if they use the next few years to eliminate the mortgage, finish funding college, and build a clearer picture of what that estate actually looks like, the picture may change significantly."

Read More

• We Retired at 70 With $4.3 Million. My Wife Won't Spend 'Our Grandkids' Inheritance,' but I Want to Travel.
• We Are 63 With $5.7 Million. My Wife Wants to Buy Long-Term Care Insurance, but I Want to Self-Insure. Who Is Right?
• We're 64 With $4.3 Million. I Want to Retire Now and Pay for Health Insurance Until We Get Medicare. My Wife Says We Should Work. Who's Right?

According to projections from Cerulli Associates, more than $84 trillion will be transferred through 2045. Nearly $73 trillion in assets is expected to be transferred to heirs, and around $12 trillion will be given to charities.

While determining how much gets left to whom is important, the timing of when an inheritance is received is crucial.

Americans are living longer, and that's changed the way wealth is being transferred. It's not uncommon for beneficiaries to be in their upper 50s and 60s — long after many key life decisions have been made.

At this point in their lives, wealth is usually less impactful, and sometimes, it's not even necessary.

Longer lifespans have unintentionally moved inheritances from a life-changing event into a late-in-life supplement.

Conversely, inheriting a significant amount of wealth at a younger age can be dangerous. It can alter motivation, distort work ethics and career aspirations, and potentially create a false sense of security.

Younger beneficiaries also lack the maturity and life experience to wisely manage assets. In lieu of empowering growth and independence, premature wealth can impede it.

Is there an optimal age?

Not necessarily. The key is flexibility. Most estate plans tend to focus solely on tax efficiency and asset transfer once the owner dies. Many assume "later is better," neglecting to think about the human consequences of receiving an inheritance later in life.

For example, carefully built financial plans can be disrupted, tax and retirement planning complications can increase, such as IRMAA surcharges on Medicare premiums, and older adults might feel forced to make faster decisions, which can lead to poor investment choices and emotional decision-making.

A change in strategy

Instead of altering beneficiaries or the amount that's being gifted, consider altering the way your wealth is transferred.

One method is through lifetime gifting. This allows you to transfer assets while you're still alive rather than waiting until you pass. Instead of receiving one lump sum, assets are distributed to heirs gradually.

There are a couple of ways to approach lifetime gifting. For example, individuals can choose to give annual exclusion gifts.

According to the IRS, loved ones can give a set amount per person per year without triggering gift taxes or reporting requirements. These gifts are often used to fund living expenses, provide emergency cushions or cover education-related costs.

Other families might choose to take a more structured approach by establishing trusts or implementing phased distributions.

Both options allow you to transfer wealth at your own pace and purpose. Asset distribution can be timed with major life milestones such as buying a first home, funding or contributing to a marriage or starting a business. The choice is ultimately yours.

The bottom line

A properly planned estate utilizes these tools to ensure your wealth transfer is intentional and impactful. You want it to serve as a developmental tool for loved ones, not an enabler of dependency.

If you're developing an estate plan or reviewing it this year, start by discussing values, goals and life stages with your loved ones and your estate planning attorney. Considering when financial support might be most meaningful can help shape your selected distribution method.

Arranging estate plans and distribution with lifetime strategies can create flexibility, relevance and timing that transforms the inheritance from a delayed gift into a living legacy to create the impact you want.

Related Content

• I'm a Financial Adviser: Silence Is Golden, But It Hurts Your Heirs More Than You Think
• Three Estate Planning Documents a Business Owner Can't Afford to Skip
• High-Net-Worth Individuals and Estate Planning Under Trump
• Will Inheriting the Family Money Make You or Break You?
• Short-Term Insurance Plans' Good, Bad and Ugly

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Just as the dust seemed to settle on Washington's tax code, the Evergreen State is once again shifting its fiscal identity.

Historically a "no-income-tax" state, Washington broke a 90-year streak in 2021 by implementing a capital gains tax. Then last year, lawmakers enacted a record-breaking estate tax hike, pushing the top rate to 35% — the highest state "death tax" in the nation.

The hike was intended to address income inequality and generate revenue for public services, such as education and childcare. Following concerns from business leaders regarding a potential "wealth exodus," though, state lawmakers pursued a legislative retreat.

Senate Bill 6347, recently signed by Gov. Bob Ferguson, reverses the estate tax increase. But the relief comes with a significant trade-off: A new 9.9% Washington "millionaire tax" on income. Here's why your heirs might not be out of the woods yet.

Washington estate tax exemption for 2026

Washington is currently in a rare "split" year for estate taxes. Depending on when an estate is settled, two different sets of rates and exemptions might apply.

For the first half of 2026, Washington's estate tax remains at the record highs set last year. However, SB 6347, just signed by Ferguson, "reverses" the higher estate tax changes, starting July 1, 2026.

Note on the "frozen" exemption: Currently, the exemption rises annually with inflation. However, the reversal bill lowered the exemption to $3 million (the level at the end of last year) and froze the amount until 2027.

Washington estate tax rate for 2026

The Washington estate tax reversal significantly lowers the tax rate for large estates. At the same time, the recently enacted law lowers the estate tax exemption threshold, meaning more moderately sized estates might find themselves in the Washington filing pool.

As tax rates and exemptions on Washington estates shift, so does the final bill for your heirs. According to an analysis by the ELG Estate Planning law group, the "reversion" might create two different outcomes:

• The $5 million estate: Under the current 2026 law (until June 30), an estate of this size could face a Washington tax bill of roughly $250,000. Under the reversal law, the same estate might pay approximately $361,050. This is a higher tax bill of more than $111,000 due to a lower estate tax exemption amount. (Since the exemption amount is raised, the final tax bill might be lower than estimated.)
• The $10 million estate: Under the current 2026 law (until June 30), a $10 million taxable estate could result in $1.33 million in estate taxes. With the recently enacted reversion, the bill could drop to roughly $1.26 million — thanks to a lower estate tax rate.

In the latter example, heirs might keep more than $72,000 that would have otherwise gone to the state. Those funds could stay in your family’s accounts.

But is this "death tax" relief enough to offset Washington residents' tax woes?

Washington estate taxes: Legislative changes

While last year's estate tax hike was designed to bolster public services, its rapid reversal in 2026 was fueled by indications of a "wealth exodus" from the Evergreen State.

"We do have a lot of anecdotal evidence that people are making a decision to redomicile," state Senate Majority Leader Jamie Pedersen (D-Seattle) told KOMO News outside the legislative session. "I think it's worth taking that seriously."

A 2026 Association of Washington Business (AWB) (PDF) survey revealed that 44% of Washington business leaders are considering moving their personal residences out of the Evergreen State, citing a rising tax burden as a primary motivator.*

This sentiment follows a string of higher-income departures:

• In March 2026, Starbucks announced it would open a new corporate office in Nashville, Tennessee, a tax-friendly state with no income taxes, and move some operations and personnel there.
• According to data reported by SmartAsset, Washington now ranks eighth-worst in the nation for the net loss of high-earning millennials. In the year following the rollout of its capital gains tax, the state saw a net departure of 222 households earning over $200,000.

However, not everyone agrees that so-called "wealth taxes" are a primary cause of out-migration. The Center on Budget and Policy Priorities considers other factors — such as cost of living, housing, climate and family ties to weigh more heavily on interstate moves.

The state's "anti-exodus" strategy remains counterintuitive: Even as lawmakers retreat on estate taxes, they've doubled down on a new 9.9% "millionaire tax." For many of the state's wealthiest, the message might be mixed.

*Note: The Winter 2026 AWB survey was conducted online with 429 employers across various industries and employee numbers.

Washington millionaire income tax

As reported by Kiplinger, another part of Washington's 2026 proposed tax package is the controversial "millionaire tax." Ferguson, who championed the bill during the 60-day legislative session, is expected to sign Senate Bill 6346 into law by early April.

While the estate tax has been rolled back to entice the wealthy to stay, this new levy is designed to capture revenue from Washington's highest earners — though not immediately.

Key provisions of the Washington millionaire's tax:

• The rate is a flat 9.9% tax on Washington taxable income.
• The tax threshold applies to income exceeding $1 million per year.
• Notably, the $1 million threshold applies per household, meaning a single filer and a married couple filing jointly both share the same $1 million deduction — effectively creating a "marriage penalty" for high-earning couples.
• If signed, this tax goes into effect on January 1, 2028.

The estimated $3.5 billion in annual revenue from Washington's millionaire tax would be earmarked for education and health care, sales-tax relief, and small-business credits.

Critics argue that the new tax will accelerate the state's wealth exodus and damage Washington's economic competitiveness with other states. For more information, check out Kiplinger's report, 9.9% Washington Millionaire Tax Approved: What's Next for High Earners?

Read More

• Washington State Tax Guide
• Washington Approves Capital Gains Tax Increase: Who Pays?
• Could a New Billionaire Tax Plan Put $3,000 in Your Pocket?