For some people, inheriting an IRA can feel like a financial windfall. But before you decide what to do with the money, there's a key question: How much will you actually keep after taxes?

The answer depends on more than the IRA balance. Where you live, your relationship to the person who left you the account, the type of IRA you inherited, and when you take the money out also matter.

That's why two people can inherit IRAs with the same balance and potentially face different tax bills. One beneficiary may have flexibility over when to take distributions, while another might have to empty the account within a set period. An heir in a state that taxes IRA distributions could owe more than someone in a state that doesn't.

Here's more to know about key factors that affect your inherited IRA tax burden.

Inherited IRA tax rules

To understand how much of an inherited IRA you'll keep, it helps to start with some basic tax rules.

Generally, inheriting an IRA isn't itself a taxable event for federal income tax purposes. Instead, taxes depend on the type of IRA you inherit and how you take distributions.

State tax rules can also affect how much you owe.

Things to keep in mind:

• Distributions from an inherited traditional IRA are typically taxed as ordinary income on your return, at applicable federal marginal tax rates.
• Qualified distributions from an inherited Roth IRA are generally tax-free.
• A 10% early withdrawal penalty often applies to IRA owners who withdraw money before age 59½, but it generally doesn’t apply to distributions from an inherited IRA, regardless of your age.
• Timing is also important. Many beneficiaries must meet distribution deadlines, and missing a required withdrawal can trigger a 25% federal IRS penalty on the amount you failed to take.

But those are federal rules. State tax laws can differ — sometimes significantly.

Some states tax IRA distributions based on where you live, while a handful impose inheritance taxes based on where the deceased person lived.

Together, these rules can affect how much tax you might owe on an inherited IRA and when you need to withdraw the money. Here are four key questions to consider.

1. Where do you live and where did the account owner live?

When it comes to state taxes, two questions can affect how much of an inherited traditional IRA you keep.

1. Does your state tax IRA withdrawals as income?

2. Did the person who left you the account live in a state that imposes an inheritance tax?

Five states currently impose inheritance taxes: Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. (Whether you owe inheritance tax generally depends on where the deceased person lived or owned taxable property and your relationship to them.)

Estate taxes are different. The estate generally pays them before distributing assets to heirs. Twelve states and the District of Columbia impose estate taxes. Maryland is the only state that imposes both estate and inheritance taxes.

Note: At the federal level, taxable distributions from an inherited traditional IRA generally count as ordinary income.

An example: Suppose you live in Florida and inherit a traditional IRA from someone who lived in Pennsylvania.

Florida, a state without an individual income tax, generally won't tax your IRA withdrawals as income. Pennsylvania also generally exempts IRA distributions paid to a designated beneficiary.

But...Pennsylvania may impose its inheritance tax on the IRA balance if the deceased owner was age 59½ or older at death (or was disabled at death regardless of age).

When Pennsylvania inheritance tax applies, the rate depends on your relationship to the deceased:

• Surviving spouse: 0%
• Direct descendants and other lineal heirs: 4.5%
• Siblings: 12%
• Most other beneficiaries, including friends: 15%

Yes, it can get confusing and this is just one simplified example.

The takeaway: When inheriting a traditional IRA, consider both the state income tax on withdrawals and whether inheritance or estate taxes may apply. Rules differ by state, and the type of tax can affect how much you ultimately keep.

2. What was your relationship to the person who left you the IRA?

The rules can vary depending on whether you inherited the account from a spouse, parent, other relative, or someone unrelated.

A surviving spouse generally has options that most other beneficiaries don't. Depending on the circumstances, a spouse may be able to treat the inherited IRA as their own or keep it as an inherited account. Those choices affect the distribution rules and can influence when withdrawals are required.

An adult child who inherits a parent's IRA, however, generally can't simply treat the account as their own. Instead, the beneficiary rules apply.

• For many individual non-spouse beneficiaries who inherit from someone who died after 2019, the account generally must be emptied by December 31 of the tenth year following the year of the original owner's death.
• Exceptions generally apply to Eligible Designated Beneficiaries (EDBs), including surviving spouses, the owner's minor children (until they reach the age of majority, at which point the 10-year rule kicks in), disabled or chronically ill individuals, and beneficiaries not more than ten years younger than the deceased owner.
• The specific requirements depend on your beneficiary category and the circumstances of the owner's death.

It's also important to know that the 10-year rule for inherited IRAs doesn't mean every beneficiary can wait until the final year to withdraw the money. Depending on the rules that apply, you may need to take annual required minimum distributions (RMDs).

Additionally, your relationship to the deceased doesn't automatically set the federal income tax rate on a withdrawal. Rather, that relationship status determines which distribution rules apply and how much flexibility you have over timing.

The takeaway: Know your beneficiary category before you plan any withdrawals. Your relationship to the deceased may determine when you must take the money out, even though your taxable income generally determines the federal income tax rate you pay.

3. What kind of IRA did you inherit?

Not all inherited IRAs are taxed the same way. One key distinction is whether the account is a traditional IRA or a Roth IRA.

• With a traditional IRA, contributions may have received favorable tax treatment when the original owner made them.
• As a result, taxable withdrawals generally count as ordinary income for the beneficiary in the year the money is distributed.
• If you inherit a traditional IRA and take a large distribution, the added income could push some of your earnings into a higher federal tax bracket.

Note: If the original owner made nondeductible contributions, part of the account may represent after-tax money. In that case, the entire distribution may not be taxable.

A Roth IRA can produce a different result. Qualified Roth IRA distributions to beneficiaries are generally tax-free, provided the requirements are met. The five-year rule is relevant when determining whether a distribution qualifies for tax-free treatment.

But tax-free doesn't necessarily mean you can leave an inherited Roth IRA untouched indefinitely. Beneficiaries generally remain subject to distribution deadlines, although the specifics depend on the beneficiary and other circumstances.

The difference can be notable in some cases. Someone who inherits a traditional IRA may need to plan for income tax on withdrawals, while someone who inherits a Roth IRA may receive qualified distributions without owing federal income tax.

The takeaway: Find out whether the account is traditional or Roth before you estimate your tax bill. The account type you inherit can make a substantial difference in how withdrawals are taxed.

4. When do you take the money out?

Once you've sorted out your state residency, beneficiary status, and IRA type, another key question remains: When should you withdraw the money?

For many beneficiaries of traditional IRAs, timing can affect your tax bill.

For example, let's say you inherit a traditional IRA worth $300,000 and also earn a substantial salary. Taking the entire balance in one year could add a large amount of taxable income on top of your normal pay. Depending on your circumstances, some of that additional income could fall into a higher marginal federal income tax bracket.

Taking distributions over several years may help manage that. However, spreading withdrawals out isn't automatically the best strategy for everyone. You still have to comply with applicable deadlines and any annual required minimum distributions.

• For many non-spouse beneficiaries subject to the ten-year rule, the account must be fully distributed by the end of the tenth year following the original owner's death.
• Depending on when the owner died and whether required distributions had already begun, annual withdrawals may also be required during that period.

For example, if an IRA owner dies in 2026 and the beneficiary is subject to the standard ten-year rule, the account generally must be emptied by December 31, 2036. Other beneficiary categories may follow different rules.

A Roth IRA may offer a different planning opportunity because qualified withdrawals are generally tax-free, but distribution deadlines can still apply.

The key is to consider the inherited IRA alongside your other income, your expected financial needs, and the deadlines that govern the account. A withdrawal strategy that works for someone approaching retirement might not be ideal for a beneficiary in their peak earning years.

The takeaway: The amount you withdraw in a particular year can affect the income tax you ultimately owe. The challenge is balancing tax planning with the rules on how quickly you must empty the account.

Avoiding taxes on an inherited IRA: Bottom line

Inheriting an IRA doesn't necessarily mean you should take the money right away. And waiting as long as possible isn't always the best approach either.

Before you take a distribution, find out when you must empty the account and whether you have to take annual withdrawals. Then consider how a distribution would affect your taxable income in the year you receive it. Depending on your circumstances, coordinating withdrawals with your other income and expenses over several years may help mitigate the tax impact.

Also keep in mind that landing in a higher tax bracket doesn't mean all of your income is taxed at that higher rate. Federal income tax rates are marginal, so only the portion of your taxable income that falls within a higher bracket is taxed at that rate.

If the account balance is substantial, or you have questions about these or other key factors, consider consulting a tax professional before deciding. The goal is to make informed decisions that comply with the distribution rules and make sense for your finances over the entire period you'll be managing the inheritance.

Remember: This article is for general informational purposes and is not individualized tax or legal advice. Consult a qualified tax professional about your specific situation.

Related

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• Why The IRS is Taking a Closer Look at Trusts
• Inheritance Tax vs Estate Tax: Who Actually Pays
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When it comes to estate planning, avoiding probate is one of the main motivators.

Whether it's designating beneficiaries or putting assets in a living trust, there are several ways assets can be directly transferred to heirs without going through probate.

But simply shielding assets from probate doesn't automatically mean assets will be distributed the way you intended. Sometimes, the same strategies used to avoid probate can unintentionally override other parts of an estate plan, potentially leaving loved ones without the protection you put in place.

Consider a father who has two adult children with different financial needs. One receives government benefits that have income and asset eligibility requirements. The other struggles with substance abuse and isn't able to responsibly manage a large inheritance.

To accommodate both children, the father creates a revocable living trust with separate trusts made for each. This allows the father to leave an inheritance to both while also keeping protections they need in place.

Later, the father opens a bank account and purchases an annuity, naming both children as beneficiaries.

Once he dies, the bank account and annuity proceeds go directly to the children instead of the trusts that were created. While naming the children as beneficiaries of that account allowed the father to keep his assets out of probate, it also bypassed the protections he deliberately built into his estate plan.

While avoiding probate is an important part of the plan, it shouldn't be the only consideration in this process. A beneficiary's situation can matter just as much as how the assets get transferred.

For example, a beneficiary might receive government benefits that have income or asset restrictions, struggle with substance abuse or managing money, or could be dealing with a personal matter such as a divorce.

Leaving an inheritance to someone in one of these situations could jeopardize future benefits, leave money vulnerable or bring new financial responsibilities they might not be prepared for or capable of handling.

Instead of having assets transferred to them outright, you might choose to open a trust so you can manage the inheritance and determine when and how distributions are made.

However, those protections only work if the assets are directed to the trust. Naming the individual as the beneficiary rather than the trust itself could make the trust irrelevant altogether.

While trusts can be helpful in protecting and managing assets, they're only one tool in the estate planning process. Reviewing how assets are titled and who's designated to receive them after you die is important.

Look at bank and investment accounts, retirement accounts, real estate, life insurance policies and annuities. A beneficiary designation or other transfer arrangement on a particular asset could determine where it goes once you die, even if that overrides protections you've established elsewhere in your plan.

Avoiding probate is just one of many considerations when it comes to building an estate plan. What's most important is making sure your assets are transferred to the people you intended in a way that accounts for their needs and circumstances.

For some, naming beneficiaries directly is enough. Others might find additional protections are necessary. Regularly reviewing your estate plan, making adjustments as needed, will ensure the strategies you use to avoid probate don't work against your estate plan.

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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 new documentary You Can See Everything about Theranos founder Elizabeth Holmes hit screens with a bang this month. Directors Nathan Fielder and Lance Oppenheim kept the movie a secret until its premiere, and buzz has been building about what it reveals.

It was certainly unexpected for Fielder to make a documentary about Holmes. He's worked in his own particular sort of reality TV for years, first with the show Nathan For You and next with The Rehearsal. While these shows tap into the human psyche in their own ways, as he says in You Can See Everything, he's far from an expert on chemistry or the Theranos case, and over the course of the filming, he seems increasingly confused about what he's doing there, which is also a central point of the documentary.

So much of this movie has been kept hush-hush, and it's an enjoyable experience to watch it unfold in a theater. So: If you haven't seen the movie yet and don't want to read any "spoilers," stop reading now before we get into the nitty-gritty.

While the documentary is ostensibly about Holmes, it's also about her partner, Billy Evans, and their relationship. After Holmes goes to a federal prison camp to serve her sentence for defrauding investors, Evans reveals on camera that he has power of attorney (POA).

He says that the power of attorney gives him the right to do many things on Holmes' behalf. The documentary shows him tweeting online from Holmes' X account, not indicating that it's not her posting (and not asking for her approval for what he writes), and creating an AI avatar of her likeness. He is also working on a new business with her, although he says he is largely making decisions on their behalf while she's imprisoned.

"The documentary shows how far people assume a POA reaches," Debra Taylor, managing partner and wealth adviser at Carson Wealth, tells Kiplinger.

So, what exactly does power of attorney give a person the right to do, and how does it work?

1. What "powers" does a power of attorney grant?

A power of attorney (POA) is a legal document that grants someone, called an agent, authority to make decisions on a person's behalf in the event of their incapacitation. Typically, one document grants medical power of attorney, and one grants financial power of attorney. As the names suggest, one gives the right to make healthcare decisions, while the other covers finances.

"A broadly drafted financial POA can give an agent authority over the principal's business interests," Taylor explains. "Certain powers, such as making gifts, changing beneficiaries or creating trusts, generally must be granted expressly. Many states require specific language in the document to authorize sensitive transactions such as gifting or certain banking transactions."

Does that mean, then, that a person could, say, speak on another's behalf outside of specific decisions?

"A POA lets an agent sign and transact on the principal's behalf. It does not make the agent's opinions the principal's words. In most states, an agent has no right to access the content of the principal's email and private messages unless the document specifically grants it," Taylor says.

2. Can power of attorney be triggered by incarceration?

In the movie, Evans said Holmes signed the POA document, giving him power to make business decisions for her. But does an incarceration always trigger a POA to go into effect?

"Powers of attorney are governed by state law, so the rules on when a POA can take effect, and what it can authorize, vary from state to state," Taylor says.

There are different types of POAs. A durable POA goes into effect once signed and remains in effect unless the principal cancels it or dies. A limited POA gives authority for specific matters and can have time parameters for when it's valid. A springing POA, meanwhile, takes effect when a specific, predetermined event happens, such as mental incompetence.

"Most of these 'springing' POAs are tied to incapacity, but many states let you name another trigger, such as incarceration, and designate a specific person to confirm in writing that it happened," Taylor says. "In many cases, a durable POA that is effective immediately makes the most sense. This is because a springing document forces your agent to prove the trigger occurred, and banks can be slow to accept that proof exactly when someone needs to act."

3. Do you have any recourse if you believe your POA agent is acting against your best interests?

"An agent is a fiduciary. The law requires them to act loyally in your best interest, avoid conflicts of interest and keep records of every transaction," Taylor says.

If you are in this situation and are not incapacitated, you can revoke the POA. Taylor recommends doing so with a signed written revocation and notifying every institution that has a copy of the POA.

Assuming you are not incapacitated, you also have the ability to sue for breach of fiduciary duty. "Serious misuse can be prosecuted as theft or financial exploitation," Taylor says.

4. What can you do if you think someone else's agent is misusing their powers?

The documentary makes it clear that Fielder doesn't trust what Evans is doing, although Holmes herself doesn't express any misgivings.

If you're a third-party observer and believe someone with POA is acting against the principal's best interests, there are some things you can do, although it somewhat depends on your relationship to the principal.

If you're a family member, heir, caregiver or government agency, you can petition a court to review the agent's conduct, Taylor explains. If a case involves an older or vulnerable adult, you can report concerns to Adult Protective Services.

Additionally, financial institutions can play a role. "Banks can refuse to honor a POA when they suspect abuse and report it, and brokerage firms can place temporary holds on suspicious withdrawals and trades for older or impaired clients," Taylor says.

"If the person still has capacity, though, a court will generally defer to their choices," she adds.

5. Should you assign your spouse or partner POA?

"A spouse is usually the right first choice since no one knows your finances and wishes better," Taylor said. "The weak spot is timing."

That's for a few reasons. First, you will be aging together, so it's possible you'll need help at the same time and therefore can't serve for each other. For this and many other reasons, it's recommended that you also name a backup POA.

Additionally, of course, there's the possibility you divorce. "Many states end a spouse's authority automatically once a divorce is filed or finalized, but not all of them, so update your documents the day you separate," Taylor says.

Taylor also points out that Holmes and Evans are not legally married, which means that if they were to break up, it would not automatically end the POA in the way a divorce would in many states. If Holmes wanted to revoke it, she would have to actively do so.

"In blended families, adding an adult child as co-agent, or requiring your spouse to report to one, heads off a lot of conflict later," Taylor says.

If you have a POA, you should review it "every few years and whenever you move," Taylor advises, so that it doesn't become out of date or invalidated by a state law.

Ultimately, Taylor says, "The best protection is built in before you sign: Name a successor agent and require the agent to report periodically to a second person."

It's important to remember that You Can See Everything is a movie constructed around the idea of suspicion. Don't let the movie scare you off the idea of POAs: They help ensure that your finances and/or healthcare can be appropriately managed in the way in which you want them to be.

And when it comes to Holmes and Evans in particular, we have to go back to that old adage: You never really know what's going on in someone's relationship ... even if you're a documentary crew filming their every waking moment.

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When it comes to passing down a lifetime of hard-earned wealth, no two legacies look the same. Some high-profile stars, such as Sting, plan to spend down their fortunes to teach their heirs self-reliance. Others, like Shaquille O'Neal, demand advanced degrees and business proposals before opening the vault. A few, like Elton John, aim to hit just the right note — providing security without spoiling the next generation.

Which iconic approach mirrors your own financial philosophy? Answer these seven quick questions to uncover your celebrity estate planning archetype — and discover whether your style aligns with Sting "The Self-Made Spender," Shaq "The Milestone Mentor," or Elton John "The Middle-Ground Mentor."

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The late hip-hop artist the Notorious B.I.G. likely didn’t have estate planning in mind when he recorded his chart-topping hit, "Mo Money Mo Problems." But the sentiment rings undoubtedly true. The more wealth you have, the more complex the estate decisions surrounding everything from taxes to paperwork.

As an estimated $124 trillion begins to change hands, many families are now trying to figure out how to end up on the winning side of the "Great Wealth Transfer."

Someone with an estate of $5 million or more, experts say, sits in "very-high-net-worth" territory, where a simple will no longer cuts it. At this level, where you live and what you own ultimately determine what stays with your estate and how easily your heirs can inherit it.

As Matthew Chancey, CFP® and founder of Tax Alpha Companies, frames it, "At $5 million, the question isn’t how much you leave. It’s what kind of money you leave."

Federal and state estate taxes

Despite the ominous name, the federal "death tax" is not what most people — even many high-net-worth individuals — have to fear. That's because the federal estate tax exemption is $15 million per person, or $30 million for a married couple. So a $5 million estate sits comfortably below that threshold.

However, that doesn't mean your estate is totally off limits. "The federal estate tax probably isn't your problem, but your state's might be," says Jeff Judge, CFP® and founding partner of Chesapeake Financial Planners. He says couples often mistakenly assume the big federal number protects them.

Twelve states plus Washington, D.C., levy their own estate tax, and five impose an inheritance tax, often with exemptions far below the federal level. For example, Judge points to his home state of Maryland, which has an exemption of just $5 million per person, a top rate of 16% and a separate inheritance tax. Other states bite even sooner, such as Oregon, where the estate tax starts at $1 million.

To minimize the state tax hit, Clark Randall, CFP® and director of financial planning at Creekmur Wealth Advisors, suggests including a provision in your will to create a credit shelter trust (CST), sometimes called a spousal bypass trust. It "allows the executor to shelter the assets from taxation at the death of the first spouse to die while still providing for the survivor's living needs," he says.

Where you live can, therefore, become an estate planning decision in itself. Eileen Olson, CFP® and founder of Emerald Wealth, had one family weigh the cost and choose to stay put to remain near their children and grandchildren.

"What matters," Olson says, "is making the choice knowingly."

Leaving heirs an inheritance, not a tax bill

With an estate of this size, advisers say planning should focus more on income tax than estate tax. What heirs keep is largely determined by the type of money involved — generally, the split between pre-tax and taxable assets.

Under the SECURE Act, most non-spouse heirs must empty an inherited IRA or 401(k) within 10 years. Should your heirs inherit your IRA during their highest-earning years, when every withdrawal stacks on top of their salary, it becomes a major tax burden.

Roth conversions offer one option. By converting pre-tax savings to a Roth during lower-income years, the tax is paid at your rate instead of your children's. "We have used low income tax years for many clients to do partial Roth IRA conversions that create a true tax-free legacy for heirs," says Jorge Padilla, CFP® and wealth adviser at Meira Wealth.

How you handle substantial appreciated assets also shapes the tax situation your heirs will face. Appreciated assets — a home, a business, a portfolio of stock — get a stepped-up basis at death, erasing the built-in capital gain for your heirs. Therefore, it's often best to wait, as handing them over while alive transfers the original, lower cost basis to your kids, sticking them with the capital gains tax.

"I wouldn't go crazy giving assets away to the next gen when you can grow that wealth and get a step-up in basis at your passing," says Marianela Collado, CFP® and wealth adviser at Tobias Financial Advisors.

To avoid this mistake, Chancey suggests a simple rule of thumb: "Give cash, not the things that have grown, or your kids get your old tax bill with the gift."

What if most of your wealth is illiquid?

If much of your wealth is tied up in a business, real estate or concentrated stock, heirs can be forced into a fire sale to cover taxes and expenses.

"Illiquid estates fail on cash, not on value," Judge says. He describes a client with a paid-off home, a rental property and a large IRA, whose children stood to inherit the real estate and a tax bill with nothing liquid to pay it. In this situation, he recommends life insurance held outside the estate, a buy-sell agreement for a business and a written plan for who runs what.

Equally overlooked is protecting the inheritance once it lands. Leaving money to adult children outright can expose it to their creditors, lawsuits and divorces. Collado offers a sobering scenario: you give everything outright to a child who the next day causes an accident and gets sued, and that inheritance becomes fair game. She says if you leave it in a trust instead, "that lawsuit wouldn't be able to touch those assets. That is something people rarely think about."

Gifting and giving while living

You can also shift wealth during your lifetime, tax-free, in bite-sized pieces. Those who want to give an early inheritance, for instance, might consider cash or other alternative financial gifts.

In 2026, you can give up to $19,000 per recipient ($38,000 for a couple) to as many people as you like, pay someone's tuition or medical bills directly, or "superfund" a 529 college plan with five years of gifts at once.

Charitable giving deserves special care, because which account you give from matters. Padilla recalls a client whose trust left 20% to charities and university foundations. On review, his team had her redirect that gift to come from her IRA instead, which spared her heirs the 10-year tax bomb while they inherited the step-up assets. "That move alone saved tens of thousands of dollars in taxes to her family," he says.

People and paperwork

So what does $5 million actually require? Judge says that while a $1 million estate needs a will, powers of attorney and current beneficiaries, a $5 million estate would benefit from adding layers like a revocable trust, state-tax planning and a liquidity plan.

But there's a risk of making your estate more complex than it needs to be. Padilla warns that elaborate structures are sometimes sold "to justify high fees when a simpler approach may be sufficient." His advice is to coordinate among a team consisting of an estate attorney, CPA and financial adviser to help.

The most important people to speak to might be those closest to you. Communicating your intentions heads off the conflicts that could erupt, especially as life and laws change. That's why Olson recommends treating an estate plan as a "living plan," one that should change "when a child or grandchild is born, when a marriage begins or ends, when you move, and when the law changes."

After all, you worked hard to make more money and don't want to leave more problems.

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My mom died unexpectedly one month after creating her will. She was sure to include a clause that funds from her estate could be used to cover costs, like her memorial service, and had spoken to me about how she'd named me executor and how she made sure money was available for those immediate expenses.

Though she'd planned to make the process as logistically and financially simple for me as possible through her estate planning, that quickly changed after her death. My mom's death was unattended, and the state of Massachusetts performed an autopsy. Months later, we still don't have the results. I have a death certificate listing her cause of death as pending, and her bank won't accept it, so I can't do something as simple as deposit her vacation payout from her employer. I won't have access to her estate funds anytime soon, and despite having a will, her estate has to go through probate.

My family's situation isn't unusual, and it's added financial stress to an emotionally turbulent time. I spoke with three attorneys to learn about why this happens and what you can do to avoid this. Here are five situations that might happen after a death despite your estate planning efforts. These situations may delay your heirs from being able to access the money you set aside for immediate expenses like funeral or memorial service costs, mortgage payments and more.

1. A death certificate may create challenges for your beneficiaries

A death certificate is a legal document that includes details about a death, including its date, time, location and cause. It's needed to begin the probate process, access or close bank accounts, claim a life insurance policy and more. If you've left money in a bank account to be used for expenses after your death, your beneficiaries will need a death certificate to access that account.

Things get more complex if an autopsy is performed. In some situations, a cause of death is clearly evident, but in others, it can be more complicated, necessitating an autopsy. Autopsies are particularly important and common when someone passes away at a young age, and they can provide a family with important peace of mind.

If an autopsy is performed, beneficiaries may receive a death certificate listing the cause of death as pending. When the autopsy results are available, that certificate can be updated to reflect the official cause of death.

Several financial transactions may require an official cause of death. "With a lot of financial assets, especially life insurance, the cause of death ultimately determines if the funds get paid out and how much they get paid out," says Kelsey Simasko, Attorney at Simasko Law. Since many life insurance policies have exclusions for suicide, illegal drug use or deaths that occur in a felony, life insurance won't pay out a policy until the insurer knows how an individual died.

"A lot of life insurance policies have riders for accidental death, so you need the official cause to determine if it's accidental and if the family should be paid out triple the policy," says Simasko.

Banks and credit unions may or may not accept a death certificate listing a cause of death as pending. According to Simasko, such financial institutions operate according to their own internal policies regarding whether to accept a death certificate with a pending cause of death. Most institutions would rather be safe than sorry, so beneficiaries may not be able to access an account at all until they have a death certificate with an official cause of death.

2. Autopsy results could delay a final death certificate

If an autopsy is performed, a beneficiary may need to wait on the final autopsy report before being able to proceed with tasks like accessing a bank account or claiming a life insurance policy. Unfortunately, the amount of time that a family may wait for a final report and death certificate may very significantly.

Benjamin Trujillo, Partner J.D., LL.M. at MONETA, explains that while the autopsy may be completed quickly after a death, toxicology and other laboratory work can extend that timeline. "Some tests can take more than a year with a backed-up lab," he says.

Simasko adds that location also affects autopsy processing timelines. Highly populous counties, such as those encompassing major cities, typically have a much larger backlog of autopsies to perform and process. In contrast, the process will likely be much faster in a small county.

3. Your bank account might be automatically frozen

Financial institutions often automatically freeze a bank account after the account holder dies. According to Elizabeth Acevedo, Shareholder/Director at Weinstock Manion, this can occur if someone calls and notifies the bank, or if a staff member sees an obituary in the news.

When older adults pass away, account freezes may be caused by benefits. "One of the most common things that triggers [an account freeze] is if the person was receiving any benefits," Acevedo says, such as Social Security benefits. "The Social Security Administration is one of the first ones to learn of the death, and they're the first to recover any additional payments that have been made. This often alerts banks."

According to Simasko, once an account is frozen, a beneficiary listed on the account will have to fill out paperwork to be able to access the account. If there's no beneficiary, a bank can't release any money until they receive an order from the probate court.

Trujillo explains that people are often surprised that being named as executor in a will doesn't necessarily give them immediate authority over the deceased person's assets. "You are nominated in the will, but you typically receive your legal authority through the probate process and after receiving what is called 'letters testamentary,'" he explains. Letters testamentary are legal documents issued by a probate court that give an executor the authority to manage an estate.

4. Your estate may have to go through probate

It's a common misconception that a will allows your beneficiaries to easily access your estate, but many people don't realize that a will must pass through probate.

According to Kiplinger's Trillion Dollar Talk survey, conducted by Morning Consult, 41% of parents have a will. But having one doesn't necessarily mean their loved ones can avoid probate.

"Having a will does not avoid probate — it almost guarantees some probate," says Trujillo. He explains that the will identifies who should receive the property left in the estate and who should administer the estate, but probate, the legal process of putting those instructions into effect, is overseen by the court.

Small estates may qualify to avoid the probate process, but the threshold for small estates varies significantly by state. In Massachusetts, that threshold is $25,000, excluding the value of a car. In California, the threshold is $107,900 for deaths occurring on or after April 1, 2025.

Many people are also surprised by the cost of the probate process. In addition to possibly retaining a lawyer, the court charges fees, including fees to open and administer probate, plus an inventory fee. In some counties, an inventory fee is a percentage of the total value of the estate's assets, while other counties charge a flat fee based on the asset value.

The probate timeline may vary, potentially taking months to years. Acevedo explains that the probate duration can depend on many factors, including how busy the court is and when hearings are set. "When I file a petition to close an estate, it's likely the hearing will be set three months from now," she explains. "There's just this drawn-out period that is truly a function of the fact that you are in court."

The decedent's organization can also impact the duration of probate. The process of unearthing assets can be time-consuming and challenging, especially if a beneficiary can't get into the decedent's email account. In such a situation, the process might involve reaching out to a CPA, going through mail, reviewing prior tax returns to identify income sources and running title searches.

5. Your beneficiaries might pay significant expenses out of pocket

Even if you have a will, your beneficiaries may not be able to access the money you'd set aside for immediate expenses after your death. They may have to cover those costs out of pocket.

Funeral costs may be substantial, and many people underestimate the costs. According to the Choice Mutual 2025 Funeral Cost Perception Report, more than half of adults ages 45 and older estimate funeral costs to be less than $10,000. However, experts report that when you account for expenses like the services, casket, printed materials and body transportation and preparation, costs can quickly approach $15,000 to $20,000.

Cremation is a lower-cost alternative. The National Funeral Directors Association reports that the median cost of a cremation, including a memorial service and body viewing, is $6,280. However, costs can still vary significantly by state.

Simasko says that families may have some flexibility in these situations. She notes that funeral homes understand that it often takes families some time to get their finances lined up, and they're typically willing to send a family a bill.

She adds that mortgages can often be left unpaid for about three months before a mortgage lender starts to talk about foreclosure. If a family can't cover the first mortgage payment, they may be able to miss that one payment and then pay it back once they have access to the funds. She encourages families to proactively contact the mortgage company and let them know about what's going on.

If a beneficiary pays for expenses out of pocket, it's essential to keep detailed receipts, including copies of checks or direct payments made from a bank account. Beneficiaries can submit those receipts to get paid back later on.

7 ways to make accessing funds simple for beneficiaries after your death

• Prepay for a funeral or cremation: Prepaying for a funeral or cremation allows you to cover the costs in advance, leaving your family with one less expense. There are a couple of drawbacks to be aware of. If the funeral home should close, it might be difficult to transfer the contract. If you and your family move and no longer want to use that funeral home, you generally can't use the contract elsewhere.  
• Consider final expense insurance: Final expense insurance is a permanent life insurance policy that helps cover expenses like funeral costs, legal fees for end-of-life documents and some other related costs. This type of policy usually has a lower premium and a smaller payout than a traditional life insurance policy, and it's an alternative to prepaying for services.
• Open a joint account: Consider opening a joint account specifically for funds to be used for end-of-life costs and other immediate expenses. You can add a beneficiary to the account as a joint user, which may help them access the funds sooner. Trujillo cautions that joint ownership of accounts may have unintended gift tax consequences, particularly if the money is used to benefit the survivor, and not the estate, so consider speaking with a tax professional when you create the account.
• Create and maintain your will: A will is important, and it identifies which assets you want to go to each beneficiary. Make sure that you create a will and keep it updated if your wishes change.
• Consider a living trust: Acevedo recommends creating a living trust in addition to a will. "The living trust operates like a will, and I have my clients move their assets into the name of their living trust during their lifetime," she explains. Instead of having to go through court, the beneficiaries take a change of trustee document and a tax ID number to the bank and are able to access accounts much faster than through the probate process.
• Add a beneficiary to your accounts: Beneficiary designations on your retirement accounts and life insurance are also essential. Trujillo cautions that retirement accounts and life insurance benefits usually pass according to the beneficiary designation, not according to the will, so be sure to keep those designations updated if your plans change.
• Leave documentation: Make sure your will executor knows how to access your financial information and estate planning documents. Keep copies of essential details, like a list of bank accounts, retirement accounts, income sources and email addresses and passwords, and share their location with the executor in advance. Having this information organized and accessible can save your beneficiaries time and stress.

Looking forward

Estate planning may be expensive, and Simasko estimates that most people will pay several thousand dollars upfront, but that investment may help save your beneficiaries both money and time. "Estate planning is so much less expensive than fees beneficiaries are facing when going through probate," she says.

Laws vary by location, so consider speaking with a lawyer specializing in estate planning in your state. Discuss your goals, including your wishes for funds to be easily accessible to cover immediate costs, and ask whether your current estate plans are sufficient or need to be improved to meet that goal.

Taking a second look at your plans may help avoid unexpected situations, making the overall process easier for your beneficiaries.

Related Content:

• How to Talk to Your Adult Kids About Their Inheritance
• 5 Steps to Prevent an Inheritance From Fracturing Your Family
• Inherited a Check? Here's What to Do with It Next
• No One Wants to Ask Their Aging Parents About Their Finances, But Here's How
• The Hidden Costs of Inheriting an Investment Portfolio

As someone planning for the future, protecting your health and savings is likely at the top of your list.

The cost of healthcare, especially long-term care, can quickly erode even a substantial nest egg. While Medicare provides vital health coverage, it has limits — particularly when it comes to long-term custodial care such as nursing homes.

That's why many people are turning to a tool called a Medicaid Asset Protection Trust (MAPT) to shield their assets while maintaining access to Medicare and Medicaid benefits.

What is a Medicaid Asset Protection Trust?

An MAPT is a specialized legal arrangement designed to protect your assets and help you qualify for government healthcare programs.

Unlike a straightforward will or a general trust, an MAPT is specifically crafted to help people navigate the complex rules surrounding Medicare and Medicaid eligibility.

At its core, the MAPT moves selected assets out of your personal ownership and places them into a trust.

This legal shift can reduce your countable assets when government agencies evaluate your eligibility for Medicaid's long-term care benefits, while still allowing you — or someone you trust — to manage and use the assets for your benefit.

Why is this important?

Medicare offers excellent coverage for hospital stays and certain medical services but provides limited support for long-term custodial care, the kind of ongoing help many people need as they age.

Medicaid, on the other hand, covers long-term care costs but comes with strict eligibility rules — especially regarding your assets.

Many retired people face a harsh choice: spend down their savings to qualify for Medicaid or pay out-of-pocket for costly long-term care. An MAPT offers a third, smarter option. Here's why:

Preserve your savings. The MAPT can protect your life savings, your home, investments or other assets from being fully spent on nursing home or in-home care. This gives you peace of mind knowing your financial legacy is secure.

Ensure eligibility for Medicaid benefits. By placing assets in the trust, you reduce your personal resources in the eyes of Medicaid without losing control or access to those assets. This helps you meet Medicaid's asset limits more easily and quickly, ensuring you get the care you need.

Maintain control of your finances. Contrary to popular belief, creating an MAPT doesn't mean you lose all control. Depending on how the trust is set up, you can still access funds for your care and daily expenses or appoint a trusted family member to manage the trust in your best interest.

Avoid probate and promote privacy. Assets held in a trust often bypass the lengthy probate process, allowing your heirs to avoid court delays and maintain confidentiality about your estate.

Plan ahead to avoid a crisis. Establishing an MAPT before a health crisis strikes is crucial. Medicaid has a "look-back" period (usually five years), scrutinizing any asset transfers made before applying for benefits. Proper planning can help navigate these rules and prevent costly penalties.

Until you provide every receipt, distribution and bank statement for all transfers predating the application for Medicaid benefits for the prior five-year period, you are responsible for paying the costs of care.

Who should consider an MAPT?

If you have assets such as a family home, savings or investments, and you anticipate needing long-term care, an MAPT might be a valuable part of your estate planning.

It's particularly beneficial if you want to protect your wealth for children or other heirs while ensuring access to government healthcare assistance.

Consult an experienced elder law attorney

Navigating Medicare and Medicaid rules can be complicated and varies by state. An elder law or estate planning attorney familiar with local regulations can guide you in creating an MAPT tailored to your situation, ensuring compliance and maximizing your benefits.

An MAPT offers people a strategic way to protect assets, maintain access to Medicaid long-term care benefits and plan without exhausting their savings.

It's a safeguard that balances financial security and healthcare needs, helping you maintain control, dignity and peace of mind as you age.

If protecting your assets while qualifying for government healthcare assistance is a concern, now is the time to explore whether a Medicaid Asset Protection Trust fits your retirement plan.

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• Your Revocable Living Trust Won't Protect Your Assets from Long-Term Care Costs: Do This Instead
• Why Building a Legal 'Moat' Is the Best Defense Against Lawsuits and Creditors
• How to Turn Your Parents' Estate Tax Exemption Into a Capital Gains Miracle
• Worried Your Estate Plan Will Unravel When One of You Passes Away? Why a QTIP Trust Can Give Married Couples Peace of Mind

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 once worked with a family in which the parents had built substantial wealth and didn't share the details with their children for decades.

Their four adult children were all successful in their own right, but they didn't discover the full financial picture until they were in their 50s and early 60s, when their parents finally brought everyone together with an attorney and a financial adviser to review their estate plan.

This isn't an uncommon issue. According to Kiplinger's Trillion Dollar Talk survey, conducted by Morning Consult, more than half of parents ages 55 and older say they rarely or never discuss money with their children.

These parents hoped one child would step in to help manage the portfolio and that the others would take on roles like executor or trustee. Instead, the children left the meeting feeling frustrated and unprepared. They urged their parents to hire someone outside the family entirely.

The wealth wasn't the problem. The problem was that nobody had built the muscles for stewardship until the day they were suddenly required.

As a legacy planning specialist at Novare Capital Management, I think about preparing the next generation less like a single event and more like a curriculum, one where the lessons grow with the child instead of arriving all at once in a conference room.

Here's the road map I walk families through, stage by stage.

Elementary and middle school: Save, spend, give

The foundation starts simple: Help a child become intentional with every dollar they receive.

One family I worked with paired basic money lessons with a values-based twist. Each year, their three children picked a charity, researched it and presented why it mattered to them.

The child who showed the strongest research and conviction chose that year's family vacation destination, and every child still made their own donation, matched by the parents.

It turned saving and giving into something the kids competed to get right, and by the time they were adults, they brought that same confidence into estate planning conversations instead of feeling overwhelmed by them.

A savings match works the same way. If a child saves a dollar, the parents contribute 25 cents. It's a small practice, but it introduces the idea of matching contributions years before that child will encounter an employer 401(k) match.

Whatever structure you use, keep the terms consistent and let the child retain some control, including the freedom to spend within clear guidelines.

High school: Real costs, real stakes

Teenagers need lessons that move from abstract to practical. If you started a savings match earlier, high school is when a teen can begin contributing a percentage toward bigger costs, such as a car, a musical instrument or sports equipment.

That shared stake teaches delayed gratification in a way allowance never will.

This is also the right window to introduce responsible credit use, while the teen still has parental guardrails at home rather than encountering credit for the first time during their freshman year of college.

For investing specifically, I like mock trading exercises that let teens experience real market swings without real money on the line.

Investors with a Schwab brokerage account can use paperMoney, a free virtual trading platform, to practice buying and selling with fake money. It's a lower-pressure way for a teen to get comfortable with market swings rather than jumping straight into a real account, like an UTMA a grandparent funded with $10,000, where mistakes carry real consequences.

One mistake I see often: Trying to get a 16-year-old to care about retirement, which is too abstract at that age.

The more effective play is teaching the underlying skills, delayed gratification, budgeting, paying yourself first and comparing fees and providers, since those transfer directly into retirement readiness later without requiring a teenager to care about something that's 50 years away.

The 20s: Building independence without a safety net

Young adults need a budgeting approach that covers both savings and debt at the same time. That means understanding high-yield savings accounts, prioritizing high-interest debt paydown and building an emergency fund that can cover three to six months' worth of expenses.

This lesson is more important than many people realize: If parents become the automatic backstop for every setback, that precedent is hard to undo later.

This is also the age to talk through what support looks like if that emergency fund isn't enough. If an adult child needs to move home for a few months, will they pay rent or contribute to groceries? Is there an end date?

Working out those terms before a crisis hits keeps the conversation feeling like a plan instead of a rescue.

30s and beyond: From teaching to partnership

Once adult children reach their 30s, the goal shifts from teaching habits to preparing them for real roles in the family's financial future.

If regular family meetings haven't started yet, this is the time, and I recommend starting with a "ground rules" session rather than a numbers session: How does this family want to communicate about wealth going forward?

You don't need to open the full balance sheet to have this conversation. Plenty of families aren't ready to disclose the size of an estate, and that's fine. Disclosure comes later.

What matters first is whether the family has built the communication and trust to handle it when it does.

Four signs your children are ready for more

Age is a poor predictor of readiness. What I look for:

• Can they explain where their money went and why?
• Do they consistently save before they spend?
• Can they compare options and ask questions before making a decision?
• When they make a financial mistake, do they learn from it instead of hiding it or expecting someone else to fix it?

Those four behaviors tell you more about a child's readiness to handle money than any birthday will.

Let's revisit the family I opened with. Their children weren't incapable — they were simply never given the stage-by-stage practice that would have made a room full of legal documents feel familiar instead of overwhelming.

You don't need a perfect plan or a full disclosure meeting to start. You need one honest conversation at whatever stage your kids are at right now — and a willingness to keep having it as they grow.

Related Content

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• 4 Practical Ways to Prepare Your Children for Their Inheritance
• Why Wills and Trusts Aren't Enough in the Great Wealth Transfer, From an Attorney Who Knows
• Great Wealth Transfer: How Families Can Get on the Same Page
• Will Millennials' Attitude Toward Money Put the Family Wealth at Stake? A Wealth Adviser Explains How Families Can Find Common Ground

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.

Receiving a financial windfall through an inheritance can trigger feelings of guilt and sadness that come as a result of losing a loved one.

What you've been left with is so much more than a number; it's a lasting legacy, and the kind of generosity that can feel overwhelming. You want to remember what the person meant to you — not waste what they worked so hard to leave behind.

Used well, a large windfall can wipe out high-interest debt, build an emergency fund or boost your retirement savings contributions. Used frivolously, it can disappear as fast as it arrived. A recent study shows that 42% of heirs spent their entire inheritance within one year.

New Morning Consult-Kiplinger research shows that adult children are far less likely to think they'll get an inheritance than parents who expect to leave one; 42% of younger respondents say they don't expect to receive a sizable amount. However, about twice as many parents plan to leave a meaningful inheritance.

That’s encouraging, given that 60% to 65% of Americans live paycheck to paycheck, according to a Wealthvieu survey, and another 56% can’t cover a $1,000 emergency. If $100,000 showed up in your bank account, it would probably feel like a lot of money.

If you’re expecting a windfall or you’ve already received a large inheritance, here’s a guide to set up your financial future so the money lasts, instead of disappearing in the first year.

Take time to breathe

According to Capital Group, two-thirds (65%) of Gen Xers and millennials say they regret how they used their inheritance money, with nearly two in five wishing they had invested more. While only 18% of millennials turned to financial advisers for investment advice, 27% were more likely to turn to social media and "finfluencers" for advice when they inherit.

Srbuhi Avetisyan, a research and analytics specialist at Owner.One, offers this advice. "Don't rush to make the money productive. Give yourself permission to do nothing with it for a while. An inheritance is unusual money because it arrives together with emotion."

She says that depending on the circumstances, there can be grief, relief, guilt and a strange sense that you need to "do something sensible" immediately. "That's not a great state in which to make a $100,000 decision."

If you receive the $100,000 in cash, consider putting it in an FDIC-insured high-yield savings account or money-market fund and leaving it there while you figure out what you want to do with it longer term. Then give yourself time to breathe. You don’t have to rush into any decisions. Coping with grief isn't easy, and adding $100,000 to the mix can only complicate matters.

Don’t treat a promise like a payday

Planning ahead is a sound strategy in many situations. But when it comes to an inheritance, making plans for how you'll spend the money before it lands in your bank account can be reckless. Wait until you know what you have, then incorporate the funds into your retirement plans.

While you might anticipate a certain amount, remember that circumstances for the person leaving you the money can change, and so can the inheritance. Your friend or relative might need to go into a nursing home or an expensive long-term care facility, or they might decide to give all their money to their favorite charity and leave you with a future you can't guarantee.

Even Thomas Jefferson said, “Never spend your money before you have it.” Talk with an inheritance planning adviser who can help you decide the best way to handle the money in the short term, as well as help devise a long-term financial plan that takes all of your assets and obligations into consideration.

Focus on debt reduction first

Paying down debt with an inheritance isn’t the most exciting first move, but it is one of the most valuable. Credit cards can carry an interest rate of 20% or more, which can eat away at even the largest inheritance.

Paying off high balances is a guaranteed return on your money. It also frees up cash flow and makes it easier to save or invest the rest of the inheritance. Paying off student loans or your home mortgage might also help, especially if your goal is to be debt-free.

Consider investing the money

With the help of a financial planner, you might want to invest the money from your inheritance. Diversify your investments across different options with varying risk levels, depending on how knowledgeable (and risk-tolerant) you are. Rather than investing it all at once, consider investing over time, using a strategy such as value or dollar-cost averaging.

Boost your contributions

An inheritance can also provide an opportunity to boost your contributions to a 529 college savings plan account or retirement accounts, such as a 401(k) or IRA. You can’t put inherited money in a retirement account because it isn't earned income or other taxable compensation. However, knowing you have it can give you the comfort needed to boost your contributions.

Take more out of each paycheck for your 401(k). Your take-home pay will be less, but now you can use the inheritance money in your bank account to cover your expenses, such as rent, groceries and bills that your paycheck used to cover. You’ll have the same lifestyle, but you’ll also have more money in your 401(k) for retirement. You can put $24,500 in a 401(k), even more if you’re 50 or older.

You can also put $7,500 in an IRA. If you have a qualifying high-deductible health plan, you can put $4,400 in an HSA for yourself or $8,750 for your family. Those accounts accept a check or a transfer, so inheritance cash can go in directly, as long as you stay under the yearly limits. You could choose a Roth IRA if you think your tax rate will be higher in the future.

Understand the tax implications

Unless you inherit a great deal of money, you probably won't have to worry about federal estate taxes ($15 million per individual or $30 million for a married couple in 2026).

However, certain assets have tax implications. For example, if you inherit securities, jot down what they were worth on the day that the person you inherited them from died. You’ll need to know your cost basis if you decide to sell them.

The tax rules for individual retirement accounts (IRAs) vary depending on whether you inherited them from your spouse or someone else. The type of IRA, traditional or Roth, also matters. You won't owe tax on the amount you inherit, but you will be taxed when you take distributions from a traditional IRA. With an inherited Roth IRA, withdrawals are typically tax-free, but non-spouse beneficiaries are generally required to empty the account within 10 years of the owner's death.

Enjoy your inheritance

If you want to spend some of your $100,000 inheritance on yourself or your loved ones, go ahead. The money is yours now. Just remember, when it's gone, it's gone.

Jason Stephens, founder and managing partner of Evertern Wealth, recently worked with a client who inherited about $150,000 from a grandparent. “They used part of it to take their first trip to Europe, paid off their student loans and invested the rest," he said. "That was a thoughtful use of the money. They enjoyed a meaningful experience, eliminated debt and still directed a substantial portion toward long-term financial security.”

Stephens says there's nothing wrong with enjoying part of an inheritance. The mistake is letting a meaningful financial opportunity disappear through a series of purchases without ever deciding what the money is intended to accomplish.

If you're reasonably secure financially and have been putting off repairs on your leaky roof, or have a medical emergency, that inheritance will come in handy. However, if you're up to your knees in debt, it might be better to focus on setting yourself up for a future no one can predict.

What a $100,000 inheritance can mean

If you receive a $100,000 inheritance, first, be grateful; it can make a positive difference in your life. Stephens recommends taking a few months to understand what you received, the tax implications and what you want the money to accomplish. “That’s often more valuable than rushing to invest or spend it.

"An inheritance can honor both sides of what the person who built the wealth likely wanted," he said. "They wanted you to enjoy some of what they worked so hard to create, and they wanted your life to be more financially secure. Good planning accomplishes both.”

Related content

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• The Expert Guide to a Tax-Free Inheritance

Like many, you might have the best intentions of "getting your affairs in order."

Year after year, it lands on your list of resolutions. Yet, every December, it rolls over, untouched, to the next year.

You aren't alone. Trust & Will's 2026 Estate Planning Report, a survey of 5,000 U.S. adults, found that just 26% of us have a will, down from 31% a year earlier, and that 56% have no estate planning documents at all.

Estate planning feels uncomfortable for two reasons:

• It's a topic most of us know little about
• It forces us to sit with our own mortality

The consequences of this procrastination are significant and affect those you love during an already difficult time.

Without a will or trust, state law decides who receives your assets, not you. That process, called intestate succession, might not reflect what you would've chosen, and it can drag out for months or years in probate court, with legal fees eating into what's left behind.

For high-net-worth individuals, the stakes are even higher: More assets, more complexity and possibly blended families or business interests that default rules weren't designed to handle well.

I'm here to help you break the cycle of avoidance, procrastination and (let's face it) fear. Here are some important basics to help you get started.

1. Your will: The foundation and the safety net

A will is the document most people picture when they think about estate planning, and it remains the foundation. It directs who receives what, it names the executor who will carry out your wishes, and it's the only document that can name a guardian for minor children.

If you do nothing else on this list, do this one. It has two limits worth knowing.

Probate. A will must pass through the public court process that a trust is built to avoid.

Retirement accounts and life insurance don't pass under your will, which surprises people. Those assets go to whoever is named on the beneficiary form, no matter what your will says.

If you're married, there is one more decision to make here. It's a common instinct for married couples to want a single, shared document. Some states don't permit a joint will, and even when one is valid, estate attorneys generally advise against it.

Two separate wills give each spouse independent flexibility to make changes. A joint will can lock in original terms for the surviving spouse even if circumstances dramatically change.

Two wills, written to complement each other, often referred to as "mirror wills," achieve the same shared intent with far more clarity.

2. Revocable living trusts: Skipping probate

A revocable living trust is a legal structure you create to hold your assets, such as your home, investment accounts and business interests. You control it, can change it anytime and continue managing everything exactly as before.

Its key benefit is that assets titled in the trust's name bypass probate entirely when you pass away, transferring directly to your beneficiaries without court supervision.

Settling a trust still takes time, but it's not dependent on a court's calendar. That means a faster, smoother transition for your heirs and privacy as well, since probate records are public. A revocable living trust is often the centerpiece of a modern estate plan.

If you set one up, your will then takes a particular form alongside it, called a "pour-over" will. Any assets you forgot to formally move into your trust or acquired shortly before your death, are "poured over" into it through the will, so they are ultimately distributed according to your wishes.

This safety net ensures any overlooked assets don't fall back into intestate succession. As a backstop, it doesn't replace the trust; it completes it.

There is one misconception worth clearing up. A revocable trust keeps your estate out of probate, but it does not reduce estate tax.

The reassuring news is that most families don't owe any. The federal exemption was increased to $15 million per person in 2026, or up to $30 million for a married couple.

However, state thresholds vary. New York taxes estates above $7.35 million in 2026, and because of the state's "cliff," an estate worth more than 105% of that figure, roughly $7.72 million, loses the exemption entirely and is taxed from the first dollar.

Consider the limits and estate tax rules of your own state.

3. Power of attorney: Your trusted 'agent'

Everything up to this point concerns what happens after you're gone. But the next four documents address a time when you're alive but unable to act or make decisions for yourself, whether because of cognitive decline as you age or a sudden accident or illness.

To prepare for such a time, a financial power of attorney lets you appoint someone who will make decisions on your behalf.

This is an important step to keeping your financial and legal matters on track. It:

• Removes friction with banks and brokerages
• Keeps bill paying, investment management and real estate or business matters moving without interruption
• Can spare your family a court-supervised guardianship or conservatorship, which is public, slow and expensive

Keep in mind that many banks will honor only their own form, so ask each institution what it requires while you're still able to sign.

4. Healthcare directives: A message for your loved ones

A healthcare directive, sometimes called a living will, is a written statement of your medical wishes when you can't advocate for yourself.

Rather than leaving loved ones with the burden of critical decisions such as whether you'd want life support, resuscitation or other invasive interventions, a healthcare directive provides them with a roadmap.

It records your values and expectations, so that if a wrenching decision ever must be made, your family is carrying out your wishes rather than guessing at them under pressure.

5. Healthcare proxies: Naming your decision-maker

While a directive states your wishes, a healthcare proxy (also called a durable power of attorney for healthcare) names a specific person to make medical decisions on your behalf if you're incapacitated.

Real medical situations are often fluid and require judgment calls. Your healthcare directive provides information and guidance for these decisions but can't lay out every scenario that could arise.

Choosing someone who knows you well and can act calmly under pressure matters more than choosing the "obvious" family member. Name the person who can ask a doctor a hard question, then live with the answer.

Tell the people you didn't name why you chose as you did while you can still explain it yourself.

6. HIPAA authorization: The one people skip

Naming a proxy is not quite the same as making sure the people who love you can find out how you are. Federal medical privacy law limits who a provider may share your information with, and a HIPAA authorization is the short form that names the people your doctors may speak with freely.

Your proxy has a right to what they need once their authority is in effect, but many proxies are written to take effect only after a physician documents that you can't decide for yourself, and obtaining that determination can require the very records the proxy is not yet entitled to see.

The authorization removes that circularity. It can also cover anyone you'd like to include, such as a sibling or an adult child. It's usually signed at the same time as the proxy and takes a few minutes. It's often a missed step because it feels redundant.

Check-ins: Not a set-it-and-forget-it

An estate plan isn't a one-time project. Marriages, divorces, births, business growth and moves to a new state can all affect whether your plan still works, or whether it's even valid.

Review your plan every three to five years, and immediately after any major life event. A proxy who has moved out of your life or a beneficiary who has already died, can undo years of careful planning.

There's no time like the present: Check it off the list

Most people don't act until something forces the issue, but that might be too late. Don't wait for a push. Be prepared and give yourself the luxury of knowing that your estate plan is solidly in place.

The topic might be uncomfortable, but the process itself is usually far more straightforward than the anxiety that not having a plan creates.

If you do only three things this month, do these.

First, pull up the beneficiary designations on every retirement account and life insurance policy you own and confirm that each one names the person you would name today. Those forms override your will, and a former spouse or a long-deceased parent still sitting on a 401(k) form is one of the most common ways an otherwise sound plan fails.

Second, write down what you own and how each asset is titled, because titling, not intention, determines what passes through probate.

Third, choose your healthcare proxy and your financial agent, ask whether they're willing to serve, and tell them where the documents will be kept.

Do that much, and an estate planning attorney can build the rest around decisions you've already made, which is faster and less expensive than starting from a blank page. Your loved ones will be glad you did.

This article is for informational purposes only and does not constitute legal, tax or financial advice. Estate planning laws vary by state, and individual circumstances differ significantly. Please consult a qualified estate planning attorney or financial adviser before making decisions about your will, trust or healthcare directives.

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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.

Your inheritance will likely be very different from your parents'. Two forces are at play. First, as life expectancies lengthen, the next generation is receiving inheritances much later in life. Second, the amount of wealth changing hands is staggering: Trillions of dollars will be passed down as part of the Great Wealth Transfer.

People inheriting money in their 30s or 40s might use those funds to buy a home or pay for their children's college. But those receiving inheritances in their 50s and 60s are using that money differently. For many, this windfall triggers a "second retirement" — an unexpected phase of financial freedom that allows them to completely rewrite their timeline.

Here's how experts recommend maximizing a late-in-life inheritance.

Buying back time

Well-off people are often advised to give with warm hands (while they are still alive) for a reason. Financial gifts for children during their 20s, 30s, or 40s can often be more "helpful" than receiving that money later.

Joshua Mangoubi, founder and chief investment officer at Considerate Capital Wealth Management, is familiar with that scenario. But he also says the narrative is shifting.

"What I usually hear is some version of, 'Man, I could have used this in 1998.' I get it. I would have said the same thing. Give it a few months, though, and the 1998 comment stops coming up," he says.

As Mangoubi explains, "At 35, the money buys stuff. At 60, you already own the stuff. Most of the 60-year-olds I work with are trying to get rid of stuff, not buy more. So what does the money buy now? Time."

What makes a late-in-life inheritance even more valuable, Mangoubi says, is that many older people know what they want to do with their time, whether it’s seeing their grandchildren more often, exploring hobbies, or traveling. And that’s something it’s hard to put a price tag on.

Paying for long-term care

On the flipside, Mangoubi says, a lot of people who receive an inheritance later end up using it to pay for a surviving parent’s long-term care.

"Long-term care insurance has an ugly math problem," Mangoubi says. "The people who can self-fund their care don't need it, and the people who need it can't afford it."

Given the way medical costs keep climbing, Mangoubi isn’t surprised by this trend. According to CareScout, the median cost of an annual assisted living stay was $74,400 and a private room in a nursing home was almost $130,000 annually, as of 2025.

While covering long-term care isn’t the most fun way to use an inheritance, it can at least alleviate an otherwise huge financial burden. Plus, recipients of an inheritance who don’t have their own long-term care plan can use the money to fund one.

Helping children and grandchildren

By the time many people reach their 50s or 60s, they’ve saved well and are still in their peak earning years. As such, they don’t necessarily have a great use for an inheritance. In these situations, recipients will often use the money to better the lives of their kids and, if applicable, grandkids, says Brandon M. Cox, CFP and founder of Coastline Complete Wealth.

"I also see people who inherit in their 50s and 60s realize they already have enough for themselves and start gifting money to their children or grandchildren. In that sense, some late-life inheritances almost skip a generation economically, even if they don’t legally," he explains.

Cox has also observed an interesting trend.

"I’d say more than half of the people I work with who receive a substantial inheritance want to keep all of it in their own bloodline," he says. "Their children become the beneficiaries of those inherited assets instead of their spouse, even in happy first marriages."

Retiring earlier than planned

While older beneficiaries of an inheritance may not "need" the money, it can often be a catalyst for early retirement, Cox says.

"We generally build retirement plans as if an inheritance isn’t coming," he explains. "Once it actually arrives, though, you can see people realize pretty quickly how different their financial picture is."

Cox shares that he once had a client with a successful pharmaceutical sales career who was making good money, but her inheritance let her retire earlier than she otherwise would have.

This phenomenon often acts as a "second retirement," where an unexpected late-in-life windfall allows someone to abandon their primary career trajectory and immediately enter a new phase of absolute financial independence.

"Once you know you don’t have to work anymore, that starts weighing on you pretty heavily when you’re having a bad day at work," he insists.

Patrick Simasko, elder law attorney and financial adviser at Simasko Law, has also seen late-in-life inheritances fuel earlier retirements than planned.

"Kids seem to want to retire earlier than their parents. They saw their parents work and never took advantage of their savings. The kids want to start their retirement as early as possible," he says.

Buying more financial security

In Simasko’s experience, many of his clients who receive a late-in-life inheritance are already in a strong position to retire comfortably. But that extra money, he says, can buy more financial security.

"There has been a major shift away from traditional pensions," Simasko explains. "For a 55- or 60-year-old who may not have a pension of their own, an inherited IRA or other retirement assets can substantially strengthen their retirement picture. In many cases, the inheritance isn't about buying something new — it's about providing greater security, flexibility, and freedom during retirement."

Pivoting to meaningful work

Some people may not be ready to retire in their 50s or 60s, despite being able to do so following a sizable inheritance. Allison Moeschberger, CFP and VP wealth adviser at Johnson Financial Group, says she’s seen clients use their excess income later in life to adapt their careers rather than ditch them.

"Working because you feel you have to is very different than working because you want to," Moeschberger says. "An inheritance can allow them to retire early, move to part-time, switch careers to try something new, or move from a paying job to volunteering."

Moeschberger shares a few stories of meaningful pivots.

"One client left their demanding job as an attorney and became a substitute teacher so they had the choice of working when they wanted to," she says. "Another stepped down from running a business to become a bartender at their local brewery because they already enjoyed going there as a customer and still wanted to be able to interact with people and have interesting conversations."

Funding family memories

You may not need more stuff if you inherit money in your 50s or 60s. But you can use that money to buy experiences, Moeschberger says.

"One of the best parts of being a wealth adviser is watching clients experience the things they dreamed of or wanted to do but thought would never be possible for them," she says. "Mediterranean cruises, real estate purchases in a new location, and home additions are all examples I’ve seen."

Moeschberger also said one client of hers chose to invite their kids and grandkids on a big family trip as an experience they would all appreciate and remember. And that’s a wonderful way to honor a loved one, too.

Related Content

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• Why So Many Families Are Unprepared for the Great Wealth Transfer — and What You Can Do About it
• Could You Handle a Sudden Windfall? Take Our Quiz
• What Happens When You Inherit a House — With Your Siblings

Each week in our Ask the Tax Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at four tax questions from readers on federal and state estate taxes. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. What's the lifetime federal estate and gift tax exemption?

Question: What is the lifetime federal estate and gift tax exemption for people who die this year? Will it be different for 2027 deaths?

Joy Taylor: The lifetime federal estate and gift tax exemption for people who die in 2026 is $15 million. This amount will go up each year with annual inflation. We don't yet know the figure for 2027 deaths.

2. How many estates pay federal estate tax?

Question: I'm curious how many estates actually pay estate tax, now that there is such a high lifetime federal estate and gift tax exemption.

Joy Taylor: In recent years, about 7,000 Form 706 estate tax returns have been filed with the IRS each year. More than half of these filings are from taxable estates of decedents, meaning estates that owe the federal estate tax.

The nonpartisan Tax Policy Center recently estimated that 6,890 federal estate tax returns would be filed for decedents dying in 2026, with 3,900 filed by taxable estates and 2,990 filed by estates that owe no tax.

3. Will the IRS tax me on inherited property?

Question: My grandmother recently died, and I inherited an appreciated, valuable piece of real property that she owned. Will the IRS tax me on my inheritance?

Joy Taylor: No. Inheritances are generally tax-free for federal tax purposes. And you would generally take a stepped-up tax basis in the inherited property equal to fair market value at the time of your grandmother's death. So if you sell the property shortly after her death, you shouldn't recognize much taxable gain from the sale.

4. Which states have their own estate, inheritance taxes?

Question: Which states have their own estate or inheritance taxes?

Joy Taylor: Most states do not impose taxes upon death. However, some do. Washington, D.C., and 12 states levy their own estate taxes on decedents. These states are Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont and Washington.

The estate tax exemption amounts in the 13 locales vary widely from state to state, and most are far below the federal exemption. Only Connecticut has hiked its estate tax exemption amount to close to the current federal level.

Five states impose an inheritance tax. They are Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania.

For more information, see our article on states with scary estate and inheritance taxes.

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

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The Great Wealth Transfer is already underway, with trillions of dollars expected to pass from one generation to the next over the coming decades.

But most Americans spend more time planning a family vacation than working on their personal finances, and the amount of time they spend on their wealth transfer is even less.

In my experience, this oversight can have lasting consequences. Here are the biggest estate planning mistakes I try to help my clients avoid.

Not preparing your heirs

Wealth is a powerful tool for creating a legacy. But if you're assuming it will be a wonderful windfall that sets your family up for success after you die, you may be unpleasantly surprised. According to research from the Williams Group, 70% of wealthy families lose their wealth by the second generation, and 90% lose it by the third.

I've found that heirs are often better prepared for wealth when they develop accomplishments and confidence that are independent of family wealth. The goal isn't to make life difficult for your children, but to help them build the skills and judgment they'll need to manage opportunities responsibly.

Unfortunately, more than half of parents ages 55 and older surveyed by Morning Consult for Kiplinger say they rarely or never discuss money with their children.

That's why I encourage families to hold regular conversations about the purpose of their wealth. This doesn't have to mean disclosing every dollar. It's about helping the next generation understand how wealth was created, what responsibilities come with it and what role it should play in their lives.

The biggest gift you can leave for the next generation is clarity and financial confidence, and you can't do that if you don't talk to them.

You shouldn't be the only one talking to your children about money, however. It's hard to be a prophet in your own land, and one lesson I've learned as an adviser and parent is that children don't always take advice from those closest to them.

Sometimes they'll hear the exact same message from a trusted mentor, adviser or family friend and view it completely differently. Create opportunities for younger generations to learn from people who have good judgment and strong values.

Failing to formalize your plan

Legal processes need to be followed to ensure assets are transferred the way you want. It's always shocking to me how so few people have a will or trust. A Guardian study found that about half of high-net-worth individuals don't currently have a will.

I've seen estate disputes strain family relationships for years. In some cases, siblings stop speaking to one another because expectations were never clearly documented or communicated. If you've spent a lifetime building wealth, take the time to preserve family harmony by ensuring everyone understands your intentions before difficult questions arise.

Not protecting your wealth

A will or trust determines where assets go. Asset protection helps ensure they're still there when the time comes to transfer them. In this litigious world, asset protection is essential to protect people from lawsuit creditors and anyone else trying to separate you from your money.

Unexpected legal claims or liabilities could reduce the wealth you're hoping to pass on. I often tell clients they need a moat around their castle. I've seen many people's life's work wiped out by a judgment, regulatory issue or divorce.

Irrevocable trusts are a way to protect your assets. These types of trusts can shield your assets from lawsuits. Depending on your circumstances, they may also be able to lower your estate and income taxes.

Waiting until you're gone to make an impact

Many people assume wealth transfer is something that happens after they die. In reality, some of the most meaningful transfers happen while you're still alive to experience the benefits firsthand.

I've seen such joy in parents and grandparents when they get to see how their money benefits their offspring. It's also incredible to be so fortunate that you can give your money to places and causes you believe in and be able to see its impact while you're alive. This is why I encourage some of my clients to not wait until they're gone to give.

People are living longer these days. If you're 99 when you pass, your kids may be in their 70s and already retired. But in their 30s, 40s and 50s, your kids may be starting families, buying houses, building businesses and putting their kids through school. Transferring money at this point can provide far greater value.

Focusing on the "how" before the "who"

Everybody asks "how?" I think the better question is "who?"

• Who are the advisers helping you make estate planning decisions?
• Who is educating the next generation?
• Who is collaborating to help ensure every piece of your plan works together?

Transferring wealth requires a team, and the quality of your team determines the quality of your outcomes. I like to call this your "kitchen cabinet," meaning the group of people you trust enough to give you the right advice when you need it most.

You don't want five great professionals working independently. You want the right professionals working together. The families who navigate these transitions most successfully tend to have financial advisers, attorneys and tax professionals operating as a coordinated team.

Wealth transfer is about far more than passing down assets. It's about passing down opportunities, values and a vision for the future. With thoughtful planning, open communication and the right team of professionals guiding the process, your wealth can become a lasting legacy that benefits generations to come.

In my experience, the families that transfer wealth most successfully treat inheritance as a conversation, not an event.

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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 most dangerous word in American estate planning is "permanent."

Congress used it last summer when it enacted the One Big Beautiful Bill Act (OBBBA), and every planning practice in the country quietly lost its sense of urgency in the days that followed.

The relief was understandable. For much of the preceding three years, the profession had operated under a deadline: The doubled estate exemption in the Tax Cuts and Jobs Act (TCJA) was scheduled to sunset at the end of 2025, and families with substantial wealth were counseled — correctly, under the law at the time — to compress years of transfer planning into a matter of months.

Then the deadline evaporated — and with it, for many families, the last practical motivation to reopen the estate binder.

The deadline that never came

On July 4, 2025, President Donald Trump signed the OBBBA into effect, setting the estate, gift and generation-skipping transfer tax exemption at $15 million per individual for 2026, or $30 million for married couples — up from $13.99 million and $27.98 million, respectively, in 2025.

It also provides for inflation adjustments beginning in 2027 using 2025 as the base year. The top federal rate remains 40%.

The 2026 annual gift exclusion for 2026 is $19,000.

Since the OBBBA took effect, for the great majority of Americans with substantial wealth — households with net worth between roughly $5 million and $30 million — the federal estate tax has effectively receded as a planning concern.

Why 'permanent' is a dangerous word

"Permanent," in tax legislation, is a term of art. It signals that Congress has chosen not to include a scheduled expiration in the statute — nothing more.

A future Congress remains free to revise the number at any time, and the historical record suggests it does so with regularity.

In 2001, the federal estate tax exemption stood at $675,000. By 2002, it had risen to $1 million. In 2009, it reached $3.5 million. In 2010, the estate tax was briefly repealed altogether, then reinstated at $5 million in 2011.

The TCJA doubled that figure to $11.18 million in 2018, and it drifted upward with inflation being lifted it to its current level.

Against that record, "permanent" is a description of legislative posture, not of statutory reality.

The behavioral response most families adopt on hearing the word — read the news, exhale, close the binder — is precisely the wrong one.

Four questions your documents need to address now

1. Does your existing plan still function when the exemption rises rather than falls?

Many trusts drafted during the preceding decade contain formula clauses — provisions that automatically allocate assets between a credit-shelter share and a marital share based on the exemption in effect at the first spouse's death.

A formula written to divide an estate at a $5 million or $7 million threshold behaves very differently at $15 million.

In some drafting patterns, the credit-shelter share now consumes nearly the entire estate and starves the surviving spouse's marital share. In others, the reverse occurs.

Neither outcome may reflect what the family intended when the documents were signed.

The remedy is unglamorous: Read the formula language, model the outcome under current law and amend or restate where the mechanics no longer serve the intent.

2. How should appreciated assets in your estate be handled?

This question inverts a decade of planning orthodoxy. Under the pre-OBBBA regime, the arithmetic favored removing appreciated assets from the estate — through gifts, sales to intentionally defective grantor trusts or grantor retained annuity trusts — to avoid a 40% estate tax that would otherwise apply.

That calculus was often correct. Under a permanent $30 million exemption, it frequently is not.

For families comfortably beneath the threshold, retaining appreciated assets in the estate captures the basis step-up permitted at death, which eliminates embedded capital gain from a lifetime of appreciation.

A 23.8% federal capital gains rate applied to decades of unrealized growth can now exceed the estate tax cost of holding the asset — often by a substantial margin.

The old default of "give it away" deserves a fresh calculation.

3. What impact will state estate or inheritance taxes have?

Several states levy their own estate tax at thresholds far below the federal exemptions, and additional jurisdictions impose inheritance tax on the recipient rather than the estate.

• Oregon begins taxation at $1 million
• Massachusetts at $2 million
• Washington at approximately $3 million
• New York at $7.35 million, with a distinctive cliff at 105% of exemption above which the entire estate becomes taxable from the first dollar

Our practice, Palmer Wealth Group, (I am the CEO), is based in Texas, which imposes no state estate tax, a genuine planning advantage for its residents.

But the analysis rarely stays clean. Property held in another state, family members domiciled elsewhere or a beneficiary residing in an inheritance tax jurisdiction can each trigger exposure the federal calculation misses entirely.

State thresholds change more frequently than federal, and several states index their exemptions annually. What was safe last year may not be safe this year.

4. Which trust strategies are the most tax-efficient?

This one addresses what existing trusts have quietly become. When federal estate tax was the binding constraint, the goal of an irrevocable trust was often to remove assets from the grantor's estate as efficiently as possible. Income taxation was a secondary concern. It is no longer.

Now, a trust reaches the top 37% federal income tax bracket at $16,000 of undistributed income in 2026 — a threshold a single individual does not encounter until $640,600 of taxable income.

For a trust with meaningful investment assets, the compression is severe.

Distributable net income planning, grantor-trust elections, situs selection and the choice between distributing and accumulating income each become materially more important once the estate tax rationale no longer overwhelms every other consideration.

What this review actually looks like

Taken together, these four questions form the shape of an estate plan review that has these components:

• Documentary. Retrieve the current trust and will documents and read the formula clauses aloud. The exercise is more revealing than most families expect.
• Arithmetic. Re-inventory the estate against the new estate tax threshold, separating what remains a candidate for lifetime transfer from what has quietly become a candidate for basis step-up.
• Geographic. identify every state in which the family owns real property, maintains a domicile or has significant beneficiaries and map the exposure against current state statutes.

The fourth component is coordinative — and, in some respects, it's the most difficult because estate planning, tax planning and investment management sit on three separate professional desks, plus a personal one:

• The attorney drafts the documents
• The accountant computes the return
• The adviser manages the assets
• The family too often serves as the unpaid coordinator among them

In our practice, the review typically begins with the attorney reading the formula clauses in the family's presence and ends with the accountant and the investment adviser at the same table, working from the same current inventory.

The mechanics are ordinary; the coordination is not. Its absence — not the tax code — is what most often causes an updated plan to remain uncompleted after the review begins.

Nothing in the current law prevents a future Congress from changing the exemption again. The 40% rate, the state estate tax landscape and the compressed income tax brackets that apply to trusts all remain what they were before OBBBA.

What has changed is the immediacy of the pressure to act. That change is welcome, but it should not be mistaken for a change in the underlying discipline.

Estate planning is not the practice of racing deadlines. It is the practice of building a plan that survives whatever the rules become next.

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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.

It’s perfectly natural to want your children to be well cared for after you’re gone. It’s also natural to wonder if they can manage an inheritance with the same care it took to build. After all, loving your children and trusting them with a large windfall are not the same thing.

An outright bequest can overwhelm a child who has never managed a large sum of money — much less a family business or other complex assets. A spendthrift trust, on the other hand, allows you to provide for them without dropping a huge lump sum into their checking account all at once.

What a spendthrift trust actually does

The name "spendthrift" comes from an English term for someone who is extravagant and recklessly wasteful with money. A spendthrift trust, an often-misunderstood estate-planning tool, lets you provide for your loved ones while protecting your legacy from poor decisions and creditors. Unlike a regular trust that lets you hand over assets, money or property all at once, a spendthrift trust rations money gradually according to its terms. That’s because the trust — not your children or other beneficiaries — owns the assets.

The trustee manages the spendthrift trust, deciding when, how much, and for what purpose funds are distributed according to your set terms. Your child does not have a right to demand a lump sum, to use the trust as collateral for a loan, or to pay a creditor. Sometimes this can be misconstrued as a vote of no confidence. However, if explained well, it is actually just the opposite, as this type of trust can help support your loved ones for decades when structured properly.

The risks of an outright inheritance

Over the next 25 years, trillions in U.S. personal assets will change hands in what’s known as the Great Wealth Transfer. The scale of that alone can make you feel a little uneasy about your kids’ finances after you’re gone.

Research by Morning Consult, in partnership with Kiplinger, shows why that uneasiness is so common: families often aren’t on the same page. Nearly twice as many parents expect to leave a meaningful inheritance (46%) as adult children who expect to receive one (23%). The same survey found that 11% of parents also worry their children won’t handle an inheritance responsibly.

With an outright inheritance, money and assets transfer directly to your beneficiaries without restrictions. That gives them full control over the inherited assets immediately upon your death and can expose those assets to risks that you never intended, especially if the beneficiary isn’t prepared. It’s not unusual that a lump-sum inheritance disappears faster than it arrived. The value of a spendthrift trust is that it can protect your heirs not just from creditors or lawsuits, but sometimes from their own financial mismanagement.

Who is a spendthrift trust for?

Spendthrift trusts are especially useful for beneficiaries who:

• Are young or financially immature, such as a teenager or a grandchild.
• Have special needs and/or receive government benefits.
• Have mounds of high-interest debt.
• Might be facing a divorce.
• Have a history of poor money management.
• May struggle with gambling or other addiction.
• Works in a profession with a high risk of lawsuits, such as doctors, lawyers and business owners.
• Is at risk of financial scams or exploitation.

When creditors can access trust assets

Spendthrift protection is not airtight. Even in states with clear statutes, courts may still allow creditors to access assets despite the spendthrift provision. For instance:

• Child support and alimony. Most states treat child support and alimony obligations as exceptions to spendthrift protection. A former spouse or child owed support can often compel a court to order distributions or wage garnishment.
• Basic needs providers. Some states allow creditors who provide beneficiaries with necessities, such as food, shelter or medical care, to file a claim against trust assets.
• Federal government claims. Federal tax debts and certain other federal obligations, such as defaulted federal student loans, may override a state's spendthrift protections.
• Tort victims. Some states allow victims of the beneficiary's intentional wrongdoing to obtain trust assets.

The specific exceptions depend entirely on your state's law, and a spendthrift provision that works well in one state may offer fewer protections in another state. Keep in mind, too, that the protection covers only those assets held inside the trust. Once you distribute the assets to your beneficiaries, they become the beneficiaries' property and ordinary creditor rules apply.

How to write the trust so it actually works

Creating a spendthrift trust is similar to creating any other trust, and the spendthrift clause itself can be relatively short. Under the Uniform Trust Code, saying the beneficiary’s interest is held “subject to a spendthrift trust” is often enough. However, you may choose to add provisions and conditions that let you decide when and how much to distribute to the beneficiary.

For example, you may add a provision that restricts how much your beneficiary can access each year. Or, you might add a condition that limits how your beneficiary can spend the money.

"Let’s say you are providing a $200,000 inheritance for your two children. You have one child who isn’t especially careful with money and the other is," says Oliver Kevin Morrisey, inheritance and estate lawyer at Empower Probate Lawyers. "You don’t split $200,000 equally. For the impulse spender, you might include a provision in the trust that pays $2,000 per month and can be used only for rent, education or healthcare. The other child can receive the $200,000 outright."

However, states have different rules about what you can and can’t stipulate in a spendthrift provision. Scott Jones, founder & financial advisor of Genesis Wealth Advisor Group, LLC, says, "In many states, an inheritance can be reached by creditors the moment it lands in the beneficiary's name, so the money mom and dad worked forty years to save can be gone before the beneficiary sees any of it."

That’s why it’s wise to consult with an estate planning attorney to ensure you’re following your state’s rules concerning the spendthrift provision.

Remember that a spendthrift clause may be overkill if your children or other beneficiaries are financially mature and stable, you have a modest estate, or you have no concerns about excessive spending or possible claims from creditors. A revocable living trust that becomes irrevocable at your death, with a spendthrift clause included, is often enough for many families.

How to choose a trustee

Choosing the right trustee for a spendthrift trust matters. You can choose a family member, a good friend, a bank or a trust company. Family members likely know your needs best, but a professional trustee with no emotional attachment can offer an objective third-party perspective. No matter who you pick, be sure the trustee is knowledgeable about financial matters because this person will distribute funds, protect assets, and ensure your beneficiaries use the money as you intended.

Pros and cons of a spendthrift trust

A spendthrift trust is one way to tell your beneficiaries you love them enough to protect the inheritance you built from impulsive spending or financial mismanagement that has nothing to do with whether or not they are "good kids." Instead, it is your way to help ensure their long-term financial security.

But keep in mind the drawbacks. Your beneficiaries have limited access to their inheritance, which can be frustrating in an emergency. And since the trust relies entirely on the trustee for distributions, disagreements may occur. Roughly 33% of adult children expect an inheritance will create conflict with their siblings, according to the Kiplinger-Money Consult survey. With that in mind, the best way to prevent arguments among your children is to take the first step. It’s never too early to start talking about your kids' finances.

Related Content

• We Asked 5,000 Americans About Inheritance and the Great Wealth Transfer. Here's What We Learned
• Why So Many Families Are Unprepared for the Great Wealth Transfer — and What You Can Do About It
• How to Talk to Your Adult Kids About Their Inheritance
• Your Beneficiaries Might Be Outdated. Here's How to Check

Every team is measured by the scoreboard, but after the game, good coaches look beyond the numbers in their constant quest for improvement.

They study video to discern strengths and weaknesses in their team and the upcoming opponent. They identify opportunities, assess risks and make adjustments before the next game.

Retirement planning deserves the same approach.

Most people know how much they have saved for retirement. They may know their investment returns, their 401(k) balance or the value of their IRA. But those numbers alone don't answer the most important question: Are you actually prepared for the retirement you want?

A strong retirement plan should be evaluated from several different angles. A retirement scorecard can help identify where a plan is strong, where it may have vulnerabilities and where adjustments could make a meaningful difference.

Here are five areas worth keeping score on.

1. Secure income: How much of your retirement income can you count on?

One of the first questions retirees should ask is not how much money they have, but how much reliable income they will have.

Social Security may provide an important foundation. Pensions can provide another source of dependable income. Some retirees may also use annuities or other strategies designed to create guaranteed income.

The next step is to compare that dependable income with the expenses that must be paid regardless of what the financial markets are doing.

Consider:

• Essential living expenses
• Healthcare costs
• Mortgage or housing expenses
• Other recurring obligations

The objective isn't necessarily to have every dollar of expenses covered by guaranteed income. Rather, it's important to understand how much of your essential lifestyle depends on your investment portfolio's performance.

A retiree with $2 million invested and $100,000 of dependable annual income may have a very different retirement outlook than someone with the same $2 million portfolio but only $40,000 of dependable income. The account balances are identical; the retirement plans are not.

2. Retirement confidence: How well does your plan hold up when things change?

Retirement rarely unfolds exactly as expected. Markets rise and fall. Inflation changes. Tax laws evolve. Healthcare expenses can be unpredictable. And people may live longer than they anticipated.

That's why a retirement plan should be tested against more than one possible future.

One way to do that is through Monte Carlo analysis, which can test a retirement plan across thousands of potential market and economic environments.

A retirement plan can be tested against periods of strong markets, declining markets, sideways markets, different inflation rates and changing tax environments.

The purpose isn't to predict exactly what the future will look like. It's to determine how resilient the plan is when the future doesn't cooperate.

A plan that works only when investment returns are strong may look successful on paper but provide less confidence in the real world. A stronger plan is one that has enough flexibility to withstand adversity without requiring the retiree to completely change course.

3. Retirement taxes: How much of your money will you get to keep?

A retirement account balance isn't necessarily the same thing as retirement wealth.

Taxes matter. A retiree may have money in traditional IRAs, 401(k)s, Roth accounts, taxable investment accounts and other sources. Each account can have different tax consequences when money is withdrawn.

That means retirement planning shouldn't simply ask, "How much can I withdraw?" It should also ask, "Which account should the money come from, and when?"

For example, a retiree might consider whether to:

• Convert some traditional IRA assets to a Roth IRA
• Realize capital gains in a lower tax year
• Coordinate IRA withdrawals with Social Security
• Manage income to avoid unnecessarily higher tax brackets
• Consider the effect of additional income on Medicare premiums
• Determine which investments should be sold to fund retirement expenses

These decisions can look relatively small when viewed individually. Over a 20- or 30-year retirement, though, the cumulative tax impact can be significant. That's why a retirement scorecard shouldn't measure only investment performance; it should also measure how efficiently the plan converts wealth into after-tax retirement income.

4. Retirement risk: What could knock the plan off course?

Risk in retirement is about much more than whether the stock market goes down.

A comprehensive risk assessment should consider several factors, including:

• Expected investment return
• Retirement time horizon
• Target portfolio withdrawals
• Market volatility
• Inflation
• Longevity
• Healthcare costs
• Liquidity needs
• Personal comfort with investment risk

One retiree may be comfortable with a portfolio that another would find difficult to stick to during a market downturn. A theoretically optimal portfolio isn't necessarily a successful portfolio if the investor can't remain committed to it during a difficult market.

The goal isn't to eliminate risk. That's impossible. The goal is to understand the risks you're taking and determine whether they're appropriate for the retirement you're trying to create.

5. Estate efficiency: What happens to the money you don't spend?

Retirement planning doesn't end when you determine that you have enough money to live comfortably. There is another question: What happens to the money that remains?

For many retirees, leaving assets to children, grandchildren or charitable organizations is an important part of the overall plan. That means estate planning should be considered alongside retirement planning rather than treated as a separate exercise.

The type of account, beneficiary designations, potential taxes, fees and the way assets are transferred can all influence how much reaches the intended beneficiaries.

The goal is about more than accumulating wealth; it's also about determining how efficiently that wealth can accomplish what you want it to accomplish — during your lifetime and afterward.

Keep evaluating your scorecard throughout retirement

A scorecard isn't valuable because it produces a number, but because it starts a conversation. A retirement plan might have excellent investment performance but a weak tax strategy.

It might have substantial assets but insufficient guaranteed income.

It might have a strong probability of success but too little liquidity for the retiree's comfort. Or it might provide plenty of income today while creating unnecessary tax or estate planning problems later. That's why the numbers need to be viewed together.

The purpose of a retirement scorecard is to identify what needs attention now. Great coaches evaluate throughout the season. They recognize what is working, identify what isn't and make adjustments when circumstances change. Retirement is a long season and deserves the same discipline.

The goal isn't to achieve a perfect score and put the plan on a shelf; it's to understand where you stand today and identify what may need to change as your circumstances, markets and priorities evolve. A strong retirement plan is evaluated, adjusted and improved throughout the retirement journey.

Great coaches don't wait until the final game of the season to make adjustments; they keep evaluating the scoreboard along the way. Retirement is a long season and deserves the same discipline.

Dan Dunkin contributed to this article.

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.

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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 just got a $1 million inheritance in the Great Wealth Transfer and don't know what to do? You're not alone. Millions of people are poised to receive a piece of the more than $124 trillion in generational wealth expected to be transferred over the next decades.

While an inheritance of that size can be life-changing, it can also cause undue strife. With a windfall come taxes, estate administration fees and investment decisions.

"Most people, when they receive an inheritance, want to spend it," said Tim McGrath, a managing partner at Riverpoint Wealth Management. "If they don't make the right decisions, it could hurt them over the long haul rather than help them."

Let's say you buy a big house that you can't afford or make risky investments — you could end up in debt or homeless because of the inheritance.

The good news is there are easy ways to protect your newfound wealth. From where to initially park your cash to how to grow it, here's how.

First, figure out what the inheritance means to you

Receiving $1 million can be a big deal. It could mean you're debt-free, your kids' education is paid for, or your retirement is in the bag, or it mightmean something completely different. Either way, McGrath says the first thing you should do is determine what it means for your goals and finances.

"For most people, $1 million is life-changing," says McGrath.

While you consider how to use your newfound wealth, don't keep the money under a mattress. Put it in a high-yield savings account or, if you already have one, an investment account.

"In today's environment, you can still find money markets or high-yield savings accounts paying 3% to 4%, so parking it there to make a little interest while you determine how to proceed is a simple way to get started," says Kassi Hyde, a financial adviser with Apollon Wealth Management. "If you know you don't need or want to touch the money and want it to grow for future needs, then definitely go ahead and invest. Just make sure to consider your time horizon when determining how risky you want to be."

If you don't have a financial adviser, now is the time to find one. Our How to Find a Financial Adviser guide will help you select one that matches your personality and budget.

Pay down high-interest debt

Even if you know how you want to use the inheritance, financial advisers say to pay off any high-interest debt first. That could include credit cards, personal loans and retail cards that charge you double-digit interest. The idea is to get yourself into a cash-flow positive position first, says McGrath.

Put the money to work while you wait to use it

Maybe you plan to buy a new house in a couple of years, pay for your kids' college in the future or save it for retirement. Whatever the goal, it's important to put your inheritance to work while you wait. That's where an investment plan comes into play. The type of inheritance dictates how you can invest it.

Develop a tax strategy

You need to be mindful of the tax portion of your inheritance, but how much is taxed depends on the asset. The lifetime federal estate tax exemption — $15 million for individuals and $30 million for couples in 2026 — pretty much guarantees most recipients won't owe federal estate taxes on their inheritance.

Depending on where the person who left you an inheritance lived, you might face state estate taxes. State tax exemptions are typically lower than the federal exemption. For example, Massachusetts exempts up to $2 million.

If the asset generates capital gains after it's passed on, you'll owe taxes. "If you inherit an investment worth $500 and the value grows to $600 and you sell it, you have $100 in gains you will have to pay taxes on," said Hyde. The caveat to that capital gains rule is the "step-up in basis," which resets an asset's original value to its market value on the date of the original owner's death.

You'll also owe taxes (as ordinary income, potentially bumping you up to a higher tax bracket) if you inherited a traditional IRA or 401(k) and you aren't a spouse.

You might wish to consult a professional tax expert if your inheritance is complex or you don't understand your options.

Stick to the plan

A $1 million inheritance offers rare financial freedom, but only if you manage it wisely. By tackling debt first, planning for taxes and putting the rest to work, you can turn a one-time inheritance into generational wealth. Once you create a plan for that money, stick to it, and don't be afraid to ask an expert for guidance along the way.

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Everyone's heard a horror story.

The adult children who no longer speak to each other after a blow-up over who would get Mom's engagement ring when she died. The constant arguments between siblings over the family vacation house they jointly inherited. The simmering resentment between adult kids after a parent's will revealed an uneven split of assets among them — tension that eventually boiled over, causing the siblings to sever their relationship and cut off their children, once-close cousins, from seeing each other as well.

These are heartbreaking scenarios that many parents worry about and try to avoid in their estate planning. And many adult children share their concern: One-third of adult kids expect an inheritance to create conflict with their siblings, according to a national survey commissioned by Kiplinger and conducted by the research firm Morning Consult.

Studies, unfortunately, show their concern is justified. Research from Cornell University indicates that among the 27% of Americans who are estranged from a family member, disputes over an inheritance are a leading trigger and frequently involve siblings.

Similarly, an Ameriprise study found that when adult siblings report money conflicts, nearly 70% of those arguments involve their parents, and inheritance was the top cause of those disputes.

Inheritance conflicts are rarely only or even primarily about money, experts say. "Sibling disputes over estates and wills almost always surface in the context of older, unresolved grievances, typically about parental favoritism and unequal treatment, so money becomes a scorecard for perceived favoritism or slights over a lifetime," says Karl Pillemer, a professor of human development at Cornell University and author of Fault Lines: Fractured Families and How to Mend Them.

Adding fuel to the fire: The transfer of a parent’s assets occurs at a time of grief, when emotions are already running high. And in many families, there has been no prior conversation about how Mom and Dad intend to pass on their wealth, so adult children are forced to draw their own conclusions — and they often fill in the blanks with negative implications, experts say.

"Grief mixed with urgency and ambiguity is a tough combination," says Elisa Shevlin Rizzo, head of family advisory at J.P. Morgan Private Bank.

The amounts at stake rarely matter. "Disputes can happen when the only assets involved are Mom’s china and jewelry, and they can happen when there’s millions of dollars at stake," says Monique Lavender Greenberg, managing partner of the law firm Lavender Greenberg in Miami and a board director of the National Association of Estate Planners & Councils.

"No one wants their legacy to be that their kids end up hating each other. We want our families to continue to love each other, but that takes thought and planning."

Want to ensure your wealth passes as you intend and your children are still speaking to each other after you’re gone? Experts suggest these steps.

Figure out what's truly fair.

The default for most parents is to split the assets they’re leaving to the kids equally. But many adult children don’t feel that’s a fair division.

In the Kiplinger-Morning Consult survey, for instance, 71% of parents said they intend to leave the same amount to each of their kids, but just 50% of adult children preferred that approach. That 21-point gap was filled by siblings who believe Mom and Dad should base inheritance decisions on each child’s financial situation and need, or on factors such as how much financial help parents have given each child in the past and how much the kids assisted their mother and father during their lifetimes.

"Equal means the same for everyone, while fair means each person gets what they deserve or need," says Pillemer. "Sometimes those two norms pull in opposite directions inside families."

Both perspectives are valid. "An even split is completely understandable if you’re a parent who wants to avoid inserting a new conflict into the sibling dynamic and to communicate that you love all your children equally," says Matthew Willner, a therapist who specializes in family conflict and estrangement, including adult sibling conflicts and inheritance disputes.

"But if one child has been struggling financially for years, an even split can feel emotionally like their needs don’t matter or aren’t recognized. And if you’re, say, a daughter who has been a caregiver for Mom or Dad for several years and there’s an even split, it can read to you as if everything you did counted for nothing."

On the other hand, an unequal division, especially if it’s unexplained, can be even more hurtful and trigger long-lasting rivalries and tensions between siblings.

"If I’m the child who received less and I already feel like my mom and dad loved my brother more, that’s going to be a real hard nut to swallow, even if they helped me more financially when they were alive," says Rizzo. "Even if I’m a hedge-fund manager and my brother works at a nonprofit making $40,000 a year, getting less is hard emotionally — even if I know intellectually it makes sense."

There is typically no right or wrong decision on splitting assets, experts say, and parents are entitled to pass down their wealth however they see fit. What’s imperative, though, is that you’re thoughtful about your process and choices, and then, crucially, that you inform your children of your decision and explain your reasoning.

It’s the element of surprise that can do the greatest damage, experts say.

"The very thing that would prevent sibling conflicts or at least lower their temperature — having an honest conversation about how parents have decided to pass on wealth and why — is the step many families skip because it can be uncomfortable and bring up old wounds no one wants to deal with," says Willner.

He suggests talking to all of the children together, if possible, as that lessens the possibility of one sibling accusing another of manipulating or pressuring their parents, especially if you’ve decided on an uneven split. It also gives the kids a chance to voice their emotions and concerns; feeling heard can make it easier to accept the parents’ decision.

"If the children know what’s going to happen and why, they typically suck it up and honor your wishes," says Greenberg. "And if the kids are going to be mad, they’ll be mad at Mom and Dad, not each other."

You can also pursue ways to reward an adult child who has helped out a lot, provide more to one who needs extra financial help, or balance the scales on past financial gifts to another that avoid a hurtful uneven division of assets in your will. You might, for example, make a caregiver child the beneficiary of a small life insurance policy or give more money during your lifetime to the child working at the nonprofit than to the one who is a hedge-fund manager.

The important thing is that none of your plans live in the dark. Says Sharon Olson, managing principal of Olson Wealth Group, "We spend enormous amounts of time preparing the money for the children. We need to spend just as much time preparing the children for the money."

Read more: Why Leaving an Equal Inheritance to Your Children Could Backfire

Take particular care with tricky assets.

Ironically, the part of your estate that’s least likely to trigger a blow-up among your kids may be your most valuable holdings, in dollar terms: Cash savings and liquid investments, such as stocks, bonds and funds. Far more fraught are assets that can’t be easily or neatly divided, such as a parent’s home, a vacation property or a family business.

Take the family lake house, for example — an asset with both monetary and sentimental value, perhaps tied to happy memories of summers together by the water. Maybe the siblings want to keep it in the family and share it, but one cannot afford the upkeep. Or maybe one sibling prefers to sell, but the other siblings don’t have the cash to buy them out.

"Parents often leave property to their children and say, ‘They’ll figure it out when I’m gone,’" says Rizzo. "That’s one of the most damaging attitudes out there. If you want to set your kids up for future conflict, let them figure it out when you’re gone."

A family business can be especially problematic, particularly if one or more siblings had jobs at the company and others didn’t. "The daughter who worked there for 25 years may say, ‘I helped Dad build this business and I deserve it.’ Her brother may say, ‘I understand that, but he was my father too, and I also deserve a share.’ Both can be right," says Olson.

To head off trouble, she suggests parents identify potentially thorny assets and establish valuation and buyout provisions as part of estate planning. If multiple children will own a vacation home, determine how expenses, property use and eventual sale will work. "Don’t leave the children a complicated asset and unanswered questions," Olson says.

To the extent that you can, solve potential problems in advance. You might, for example, put the house in Nantucket in a trust with enough financial assets to cover the expenses, if the estate can afford it, Rizzo suggests.

Or, if an estate lacks cash, buying life insurance might be helpful. That way the child who wants the beach house gets it, or the family business passes to the kid who works there, and the other child is the beneficiary of the insurance policy and receives an asset of comparable value, says Carly Doshi, head of family advisory planning and trust services at Flagstar Bank and chair of the New York branch of the Society of Trust and Estate Practitioners.

Be careful to communicate your intentions, including for any accounts you own jointly with one of your children, to all of your offspring, experts say.

For example, you may have a joint checking account with right of survivorship with a son or daughter who helps you with bill-paying, and that will pass directly to them upon your death. If that’s what you want — say, to compensate that child for their help — let all of the kids know the plan. Or, if not, let them know you intend for that money to be split among them after you’re gone, document your wishes in writing in a letter of instruction, and consider retitling the account.

"One of the greatest gifts a parent can leave their children is clarity," says Doshi. "A thoughtful estate plan is really about removing as many reasons for conflict as possible."

Read more: What Happens to Your Savings Account When You Die?

Sweat the small stuff.

For one family, it was the red plate with hearts on it that said "You’re special," which Mom used to serve birthday cake for each child growing up. For another, it was a 25-cent Christmas ornament.

In yet another case, it was a piece of art, promised by the father to one kid and by the mother to another. Then there was the daughter-in-law found racing through the parents’ home after the funeral, switching masking-tape labels attached to various cherished items indicating which sibling was supposed to get what.

Estate and wealth-management experts are filled with stories of personal possessions, sometimes valuable but often not, that triggered big fights among siblings after a parent’s death, sometimes resulting in a permanent rift.

"Objects are often more contentious than money — not just because it’s hard to divide a holiday ornament or a plate, but because those kinds of items hold more memories and meaning for people," says Sara Croymans, an educator with the University of Minnesota Extension who helps facilitate its Who Gets Grandma’s Yellow Pie Plate? program, which teaches research-based practical strategies for passing on personal possessions.

Croymans suggests parents take a poll of their adult children to find out what items they’re interested in and why. Don’t just assume, for instance, that a son should get the tools and a daughter her mom’s jewelry, she says. Parents should also share their views and plans for dividing possessions and the stories behind items that are particularly meaningful to them. That, in turn, might affect the kids’ preferences.

If more than one child wants the same item or items, try to land on a system together that feels fair for deciding who gets them, perhaps coming up with similar items that can be considered in tandem. Croymans recalls three sisters who had shared a baptismal gown, and each one wanted it for her own kids. The siblings averted an argument by identifying a confirmation gown and their mother’s wedding dress as things of similar emotional value, and each sister ended up with a garment that was meaningful to her.

"Research has found that if people buy into the process and believe it’s fair, they’ll support the outcome, even if they didn’t get the specific thing they wanted," says Croymans.

Experts recommend documenting your plan for personal possessions, naming names and specific objects, in a letter of instruction you keep with other estate-plan documents. Although the document is not legally binding, experts say it carries the weight of moral authority, and most siblings honor their parents’ plans.

Read more: The Great Junk Transfer: Why Heirs Want Meaning, Not More Stuff

Avoid the oldest-child syndrome.

Sometimes tensions build and boil over among siblings not over the inheritance itself but rather who is appointed to oversee the disposition of those assets. To avoid fights, parents often default to appointing their oldest child as executor or trustee or naming some or all of the children as co-managers — well-intentioned moves that experts say often backfire.

"The person who is most suited for the role is the best choice, and that should be the person who is organized, financially capable, communicative and, crucially, trusted by the other beneficiaries," says Doshi.

Whoever you pick, to minimize resentment or hurt feelings, be sure to communicate your decision to all of your children as well as your reasons — say, if the appointee has legal or financial skills or is recognized within the family as the peacemaker.

As for the team approach to executorship, experts are not fans. "Requiring all of your children to reach constant consensus, especially when everyone is grieving, can slow things down or even create conflict where there wasn’t any," says Doshi.

And if the kids don’t always get along? "If the siblings have never made decisions well together, requiring a consensus after a parent dies is planning for deadlock," Rizzo says.

The critical question parents don’t ask enough, Olson says, particularly when it comes to trusts: What will giving this child authority do to the sibling relationship? "Sometimes the most loving thing a parent can do is not put one child in the position of policing another," she says.

Alternatives to naming one or more of your children as executor or trustee include appointing another family member or close friend who is capable and willing to take on the responsibility, or hiring a professional fiduciary through, say, a bank or other financial institution. Or you can turn to an estate-planning attorney who offers these services (find one via the directory of The American College of Trust and Estate Counsel).

Read more: 6 Steps to Choosing an Executor

Get help before things blow up.

If you anticipate conflict between your children over their inheritance, or recognize it’s a possibility, you can also turn to professionals to mediate potentially thorny issues or just help get all the kids on the same page. Siblings can also seek outside help after a parent’s death, if issues around their bequests start to get contentious.

"Having a neutral third party in the room guiding the conversation can help mitigate some long-standing family feelings and tensions, and people tend to be more respectful and reasonable," says Joseph Kellogg, head of wealth planning for WE Family Offices in Miami.

Experts suggest parents consider building a procedure for mediation of disputes into estate-planning documents. (An estate-planning attorney or family wealth manager may be able to fill this role, or you can find a professional mediator in your locale using a tool such as Mediate.com’s practitioner directory.)

"That way everyone knows there’s a way out of disputes that attempts to be fair and objective," says Kellogg. "And it can motivate kids to go the extra mile in trying to work it out themselves, knowing that if they don’t, someone else will step in and do it for them."

Research from Karl Pillemer at Cornell, including interviews with about 300 people who had experienced family rifts, backs up the importance of seeking independent mediation if siblings are locked in a fight over their parents’ estate.

"When I asked family members who had a rift over inheritance what would have helped, they often said some version of, ‘I’d like a time machine, so we could go back and get outside help.’"

The good news, says Pillemer: Rifts over wills, inheritance and money are somewhat more likely to be repaired than ones that stem from systemic family problems, such as harsh parenting or extremely difficult childhoods — unless siblings reach a tipping point in which one says to the other, "I never want to see or speak to you again."

"When that occurs, it develops its own dynamic and is surprisingly hard to repair," says Pillemer. "Almost every estranged family I talked to wished they hadn’t drawn that line in the sand.

So do almost anything you can not to reach that cutoff point. Keep talking, be more understanding, seek mediation, get help from a therapist, apologize — even if you feel you shouldn’t have to — and, most especially, ask yourself, Is this really worth it?"

The price of destroying a family over money, he notes, is almost always too high, and it’s the next generation that pays. "If two siblings cut off contact over an inheritance, they don’t lose only each other; their children lose their cousins. Your kids will inherit not only your assets one day but also the estrangements that came with them."

That’s the opposite of the legacy most parents hope to leave. The way to prevent it, Pillemer and other experts say, is to talk with your children, communicate your intentions and the reasoning behind them clearly and early, and be open to your kids’ views and feelings in return.

He says, "That’s the single most important thing parents can do."

Read more: Kiplinger Conversations: How to Talk Inheritance With Your Kids

Special considerations for blended families.

Families in which one or both spouses have children from previous marriages are the most likely to experience disputes around estate plans, according to research from the Society of Trust and Estate Practitioners (STEP). Unequal treatment of siblings and conflicts between children and stepchildren were among the most-common points of friction, second only to disputes between children and a surviving parent or stepparent.

"The core problem is that remarriage creates competing loyalties and competing claims, which can be difficult to resolve in a way that feels fair to everyone," says Karl Pillemer.

If you’re part of a blended family and want to keep the peace between your biological children and your stepkids after you’re gone, experts recommend these steps.

Formalize your wishes. Recent research from Yale shows parents often favor stepkids as beneficiaries over any relatives other than spouses and their own children. But state intestacy laws, which dictate how your assets will pass to others if you die without a will, typically don’t make provisions for stepchildren.

So if you want yours to inherit anything, you’ll need to make that intent clear and legally binding with bequests via a will or trust or by including them as beneficiaries on financial accounts that pass outside of a will.

Accommodate age differences. There are often big age gaps among children in blended families, notes Carly Doshi, head of family advisory planning and trust services at Flagstar Bank. So their financial needs and when they need to tap assets may be different — one child might be gearing up to, say, buy a first home while another might be nearing retirement.

The solution? Doshi says this is a situation in which trusts come in handy, giving you the ability to spell out when and under what circumstances different heirs get distributions from your estate.

Consider a neutral party for key roles. Parents often pick the oldest child as executor or trustee. But in a blended family, putting a child from one branch of the family in charge of assets for someone from a different branch can spark tensions.

An alternative: Appoint a neutral party, such as an estate attorney or professional fiduciary.

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.

More Trillion Dollar Talk

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In a Berkshire Hathaway shareholder letter, Warren Buffett once advised, "Leave the children enough so that they can do anything but not enough that they can do nothing."

Many parents share this sentiment. A recent survey from Kiplinger and Morning Consult found that parents hope their adult children use an inheritance to improve their lives (22%), not waste it (20%).

Once it's handed over, though, an inheritance can go toward things you'd never condone, or the windfall can shift a child's behavior in unhealthy ways in the long run.

Take David and Kathy, a hypothetical couple who gave their 20-something twins $100,000 each. Instead of using it to buy a house or invest wisely, one twin quit a steady job to day-trade, while the other used it to buy a luxury car that would depreciate over time. What was meant as a gift to open up the future instead became a setback or wasted opportunity.

As Joy Slabaugh, a certified financial planner (CFP) and founder of the Wealth Alignment Institute, explains: "Money can unintentionally interfere with motivation, identity, autonomy or family relationships."

Fortunately, avoiding that outcome doesn't have to change your desire to give or how much, just the way you give it. This holds true for parents as well as grandparents.

Why early inheritances can backfire

An early inheritance is a chance to help adult children while you're still around to see them enjoy it. While more adult children would rather get financial help now (45%) than a larger inheritance later, only 14% of parents say they'd prefer to give now, according to Kiplinger's survey.

Part of that hesitation might stem from research such as a 2026 study that found 42% of heirs spend their entire inheritance within a single year of receiving it. Going from having little to suddenly having a lot can trigger impulsive spending. Depending on the amount, it can also dull the motivation to work hard or invest.

Psychological factors are at play, too. Heirs can experience what researchers call "mortality salience" — the subconscious discomfort of handling "death money," which can prompt rapid spending as a coping mechanism.

Unearned money also tends to be treated more casually than a paycheck. Behavioral economists call this the "house money effect." People spend windfalls, gifts and winnings more freely than money they worked for, as though it were the casino's money rather than their own.

Control of an early inheritance with incentive trusts

For parents who want to give each adult child an early inheritance without fear that it will become a slush fund to live on, one possible solution is an incentive trust.

An incentive trust releases money only when your child meets certain conditions you've set, rather than handing everything over at once. Think of it as a gift with instructions attached. You, the parent, write the rules, while a trustee checks that each one is met before releasing any money. Your child receives a payout only after clearing the bar you set.

If David and Kathy had used an incentive trust, they could have nipped the twins' spendthrift behavior in the bud. Some common conditions they might have required are: a college degree; matching income from a job; or releasing money for a specific step such as buying a first home. Other requirements act as guardrails, such as pausing payouts if a child struggles with substance abuse.

Jon Lapp, a CFP and founder of Haven Financial Advisors, suggests, "Reasonable provisions might support college or vocational training, match retirement savings, help purchase a first home, fund a credible business plan, or give an independent trustee discretion to make staged distributions as the beneficiary demonstrates financial responsibility."

Ultimately, the purpose of an incentive trust is to encourage a desired action or prevent mismanagement. "I would consider this type of trust when the inheritance is large relative to the child's experience, or when there are specific concerns involving addiction, impulsive spending, creditors or an unstable relationship," Lapp says.

What to know before setting up an incentive trust

While an incentive trust sounds good on paper, it can turn into a problem in practice without careful planning.

For instance, Lapp says, "Conditions based on earning a particular salary, entering a certain profession, getting married or having children can become unfair very quickly. Even an earned-income match can penalize a teacher, caregiver, entrepreneur or disabled beneficiary."

Rigid rules can also become outdated, fail to account for unexpected life events such as illness or injury, and place trustees in difficult emotional positions. "When parents use wealth to protect, control, rescue or reward their children, the financial gift can become emotionally complicated for everyone involved," says Slabaugh.

When weighing how best to give an early inheritance, she recommends first asking the right question: "Rather than asking, 'How do we keep our kids from wasting the money?' I encourage families to ask, 'What do we want this wealth to make possible for our children, and what do we want it to teach or reinforce?' "

Other ways to help sooner rather than later

If you plan to give as much as a six-figure sum to your adult children, Lapp advises starting small. "Smaller gifts over several years can provide a useful test of how the child handles money," he says.

Other options Lapp offers include helping fund a Roth IRA when the child has eligible earned income, using a parent- or grandparent-controlled 529 account, paying tuition or medical costs directly to the provider and structuring housing help as a formal loan rather than an informal blank check. He points out that direct tuition and medical payments can also qualify for specific federal gift-tax exclusions when handled correctly.

When the money supports positive choices a child has already made, it can set healthier expectations. That's what parents want most. As Lapp puts it, "The primary goal is to help the next generation, without enabling poor financial management, or creating the expectation that they will always be 'bailed out' by mom and dad."

More Trillion Dollar Talk

• How to Talk to Your Adult Kids About Their Inheritance
• Shielding Your Heirs: The Expert Guide to a Tax-Free Inheritance
• Why So Many Families Are Unprepared for the Great Wealth Transfer — and What You Can Do About it
• Why Leaving an Equal Inheritance to Your Children Could Backfire

Do I need a will, a trust or both? It's one of the most common questions we hear, and the answer is rarely simple. It depends on your family, your assets, your priorities and how much work you're willing to do now to make things easier for the people you leave behind.

Here's how we typically walk clients through the decision.

The core difference

A will is an ancient tool, which traces back to English common law and the Middle Ages. In many ways, it still operates on a system that's hundreds of years old.

When you die with a will as your primary estate planning vehicle, your estate goes through probate, which is a court-supervised process of settling what you owned. In most places, probate is slow, expensive and public.

Some states are less slow, less expensive or less public, but in general, probate is a complex and costly legal process.

A trust does much of the same work as a will, but it's a far more modern structure. A revocable living trust functions as a will-replacement vehicle. It helps you arrive at the same destination — your assets go to the people you choose. However, while a will typically goes through the probate court process, a trust can bypass it.

Some people need both

If your plan is built around a revocable trust, you still need a will. It will just play a different role. This fact tends to surprise a lot of people.

Think of it this way. A "will-only" plan uses the will to say who gets what and when. But once you have a revocable trust, the trust holds those details, and the will becomes a safety net beneath it.

For a trust to work, assets must be inside it or have a way to get in. If you pass away before you've retitled an account or updated a beneficiary designation, your will acts as a catch-all.

Instead of spelling out your whole family story, this will just says one thing: Sweep whatever is left in your probate estate into the trust to be administered under its terms.

The myths that hold people back

The biggest misconception we hear is that trusts are wildly expensive and only for the wealthy. Most people simply don't know what a trust is or how it works.

About 95% of the time, when someone says "trust," they mean a revocable living trust (also called a living trust). There are many other kinds of trusts, including spousal lifetime access trusts, life insurance trusts and more. These trusts typically don't enter the picture until you've built significant wealth.

Myths exist on the will side as well. Many people believe a will avoids probate. It doesn't. Others assume that being named executor (or personal representative) automatically puts them in charge. It doesn't either.

Until a will goes through the probate process and a court appoints someone as the executor or personal representative, the person named in the will has no legal power or authority.

Three key questions to ask yourself

If you're trying to decide between a will and a trust, ask yourself the following:

1. How would your family get by in the weeks after you're gone?

Probate can slow down access to money. Ask how important it is that your loved ones, especially a surviving spouse, can pay bills and keep living their lives. If immediate access matters, avoiding probate through a revocable trust deserves a serious look.

2. Who do you want doing the work?

Setting up a trust takes effort during your lifetime. Some families place a high value on making things efficient for their kids and grandkids while others don't. The question is whether you'd rather put in the work now or leave the next generation to handle it later.

3. How much do you care about privacy?

Probate usually produces an inventory of what you owned. In most states, that inventory is a public document.

Some people do nothing but go through probate records looking for houses to purchase at a discount, and few families enjoy getting a "sorry for your loss, want to sell the house?" call. A trust keeps those details private.

Overall, the choice between a will and a trust isn't about which is fancier or who's wealthy enough to need one. It comes down to how much you value privacy, how quickly your family needs access to your assets, and whether you'd rather do the work now or leave it to the next generation.

Once you understand what each document does and what it doesn't, the right answer will come into focus.

Shelby Anderson, J.D., CEPA®, is a Senior Wealth Planner at Clark Capital Management Group. In this role, Shelby works closely with clients' legal and tax advisers to provide client-facing expertise across a wide range of wealth planning strategies.

Patrick Schultz, J.D., CEPA®, is a Senior Wealth Planner at Clark Capital Management Group. In this role, Patrick works closely with clients' legal and tax advisers to provide client-facing expertise across a wide range of wealth planning strategies.

Related Content

• How to Leave a Legacy to Your Loved Ones — and Keep Probate Out of It
• Who Needs a Trust and Who Doesn't? A Financial Planner Explains
• The 5 Biggest Myths in Estate Planning and the Strategies to Follow Instead
• Why Wills and Trusts Aren't Enough in the Great Wealth Transfer, From an Attorney Who Knows
• When a Will Isn't Enough, Families Can Let Trusts Do the Heavy Lifting: Here's How

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.

One of the biggest misconceptions I encounter is that inherited investments should simply be sold.

Stocks are not cash. Many portfolios are built around long-term goals, whether that's preserving family wealth, generating future income or supporting future generations. Selling everything may often seem like the easiest option, but it doesn't always align with the investor's wishes.

This happens all too often. Investors spend years building wealth through brokerage accounts. They follow the markets, make strategic decisions and carefully build portfolios designed to achieve long-term financial goals.

Then, when it's time to put an estate plan in place, those same accounts are often left out of the conversation.

When stock portfolios aren't properly addressed in an estate plan, loved ones can be left trying to answer questions they were never prepared for.

• Should certain investments be kept or sold?
• Was the portfolio intended to support future generations?
• Were there specific goals behind the investment strategy that beneficiaries should understand before making big decisions?

If there are no clear instructions, even the most well-intentioned estate plans can become a headache for beneficiaries and cause confusion or worse — costly mistakes.

Most Americans haven't planned for their assets

Estate planning remains widely neglected. More than half (56%) of Americans don't have a will or trust, according to Caring.com's 2025 Wills Survey. People still view estate planning as something that can wait until later or is only for wealthy individuals.

This myth leads to countless assets being left without clear instructions for the people who will eventually inherit them.

Investing has also become more accessible than ever. More than 145 million people globally used stock trading apps in 2024, according to the Business of Apps Fintech App Report 2025. These apps give individuals easy, user-friendly access to building and managing their own portfolios.

The challenge is that while investing has become easier, planning for what happens to those investments after death often doesn't take place. Countless investment accounts exist without any clear estate planning instructions attached to them.

This problem isn't limited to people who have no estate plan at all. I often see it among people who have already taken the important step of creating one.

They may have a will. They may have discussed their wishes with family members. They may even have worked with attorneys or financial professionals. Yet their stock portfolio remains largely undocumented.

Family members may know the accounts exist but have little understanding of the intentions behind them. They may recognize certain holdings but don't understand why they were purchased in the first place.

• Was a particular investment intended to be held for another decade?
• Was the portfolio built to generate income for a surviving spouse?
• Was preserving the account more important than distributing it immediately?
• Who was the investor's financial adviser?

Those answers, along with important details about the investor's risk tolerance, are rarely documented, and beneficiaries are often left making important financial decisions without the context that guided the investor's strategy in the first place.

Stock liquidation isn't always the best plan

I've seen beneficiaries inherit a portfolio and begin liquidating positions simply because they don't know what else to do. That tactic is understandable. When there are no instructions, people are forced to make decisions based on limited information.

Some investors may have wanted heirs to retain certain long-term investments. Others may have wanted the portfolio to support goals such as education, home purchases or broader family support.

There may also be important tax implications beneficiaries should understand before taking action. Without guidance, those intentions can easily be lost.

The situation becomes even more complicated when there is no transfer on death (TOD) designation, no beneficiary designation or no trust directing the asset.

In those cases, the stock portfolio will typically become part of the probate estate, creating additional delays and expenses, and leaving the management of the portfolio to the administrator or executor rather than the ultimate beneficiary.

Before assuming a portfolio should simply be liquidated upon their death, investors — whether self-managed or accredited — should decide how they want those assets handled.

• Should certain investments be retained?
• Should others be sold and distributed?
• Have those wishes been documented clearly enough for beneficiaries and executors to carry them out?

The goal here is to leave enough context behind so beneficiaries aren't forced to guess. That starts with:

• Maintaining an inventory of brokerage accounts
• Keeping beneficiary information current
• Documenting the purpose of the portfolio
• Clarifying which holdings should be kept or sold
• Leaving contact information for any financial professionals involved

These details will make a significant difference when beneficiaries are trying to make informed decisions during a difficult time.

What happens when no instructions exist

When no instructions exist, families are often left piecing together information on their own. In many cases, the first challenge is simply identifying what accounts exist. A family may know a loved one invested throughout their lifetime, but have no idea where those accounts are held.

Locating records, accessing accounts and understanding how they fit into the broader estate can take significant time, creating unnecessary administrative burdens for executors.

Then comes the decision-making. I've seen beneficiaries inherit portfolios and immediately begin selling assets because they believe that is what they're supposed to do. I've also seen families disagree because each person has a different understanding of what the investor intended.

Nobody is acting with bad intentions. The problem is that they're trying to make important decisions without enough information. What should have been a relatively straightforward transfer of wealth becomes a far more complicated process than it needs to be.

What investors owe their beneficiaries

A few clear instructions go a long way and can help loved ones understand the purpose behind a portfolio, preserve wealth where appropriate, avoid unnecessary confusion and make more informed decisions.

Estate planning is not simply about transferring assets. It's about transferring clarity. You have to remember that the more guidance investors leave behind today, the easier it will become for beneficiaries to make thoughtful decisions when they don't have someone to guide them.

Related Content

• Shielding Your Heirs: The Expert Guide to a Tax-Free Inheritance
• 5 Questions to Ask a Financial Adviser About an Inherited Stock Portfolio
• Will This 'Tax' Tear Your Family Apart, Even Though Their Inheritance Is Split Equally?
• 3 Life Events That Should Trigger an Immediate Estate Plan Review
• What Really Happens in the First 30 Days After Someone Dies (and Where Families Get Stuck)

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 part of our Trillion Dollar Talk campaign, Kiplinger editors — Alexandra Svokos, Kiplinger digital managing editor and Diane Harris, Kiplinger Personal Finance Magazine deputy editor — brought together three of our favorite experts to discuss inheritance.

We had an invigorating conversation about how families can approach these conversations and the types of problems that often come up, as well as highlighting possible solutions for those scenarios.

Joining us for our panel conversation were: Valerie Galinskaya, managing director and head of the Merrill Center for Family Wealth®; Brad Klontz, associate professor of practice in financial psychology at Creighton University Heider College of Business; and Ryan Coon, attorney at Anderson Advisors and J.D. from Willamette University.

Watch the full conversation here:

During this episode of Kiplinger Conversations, we asked viewers to send us their questions. Here's a round-up of those questions, along with our responses. If you have questions on this topic, please reach out to us at KipInheritanceTalk@futurenet.com.

We will do our best to answer as many questions as we can, and your questions might inspire future articles for Kiplinger. The answers provided by our editors are for general informational purposes only. Not all questions submitted will be published, and some will be edited for clarity.

1. Addressing specific numbers.

Question: The overarching question is, how do you have an informed conversation with your adult children without having to discuss specific dollars and cents?

Diane Harris: Great question! It's a very common concern among parents, not wanting to disclose exact numbers.

And you don't need to, honestly. Your general intentions, and why you've made the decisions you've made, and what plans you have in place are what the kids need to know, not numbers. After all, those numbers can change, depending on how long you live and what your expenses will be, particularly when it comes to health or long-term care.

The critical details are not the amounts you intend to leave but whether you have a will and other estate planning documents and, if so, where to find them; the kind of assets you have (for example, do you have accounts that will pass outside of a will, property in addition to your primary residence, investment accounts, and so on); and how you plan to divide them and why.

In particular, it's important to explain your thinking if you intend an unequal distribution of assets among your children, so they understand your reasoning.

And if you have money you intend to give for specific purposes during your lifetime — say, if you plan to help pay for a wedding or assist with the down payment on a home or your grandchildren's college education — it would be good for the children to know that too, so they can plan accordingly.

Alexandra Svokos: It's not unheard of to be concerned about this. In our Trillion Dollar Talk survey, conducted by Morning Consult, we asked adult children to write in the one question they would want to ask their parents about a possible inheritance. The most common response we heard was a version of, "How much will I receive?"

On the flip side, the most common reason parents said they haven't talked to their kids about inheritance yet is that "there are too many unknowns."

Don't let this uncertainty stop the conversation from happening in the first place.

As Diane said, you don't have to lay out everything in your estate — but I would recommend you aim to give your children a ballpark idea of what's in your estate so you can both plan appropriately. Again, exact numbers aren't what matter here; you just don't want to leave them surprised and unprepared when you're gone.

Additional reading:

• We Know You'd Rather Talk to Your Kids About Politics Than Inheritance. Here's the Right Way to Have That Conversation Anyway.
• Why So Many Families Are Unprepared for the Great Wealth Transfer — and What to Do About It
• Counting on the Great Wealth Transfer? Why It May Not Pan Out the Way You Hope

2. One-on-one vs group conversations

Question: Do you feel it is better to have a family group inheritance discussion or one-on-one with each family member?

Alexandra Svokos: The answer to this largely depends on your own family dynamics. If your family regularly has open (and healthy) conversations about finance and future planning, a group setting would make sense. If, however, group settings tend to bring up arguments, you may want to start the conversations one-on-one.

Starting with a one-on-one conversation is also helpful if you're splitting an estate anything besides explicitly equally — that way, you can explain your reasoning without having to balance group dynamics, and you'll be in a space where the heir can openly ask questions to understand your decisions.

But what I would keep in mind, as Ryan said, is that it's not a one-and-done conversation. You can have both group discussions and one-on-one conversations to make sure everyone feels comfortable and confident.

Additional reading:

• The Conversation You’re Avoiding: How to Bring Up Estate Planning with Your Family

3. Handling older parents' finances

Question: My husband is an only child, and his parents own two homes. They are 88 and 87. They have made it clear that everything is coming to us and have started to gift us the max each year $76,000.

We don't know how much they have, and we don't need the money. We worry that they might need extensive care as they get older (her mother lived to 106 years old). We are keeping the money in an interest-bearing account so we can use it for them if they need it later. Are there any recommendations as to how/where we keep these funds they are gifting to us? We want to do what is best for them.

Alexandra Svokos: Thanks for your question. Long-term care costs are something many families are worrying about. In fact, our survey found that 24% of older parents fear that ongoing care costs will deplete their estate.

First and foremost, we recommend speaking to professionals for advice on your own particular case. Our answers here are for general information purposes only.

As a general principle, it's worth having a conversation to ask parents if they have their own plans for managing long-term care. They may feel comfortable making gifts because they have a plan in place, for example, and if not, you can discuss how to set up a plan and what makes sense for you both.

Again, this is generally speaking: If you have funds you may need to use within a short time span, an interest-bearing account where you can immediately access funds (like a high-yield savings account) is a decent idea. If you feel sure you won't have to use funds for a longer time period, you can consider CDs (which typically have higher rates, but lock your money in for a set time period) or investing in the market, although that comes with higher capital gains tax rates if sold within a year, and of course, more risk than, say, a locked-in CD.

Additional reading:

• No One Wants to Ask Their Aging Parents About Their Finances, But Here's How
• Where to Put Inherited Money
• Gift Tax Exclusion 2026: How Much You Can Give Tax‑Free This Year
• I Have $150,000 That I Don’t Need Anytime Soon, but I Don't Want To Put It in the Market. What Should I Do?

4. Estate planning for blended families

Question: Given the realities of today’s blended and often fractured family dynamics, is there a provision that allows us to safeguard the inheritance so it stays within the family?

Diane Harris: Yes, in blended families, as our panelists mentioned during the discussion, a will is often not sufficient to ensure your assets pass as you want them to and protect the people you love and want to provide for.

One key estate-planning tool that helps with this is a trust, which allows you to make stipulations — for example, you might set up a trust in a way that provides for a surviving spouse during his or her lifetime but then ensures that the remaining assets will pass to your children from a previous union. Whatever the specifics you want to put in place, a trust is often a good tool. Laying out your intention for personal property in a letter of intent, while not legally binding, is also often helpful.

Often the most contentious items in an estate — in all families, not just blended ones — are items with emotional resonance, not the investment portfolio. Who gets Mom's engagement ring or Dad's prized watch or the ornament that sat on top of the Christmas tree or Grandma's yellow pie plate… those are the items that can cause the greatest friction in families, experts tell us.

An estate planning attorney can help with all of these decisions. You can find them either via personal recommendations from people you trust or by checking a professional directory such as those from the National Association of Estate Planners and Councils or the American College of Trust and Estate Counsel (ACTEC) Directory.

Additional reading:

• The 5 Essential Trusts You Need for 2026 Estate Planning
• This Is How the 'Brady Bunch' Safety Net (aka a QTIP Trust) Protects Your Kids' Inheritance
• The Six Estate Planning Steps Every Blended Family Must Take
• The Little-Known Tool to Protect Your Retirement Savings in a Divorce

5. Children with particular circumstances

Question: How do I or you address issues of a child with dementia and estrangement, re any or partial benefits of an inheritance?

Alexandra Svokos: This is where you definitely want to make sure to get professionals involved. If you are planning to leave something to a child or other heir with whom you're estranged, a letter of intent can help explain the inheritance to them without breaking an estrangement. I would just caution you to remember that a letter of intent is about explaining an inheritance, not about reopening conversations when you're not around to have them.

For a child with dementia or special needs, the answer here is again to make use of trusts. You can, for example, set up a special-needs trust. This is also why I say you'll need professionals involved – be careful about setting these systems and guardrails up so that your legacy gets used in the way in which you want it to be used.

Additional reading:

• The Benefits of a Special Needs Trust
• A 5-Step Plan for Parents of Children With Special Needs, From a Financial Planner
• Managing the Financial Dominoes of Special Needs Planning: A Practical Guide for Long-Term Security
• How to Plan for Retirement When Your Child Has Special Needs
• Is a Living Trust the Right Move for Your Estate Plan?

For many Americans, a traditional measure of financial success has been straightforward: Build wealth and grow net worth.

Saving, investing and planning for retirement are as important as ever. Increasingly, however, people are also evaluating financial success through a broader lens.

Today, many people measure financial progress not only by what they've accumulated, but also by the opportunities, confidence and stability their finances provide.

That shift is reflected in research by Thrivent, where I am the president and CEO: 69% of Americans say long-term financial success is about financial security and peace of mind, while only 3% say it's primarily net worth.

This broader perspective reflects the realities many people face today. While Americans continue to value saving and investing, they also want confidence that their finances can help them navigate uncertainty, support the people and causes they care about and create opportunities for the future.

Money is a tool to build a better life

Nearly two-thirds of Americans say money is a tool for creating the life they want, rather than something to accumulate for its own sake. When money becomes a means rather than an end, financial success takes on a broader meaning. The focus shifts to what it makes possible:

• Preparing for the unexpected
• Caring for loved ones
• Pursuing meaningful experiences
• Supporting important causes
• Building a legacy

A growing account balance can strengthen someone's financial position, but confidence also comes from understanding where you stand, where you want to go and how your financial decisions support that journey.

What this shift means for financial services

As people's definition of financial success evolves, the role of the financial services industry must evolve alongside it.

People will always need sound financial fundamentals and expertise. But increasingly, they're also seeking guidance that helps them align their finances with what matters most to them.

That requires the industry to see the person behind the portfolio. Financial decisions are never just about dollars and cents. They're connected to people's goals, responsibilities, values and aspirations.

Our role is not to define success for someone else, but to help people make informed decisions in pursuit of the outcomes that matter most to them.

That's why trusted guidance is essential. Our industry can help people navigate complex decisions while keeping their goals, priorities and values at the center of the conversation.

When those elements come together, financial planning becomes a way to help people move forward with greater clarity and confidence.

The bottom line

Financial success can't be captured by a single number. It includes what people accumulate, but also the security, choices and opportunities their money creates.

Building wealth remains important. But ultimately, financial success is about aligning money with what matters most and using it to create the life you want to live.

Related Content

• Your Legacy Is More Than Your Money: How to Plan for Values, Not Just Valuables
• Value Investing and Values-Based Investing Gain Momentum
• The Inheritance Your Kids Need More Than Money — and 5 Ways to Pass It On
• How to Support Local Communities With Your Fixed-Income Strategy
• What Will They Remember About You? It's Not Just About Your Money

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 take care of a child or another loved one who has a disability, you'll need a plan to provide for them after you pass away. One option is a special needs trust, a legal entity that holds assets for the beneficiary's future care without affecting their eligibility for income-based government services, such as Medicaid health insurance and Social Security Supplemental Security Income. A special needs trust adds another layer of financial support for your loved one and reduces their vulnerability to exploitation.

These trusts are commonly created for people who have permanent or severe disabilities that prevent them from working, such as vision loss, paraplegia or chronic mental illness.

A special needs trust funded by someone other than the beneficiary is known as a third-party trust. By contrast, a first-party trust is funded with the disabled person's assets.

A benefit of a third-party trust is that it offers more agency in how the remaining assets are distributed after the beneficiary dies, says Nicky Amore, a certified financial planner and chartered special needs consultant at Parallel Advisors in San Francisco. The money may, for ex-ample, go to a sibling or a favorite charity. With a first-party trust, however, any remaining funds must first be used to reimburse Medicaid for services the beneficiary received during their lifetime.

A third-party trust can be revocable, meaning that you can change the terms after it's established, or irrevocable, meaning that it can't be easily altered or terminated. Families often choose to set up an irrevocable trust to provide the strongest long-term protection.

Funding the trust

You can put a variety of assets in a special needs trust, including cash, real estate, and investments such as stocks or bonds.

If you have a life insurance policy, you can list the trust as the beneficiary, says Jehan Crump-Gibson, founder and managing partner of Great Lakes Legal Group in Southfield, Michigan. If you do this instead of designating the disabled individual as the beneficiary, the proceeds won't count as income that could jeopardize their government benefits. Similarly, you could name the trust as the beneficiary on your retirement accounts, such as 401(k)s or IRAs.

The beneficiary can use funds from the trust to help pay for expenses that government benefits or other income don't cover, such as caregiving services, medical equipment and supplies, transportation, and travel and entertainment.

Designating trustees

A trustee manages the assets in the best interest of the beneficiary. While living, the parents (or other individual who established the trust) may choose to act as trustees.

But you'll need to name a successor trustee to take on the responsibility after your death. Amore advises using a corporate trustee, such as a bank, to be an impartial guardian that can take care of such tasks as record-keeping and paying taxes. A corporate trustee may charge 1% to 2% of the trust's assets each year in fees. You could also designate a trusted friend or family member as a co-trustee.

Amore recommends giving trustees a letter of intent that details your loved one's medical and emotional needs. While the document isn't legally binding, it can provide valuable direction on the beneficiary's abilities and interests and outline your preferences for care.

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 Content

• You've Got a Trust: Now Who Should Be the Successor Trustee?
• The 5 Essential Trusts You Need for 2026 Estate Planning
• Revocable vs Irrevocable Trusts: It Comes Down to Control vs Protection

Many families reach a point when a loved one requires part-time or full-time care due to health issues or aging. In families with multiple children, caring for an aging or ill parent often falls on one sibling more than the rest.

Caregiving in any capacity can take a financial toll, known as the "caregiver penalty." Research from the Employee Benefit Research Institute finds that caregivers are likely to have fewer financial assets than non-caregivers, and more debt. This isn't shocking, since caregivers typically have to sacrifice career growth and associated wages.

Typical estate plans compound the problem, since many parents split their assets equally among their children even when one child stepped up to provide care more than the others. This inevitably penalizes the caregiver, even if unintentionally. But there are ways around that.

Here's how parents can make things right when one child sacrifices their own financial well-being to provide care.

Create a caregiver contract

Some parents choose to reward their children for providing care through an inheritance. But that's not the only avenue to explore.

"If parents want to pay for their child to care for them, they can create a caregiver contract that outlines the caretaker duties, how much they will be compensated, and mileage for driving parents," says Kelsey Simasko, attorney at Simasko Law. That agreement can have a specific equity clause designed to compensate the caregiver using property, home equity, or other assets.

As Simasko explains, a caregiver contract can be worded to make it clear that the payments are not a gift, but for services rendered. This allows a grown child who may be working less and therefore earning less to receive compensation immediately, thereby reducing near-term financial stress.

Of course, Simasko recognizes that not all parents have the funds to begin paying their child for caregiving services.

"If this is not the case, then providing their compensation as inheritance may be a better option," she says.

But if you do decide to pay a child for caregiving services, you should have an elder law attorney create a contract for you so you can be sure it complies with Medicaid rules, Simasko insists.

Misty Ralston, owner and attorney at Ralston Law, says a caregiving contract should spell out the caregiving duties and associated compensation. She also says such a contract should ideally be in place before services are rendered, and that the caregiver should maintain a log of the hours they work.

"Otherwise," she warns, "those payments will be treated as a gift or uncompensated transfer for Medicaid or might be considered as something coerced upon the parent as an afterthought rather than a true contract for services."

Keep in mind that Medicaid uses a five-year look-back period, so the transfer of certain assets may compromise eligibility.

Ralston also says that before drafting such a contract, it's best to research what the average professional is being paid for these services. Also, she insists, "You want to make sure that the person signing has capacity to do so, and get a letter from the doctor stating the person’s capacity as well as the need for these services."

And, Ralston says, "If the child doing the work is also the power of attorney, they should not sign for the parent. Allow the parent to sign themselves [and] have the parent meet with their own attorney."

Before putting such a contract in place, Ralston recommends having a family meeting to discuss what is happening and why. All family members should sign a written acknowledgment confirming they understand the arrangement. Many families find discussing inheritance difficult, so we have tips to get you started in How to Talk to Your Adult Kids About Their Inheritance.

Finally, any family entering into a caregiver contract should consult a tax professional. The parents paying for care may owe a "nanny tax." And the adult child receiving compensation may have to report it as taxable income.

Compensate the caregiver with a larger inheritance

In a caregiving situation, it's often easier, logistically and financially, to give a caregiving child a larger share of an inheritance. Ralston says there are several ways to do this.

One option is to make a specific bequest that provides a preset sum to the caregiver as a thank you for stepping up during the parent's time of need. That can sometimes be "easier to swallow," she says, "than an extra percentage of the estate."

Another option is to gift the home to the caregiving child. If they lived with the parent for two years prior to going into a nursing home for Medicaid, they may be entitled to use the Caregiver Child Exemption during estate recovery.

"Since the house might otherwise have to get sold to pay for the Medicaid 'bill,' why not give that to the child that has been caring for the parent and for the home all this time?" Ralston says.

Otherwise, a parent might choose to designate a certain account or life insurance policy to the child.

"It doesn't matter what option one chooses," Ralston says. "What matters is how it looks to others."

Simasko agrees. While adjusting a will or trust to give a caregiving child a larger inheritance than their siblings is always an option, "this always carries the risk of the siblings fighting," she says.

One approach Simasko recommends is having parents adjust each child’s inheritance from time to time to ensure it reflects the actual amount of care needed. The flipside, though, is that amending a trust costs money, so adjusting beneficiary designations could get expensive, even if it's only done once a year.

No matter which option you choose, the key is to have open conversations at the family level before one sibling starts providing consistent care. That way, everyone is on the same page, and there are fewer surprises, conflicts or ill feelings.

More Trillion Dollar Talk

• Why Leaving an Equal Inheritance to Your Children Could Backfire
• 8 Estate Planning Secrets You Can Borrow from the Ultra-Wealthy
• Why So Many Families Are Unprepared for the Great Wealth Transfer — and What You Can Do About it

Older generations hold $124 trillion in assets they plan to pass on to loved ones and charity over the next two decades. Many will wait until they are gone to share the wealth, but some are opting to give while they live.

It makes sense. A new survey conducted by Morning Consult on behalf of Kiplinger found that, when asked what they would want an inheritance used for, both parents and adult children said practical things such as paying down debt, buying a home or securing a retirement.

"There's a recognition that the money would be more useful in their 40s and 50s than in their 60s and 70s," said David Blanchett, head of retirement research at Prudential. "But if you wait to give them that money, you won't get to see it in action. You won't know what impact it has."

For retirees who plan to wait until they die to pass on their inheritance, fear of outliving their money can create paralysis. After all, people are living well into their 80s, which means their money needs to last longer. "There's always an element of what if I need it, I won't be able to take it back," says Michael Conrath, JPMorgan's chief retirement strategist. "Legacy and retirement are connected in terms of the math and in terms of the emotions."

To overcome the fear of running out of money, Conrath says to break retirement savings into three buckets — stable, variable and legacy. The stable bucket is for recurring bills such as rent, food, utilities and healthcare, while the variable bucket is for travel, hobbies, entertainment or other wants. The third bucket is for legacy, which is where the giving comes from.

"Once you have those two parts covered, it really gives people the freedom and the comfort knowing they have the capacity to gift money," said Conrath. "It's a way to remedy some of the fear."

Benefits of giving while you're living

There are several reasons to favor giving while you're alive, for both the giver and the receiver.

Benefits for givers:

• They can reduce the total size of their taxable estate before passing away, minimizing potential state or federal estate taxes.
• They can gift up to $19,000 per recipient in 2026 (married couples may gift up to $38,000 to an individual) without triggering gift tax filings or dipping into their lifetime exemption.
• They may gift appreciated stock to a qualified charity or an heir, thereby avoiding capital gains tax on the stock's growth.
• They may pay medical or tuition bills directly to the institution (which bypasses the $19k limit entirely), or fund a 529 plan.
• They experience the immediate joy and satisfaction of supporting loved ones during key life milestones.

Benefits for heirs:

• They can use the funds immediately to improve their financial health.
• They don't have to pay taxes on it; the federal tax code doesn't treat gifts as taxable income for the recipient. (Appreciated stocks are the exception.)
• Direct gifts eliminate potential delays and legal complications associated with going through probate court after a donor passes away.

How to give while you live

If giving while living sounds like something you want to do but you aren't 100% on board, Blanchett says to test the waters with small gifts. You don't have to give your heirs their entire estate, but you could help your adult child with a down payment on a home or pay for daycare or college tuition for your grandchild.

It can be something as small as a cash gift or an extra deposit into the 529 account. Not only can you help them now when they need it, but you're also preparing them to manage the inheritance they will receive later.

Don't sacrifice your retirement

There is a lot of joy and satisfaction in giving while living, whether it's to your adult children, grandchildren or a beloved charity. Don't start writing checks willy-nilly, though. If you plan to rely on Medicaid, you could disqualify yourself by giving monetary gifts during the 5-year look-back period. Be certain you have a locked-down plan for how to pay for long-term care, as those costs have ballooned in recent years.

In other words, giving can't be at the expense of your retirement. As Pam Krueger, founder and CEO of Wealthramp, warns, you don't want to end up giving too much and being broke.

"The best answer for most people is you don't have to do it all now, and you don't have to do it all later," said Krueger. "Protect your own financial security first and foremost, and then say, 'OK, I can give this much now while I'm alive and this much when I'm dead.'"

Editor's note: Want more help making this decision? Take our quiz on giving while you live vs waiting until death.

We know this can be a contentious conversation. If you want to share your opinion, reach out to us at KipInheritanceTalk@futurenet.com.

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Give while you're living or wait until you die? That's the choice for many retirees sitting on a sizable nest egg as they live out their golden years.

At last check, an estimated $124 trillion in assets are expected to be passed on in the Great Wealth Transfer, according to research firm Cerulli Associates. While most of it will go to heirs after their deaths, many people want to give while they are still alive.

After all, a new Morning Consult survey conducted on behalf of Kiplinger found that when asked what they would want an inheritance used for, both parents and adult children cited practical uses such as paying down debt, buying a home or securing retirement, all of which can benefit heirs now or in the future.

On the one hand, if you wait until you die, the money has more time to grow and compound; on the other, if you give while you live, you can enjoy the fruits of your labor or help someone now. You can also do a little bit of both: Give a little while you are alive and leave the rest for when you're gone.

Which giving approach works best for you depends on your financial goals, risk tolerance and personal values. To determine which type of giver you are, take our quiz.

Editor's note: We know this can be a contentious conversation. If you want to share your opinion, reach out to us at KipInheritanceTalk@futurenet.com.

More Trillion Dollar Talk

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• Is Your Will 'Fair'? Estate Planning Is About More Than Money
• The $124 Trillion Great Wealth Transfer: Fact vs Fiction Quiz
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In today's litigious society, just being involved in a lawsuit — even if you ultimately win — can be an exhausting, expensive and stressful ordeal.

The reality is that "the process is the punishment." The legal battle itself, with its endless paperwork, court appearances and mounting fees, often causes more harm than the final court decision.

For many, the best form of defense isn't waiting to fight but preventing certain lawsuits from being filed in the first place. The key is to create legal "moats" around your more valuable assets — carefully structured legal protections that make it difficult or impossible for creditors or claimants to reach them.

What does it mean to build a "moat" around assets?

Imagine your assets as a castle. Without protection, attackers (in this case, lawsuits or creditors) can easily breach the walls and seize your valuables. A moat is a defensive barrier that surrounds the castle, deterring or outright preventing attackers from getting close.

In the legal world, these moats come in the form of strategic asset protection planning. It involves using legitimate, well-established legal tools — such as trusts, limited liability companies (LLCs) and insurance — to isolate assets and safeguard them from being seized in the event of a lawsuit.

Why build asset protection moats?

1. Discourage lawsuits from the start

Most lawsuits are only filed if there is money or assets to reach at the conclusion — they are often filed because the plaintiff believes there is something worthwhile to recover. If your assets are structured in a way that they are legally out of reach, potential claimants will likely make the cost/benefit analysis and be discouraged from even attempting to sue you. Why spend time and money chasing an empty target?

2. Create a strong position for settlement

Even if a lawsuit is filed, having assets protected can give you significant leverage to negotiate a favorable settlement. A well-protected personal or company balance sheet signals to opposing parties and their attorneys that lengthy and costly litigation may not pay off. This environment frequently leads to settlements on terms more advantageous to you, saving you time, money and stress.

3. Reduce financial and emotional consequences

Lawsuits are draining — not just financially but emotionally and professionally. Protecting your assets allows you to weather legal storms without jeopardizing your financial foundation or your peace of mind.

Common tools for building asset protection moats

Irrevocable trusts (domestic and foreign): Assets placed in special trusts in the right jurisdiction (venue) generally are no longer considered your personal property, shielding them from personal creditors.

Limited liability companies (LLCs) and corporations: By owning assets through these business entities, personal liability can be limited, separating personal wealth from business risks.

Equity stripping: This involves using loans secured by assets to reduce perceived equity and limit access to those assets.

Insurance: Umbrella policies and other liability insurance can act as a first line of defense, absorbing potential claims before they reach your assets.

Asset protection requires planning in advance. The law frowns on attempts to hide assets after a lawsuit arises, often viewing such moves as fraudulent and voiding protections. A proactive strategy ensures your moat stands strong before any claimant appears.

Choosing the right partner

Asset protection planning can be complex. Choosing experienced legal professionals who understand your unique financial situation and risk profile is essential. They can design a tailored strategy that balances protection with flexibility, ensuring your assets remain productive and accessible to you while safe from potential legal threats.

While no strategy can guarantee immunity from lawsuits, building strong legal moats around your selected assets is one of the most effective ways to discourage lawsuits before they start and to put yourself in a position of strength if litigation occurs.

Protecting your wealth is not only about financial security — it's about preserving your peace of mind, your family's future and the hard work you've invested over the years.

If you want to learn more about how to build these protective moats and shield your assets in today's litigious world, consult an experienced asset protection attorney who can guide you through the steps needed to turn your castle into an impregnable fortress.

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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.

Asking about your parents' finances can feel awkward until an emergency hits. You've procrastinated for years, but now, here you sit across from your parents at the kitchen table, talking about the grandkids or their last vacation, and a quiet voice in your head starts whispering about the urgency to ask the important questions:

• Do they have enough money or assets set aside if one of them needs long-term care?
• Do they have a will?
• Who has the passwords to their online banking accounts?
• What happens to the house?

But you worry this conversation might sound as if you're angling for an inheritance, so you keep quiet.

That scenario might be especially familiar to Gen Xers, many of whom are watching their parents age while still supporting their own children or planning their own retirement. Relying on an inheritance can be risky, and talking about it still feels taboo.

It feels so taboo that only about two in five families have discussed inheritance plans, according to new research from a Morning Consult-Kiplinger survey. Not to mention that families rank inheritance next to last among topics they feel comfortable discussing.

However, Psychology Today advises that talking openly about money can reduce anxiety, strengthen relationships and improve well-being.

Unsure of how to bring up money with your aging parents? Here are a few tips to help you start the conversation.

The trade-offs to waiting to discuss money

Many families treat money as a hands-off topic. That is until a parent's long-term care needs, sickness or financial shortfall forces the issue. But by then, decisions about who pays what, how much support is necessary or what trade-offs are acceptable tend to be reactive rather than planned.

Evan Mills, MBA, associate financial adviser at Scholar Advising, points out that if you wait, you could reach estate limits, so the wealth your parents accumulated over the years doesn't go to the next generation; it goes to the government and the tax bill. "It's also difficult to manage at that point if you don't know the wealth your parents accumulated."

Cameron Huddleston also knows the cost of waiting. The personal-finance journalist (and frequent Kiplinger contributor) was 35 when her mother was diagnosed with Alzheimer's. By the time she tried to unravel her mom's finances, the conversation had become much harder.

She later wrote the book Mom and Dad, We Need to Talk, precisely because she wished someone had pushed her to start earlier. "When there's an emergency, it's a lot harder to have a rational conversation about finances," she said. "Your emotions are all over the place."

The inheritance expectation gap

Recent surveys from 2025 and 2026 reveal that conversations about parents' finances remain rare. For instance:

• The Kiplinger-Morning Consult survey points out that 60% of adult children would rather talk to their parents about politics than inheritance, and 80% of parents would rather discuss their physical health than their inheritance plan.
• Among parents age 55 or older with at least $500,000 in investable assets, 68% have not discussed what their children might inherit, and more than half have not shared their net worth. Nearly half of families have still not engaged in estate-planning conversations, according to Fidelity's 2025 Family & Finance Study (PDF).
• Key Wealth's 2026 Inheritance Pulse Poll (PDF) revealed that only 34% of families who expect an inheritance have had a direct family conversation. The rest were operating largely on assumptions. Half of those who had never raised the topic said they avoided it because they didn’t want to appear to be counting on the money.
• Catalyst Advisory's "Family Wealth in America" study found that only 14% of adults had held detailed inheritance discussions, while 36% had never discussed inheritance with their families. Nearly one in four people who expected (or thought they might receive) an inheritance had never talked about it.

How to start a conversation about money with your parents

Parents hesitate to talk about their finances mainly because of uncertainty: 34% cite too many unknowns about how long they'll live or how much will be left, according to the Kiplinger-Morning Consult survey. Another 22% say they haven't gotten around to it. But only 7% say they stay silent because they're uncomfortable discussing money with their children.

Mary Ware, senior wealth adviser and managing partner at Carnegie Private Wealth, says the best way to approach these tough conversations is from a place of preparation, not control. "Don't start by asking, 'How much money do you have?' Start with, 'If something happened and you needed my help, would I know what to do? And what is most important to you?' "

Timing is crucial. Conversations with parents about their finances often work better as a series of short chats than one long talk.

Other ways to kick-start a conversation might include:

1. Choose the right time. If possible, pick a time free of distractions. That might mean avoiding holidays and large family dinners that are already chaotic.
2. Decide whether to start one-on-one or with your siblings. Sometimes you might feel more comfortable beginning this kind of conversation privately before bringing in the rest of your family. If you have siblings, it can help to get everyone on the same page beforehand so no one feels blindsided or left out.
3. Ease in gradually rather than diving straight into the numbers. Lisa McCurdy, founder and managing partner at The Wealth Counselor, advises skipping talk of death and dying when initiating a conversation. Ask, "If it takes 90 days to recover from your procedure, with no one authorized to manage your affairs, what would you be confronted with once you returned home, fully recovered, to your accounts and property?" This frames the conversation around the lack of predictability and the mess that could develop if nobody has been left in charge.
4. Have a few follow-up topics ready. If your initial conversation is brief or nonproductive, try asking more direct questions next time, such as where their important estate documents are kept or if they'd like help organizing their paperwork
5. Leave the option to return to the conversation later. These talks rarely finish in one sitting. Give everyone space to revisit the topic after a few days or weeks. Consistency over time usually works better than pushing for every detail at once.

What needs to be covered

Carnegie Private Wealth's Ware says her bare minimum is knowing where their key financial and legal documents are stored, which bank, investment and retirement accounts they hold, and how to contact their financial, tax, insurance and legal advisers.

You might also want to ask whether they have an updated will, financial and healthcare powers of attorney, and other appropriate estate-planning documents. Find out what insurance coverage they have, what regular bills need to be paid and how they pay them, and where to find information about pensions, Social Security and other sources of income.

She's also a big believer in organization. "An organized financial life is a gift we can all give our loved ones. Your adult children shouldn't have to become financial detectives during an emergency. Whether your information is kept in a binder, secure digital system or another organized place, make sure the appropriate person knows where it is and how to access it."

Another often-overlooked question is about their long-term care preferences and whether they’ve set aside any insurance or savings to cover them. Roughly 70% of people turning 65 will need some form of long-term care, and the costs can quickly upend retirement savings.

Bring in neutral help if needed

When conversations stop or emotions run high, a trusted third party can help lower the temperature. Mills says,

"We always joke with clients to just blame the adviser when breaking the ice." When you have a meeting with a financial adviser, he or she might think it's important to add a potential inheritance and what that might look like, into the plan, she said. A well-designed structure can fall apart if nobody really understands the plan.

Joseph Fresard, attorney at Simasko Law, recommends introducing the conversation by bringing up difficulties friends or family members went through who did not have their affairs in order and letting them know you've found an attorney who you think could help get their estate plan done.

A financial planner or estate attorney can reframe the discussion as professional planning rather than a cross-examination. Your parents might want to go over the details with an adviser first before bringing you into the conversation.

Know enough to help your parents protect their future

Keep in mind that asking the size of your future inheritance might not be in your best interest at this time. You don't need that exact number to be informed.

What you do need is enough information to help your parents protect their own future and to prepare yourself for what’s to come. Essentially, you're asking for information to help keep them from losing their dignity and their independence, and that's a conversation worth having.

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For much of our lives, our parents are the ones helping us plan for the future. But as we get older, that dynamic begins to shift. At some point, adult children need to start asking parents about their future plans.

That means having conversations about how money should be managed, who's responsible for making medical decisions and what happens after our parents die.

While they can be uncomfortable, having these conversations before an unexpected illness or accident can prevent you from being forced to make difficult decisions for your parents without knowing what they truly wanted.

Families often associate these conversations with old age, but anything can happen to anyone at any time. An accident or illness can leave an adult child responsible for important financial or medical decisions for a parent much sooner than expected.

Not knowing a parent's wishes can make the situation much more difficult to navigate.

The earlier families can begin having these discussions, the more opportunities they'll have to revisit the conversation as parents age and their wishes or circumstances change.

Figuring out how to approach this conversation can be the most difficult part. Unexpectedly asking about nursing home care, medical decisions or powers of attorney can be jarring and can make parents feel as if they're losing independence.

Instead, let them know that you'd like to have a conversation about their future and list some topics you'd like to discuss. The goal isn't to take control of the parent's affairs; it's to understand how they want things handled if someone needs to step in on their behalf.

It's also important to consider the environment in which you have these conversations. Discussing sensitive financial or medical information during a private conversation at home will likely feel very different from a public restaurant.

Schedule a day, time and location that works for everyone, giving all family members a chance to prepare.

When it's time to have the conversation, the main focus should be understanding what a parent wants if you, a sibling or another family member has to act on their behalf.

Start with finances

Begin by asking how their finances should be handled if a parent can no longer manage them. Who would they like to step in on their behalf if they become incapacitated?

In addition to designating a financial power of attorney, adult children should also understand the parent's financial philosophy. Ask what expenses should be prioritized, how investments should be handled and how money should be managed on their behalf.

Make a medical plan

A medical power of attorney will identify the person making decisions on a parent's behalf. They need to understand the values behind those decisions.

Parents should also clearly define what quality of life looks like for them. How do they feel about life-prolonging treatment? Do they have a DNR (do not resuscitate order) in place?

Discuss long-term care

Parents should also discuss what they'd like to have happen if they can no longer care for themselves. Would they prefer to receive in-home care, or move into an assisted living or nursing facility? How would it be paid?

Knowing these preferences ahead of time can help adult children make decisions that align with their parents' wishes rather than having to guess.

Settling the estate

Finally, families should discuss what should happen after a parent passes. Who will inherit financial assets and property? How sentimental belongings should be transferred? Talking about this ahead of time gives everyone a better understanding of what to expect, potentially reducing disagreements later.

Adult children should also ask if these wishes have been legally documented in an estate plan. If parents have an estate plan in place, family members need to know where those documents can be found. If they don't, this conversation is the perfect time to help them set one up.

Final thoughts

Conversations about aging, illness and death might never feel comfortable, especially when they require the dynamics between parents and adult children to change. But knowing what a parent wants can make all the difference when difficult decisions need to be made.

Starting the conversation now gives families as much time as possible to understand those wishes, put the appropriate plans in place and update them as life changes.

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• Don't Leave Your Heirs an IRA 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.

We asked millionaires to show us the money, and several dozen have. The bulk of them are ordinary people like you and me, working hard, saving diligently and living within their means.

They're teachers and entrepreneurs and project managers from all across the U.S., from Shoshoni, Wyoming, to West Lakeland, Minnesota, to Virginia Beach and San Diego. They're taking care of their families and planning for the future.

They're also part of the Great Wealth Transfer ­— the estimated $124 trillion of assets that will flow from older generations to heirs and charities through 2048.

So we wanted to know how they're talking with their heirs about inheritance and all the uncomfortable details that involves.

To find that out, we created what we're calling the Millionaires Panel, made up of 30 of the millionaires who've been featured in our ongoing My First $1 Million feature. Their identities are known only to us to protect their privacy and to encourage them to speak openly. What an enthusiastic crowd they are, too — on the first survey, we had a 100% participation rate. Who could ask for more and get it?

Let's find out where these real-life millionaires stand on these three issues:

• Transparency with their kids about their financial situation
• Equal vs unequal estate distribution
• Capping inheritance to avoid demotivation

Are these millionaires talking with their kids about their money?

According to Kiplinger's Trillion Dollar Talk survey, conducted by Morning Consult, more than half of parents ages 55 and older say they rarely or never discuss money with their children.

That number changes as income increases. Overall, 45% of adults say they discuss money often or sometimes with their children, but among adults with income above $100,000, that increases to 56%, with only 11% saying they "never" do (as opposed to 18% overall).

Many of our Millionaires Panel members have followed this trend, focusing on financial literacy when their kids were young and prioritizing financial transparency as adults.

One respondent reported developing what he calls the Family Wealth Mission Statement to outline his family's values and priorities so his kids know what's important to him and their mother. "Communication is vital in preparing the next generation to be good stewards in preserving, growing and passing on this gift and legacy."

Another parent shared that he and his spouse keep their family dynamics in a healthy place by being upfront about the impact of retirement spending on the kids' inheritance.

"Since we are open with our children about our finances," he said, "and since they understand that their inheritance is, in part, determined by how long we live and how much we need to spend to take care of ourselves during retirement, they have been very supportive."

What other panelists said:

• "The broad concept of estate planning was incorporated into a gradual education process about money, saving, investing, debt and retirement planning that began in childhood. They were all familiar concepts that reduced at least some of the fear or uncertainty when they became an adult and began to deal with them firsthand."
• Our financial talk "was very matter of fact (take the emotion out of it). We're all going to die someday — better for everyone to discuss with a clear head... The more you communicate and discuss, the freer you become!"
• "(In our conversation), I wanted to make sure there was guaranteed money for the kids in case my husband remarries a gold-digger, you know? I mean, not really, but yeah, it's crossed my mind."

Should inheritances be split 50/50?

On the question of whether they plan to split their estate equally among their heirs or perhaps adjust inheritances based on their kids' individual circumstances, many of the panelists said they are defaulting to equal distribution, with one parent noting that people should avoid picking favorites.

"There should be no favorites," he said. "Love all that are close to you equally. Don't create a rift or friction after you pass."

Another parent has decided on a 50/50 split despite struggling with whether she should differentiate because her daughter has children.

"I worry about 'even' vs 'fair,'" she said. "One of my kids (my daughter) is married and has children; the other (my son) is currently single with no kids. Should she get more because of the grandchildren? Or should I just run with two kids, 50/50? Right now, it's the latter."

Illustrating a dilemma many parents face, one respondent shared how his mother left all of her investments and savings to the son who "needed it most," because he was underemployed and living paycheck-to-paycheck. Then she divided her physical assets in other ways.

"We discussed who needed financial help vs who was deserving of help," the panelist wrote. "Once we worked through that conversation, it became very easy."

What other panelists said:

• "I don't plan to leave any money to people. It's all going to charity upon my death."
• "Both of our children are fiscally responsible and relatively financially comfortable, so there is minimal motivation for financial jealousy."
• "I think people rarely admit that they want to leave certain close family members, i.e., siblings, children, etc., more money simply because they like them better."

Should inheritances be capped to avoid demotivation?

Another area we explored involves whether parents are planning to limit how much they leave their children to ensure they don't decide to crash on the sofa for the rest of their lives.

For example, Microsoft founder Bill Gates has said that he's leaving less than 1% of his billions to his three children because he doesn't want his good fortune to prevent them from achieving their own success. Granted, less than 1% of $115 billion will still be hundreds of millions, but still.

Taking a similar approach, one of our panelists wrote, "I have a fear that if they find out the potential inheritance, it could demotivate them for grades, life and job seeking, etc. (I) prefer to keep them motivated."

Another panelist said she plans to leave her children $4 million each but will expect them to focus on making their own way.

"Our kids know that they will inherit $4 million each, because that is the state tax exclusion in Illinois," she noted. "Everything (else will) pretty much go to charity. This means my children, who are 21 and 24, need to make their own living. They are motivated to do so."

What other panelists said:

• "I know wealthy families who have split apart because of arguments over money. There are also some who practice false scarcity because they don't want to spoil their children. There has to be a middle ground. I hope our children grow into capable adults who realize their worth is more than money. I hope they utilize their money as a tool to enhance life for themselves and for others."
• "I'm so glad I get to give (my kids) enough to make life comfortable, but not enough to ruin them, because too much money is a curse, I think. … I like knowing that when I die, they'll be able to benefit in some way, and I hope there will be a moment when they sit back and say, 'Thanks, Mom. You were awesome.'"

In the next article, we'll explore how our Millionaires Panel responded to questions about whether an adult child who is an aging parent's caregiver should receive a larger inheritance than their siblings.

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• Who Actually Wins the Great Wealth Transfer?
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• We Asked 5,000 Americans About Inheritance and the Great Wealth Transfer. Here's What We Learned

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.

Over the next two decades, an estimated $124 trillion will move from older generations to their heirs, making the Great Wealth Transfer the largest intergenerational transfer of wealth in American history.

Most families with $10 million or more in complex, multigenerational assets that I advise have already done the technical work: Trusts are funded, powers of attorney are current, the generation-skipping exposure has been modeled.

None of that determines whether the transfer actually holds. What determines that is whether heirs understand the reasoning behind the structure, not just the structure itself.

A trust can tell your heirs what to do with what they inherit. It can't tell them why you made the choices you made, and why is usually the piece that decides whether wealth strengthens a family across generations or fails to sustain it in the first one.

A lesson I learned the hard way

Early in my career, an aging family member began showing signs of dementia. He had built real financial success over a long professional career, but he had never married and had no spouse or child positioned to step in.

Because he had never executed a power of attorney or healthcare directive, our family had to petition a court for the authority to help him. I became his court-appointed guardian in my early 30s and served in that role for eight years until he passed away.

What stayed with me wasn't the legal gap itself. It was that someone that accomplished, that educated, still ended up in a public guardianship proceeding over documents that take an afternoon to execute.

Sophistication in your portfolio doesn't protect you from a gap in your authority documents, and I've watched it happen to plenty of clients who assumed their success made them exempt.

Silence is a bigger risk than estate tax

Advisers and clients alike spend enormous energy on exemption planning, basis step-up and trust jurisdictions. It's worth doing, and rarely the reason families fracture after a transfer. They fracture over unexplained decisions.

One heir receives liquid assets. Another receives an interest in the operating business or the real estate portfolio. Absent an explanation of the reasoning, once the person who made that decision is gone, the reasoning goes with them.

Beneficiaries fill the silence with their own narrative, usually one involving favoritism, and that narrative is where litigation and the estrangement start. I call probate the original reality show. Every year in practice reinforces it.

Have the conversation about intent now. If you haven't had the conversation, you're certainly not alone. More than half of parents age 55 and older surveyed by Morning Consult for Kiplinger's Trillion Dollar Talk report say they rarely or never discuss money with their children.

Three moves to make beyond the documents:

Put your reasoning in writing, separate from the dispositive documents. A letter of wishes, kept alongside the trust instrument, isn't legally binding, but it's the piece your heirs will read for context on why the plan is structured as it is.

Convene the family before a crisis forces a conversation. You don't need to disclose account values to communicate priorities, though I recommend making these discussions common and hosting them periodically.

A single structured conversation about intent can pre-empt years of downstream disputes among co-trustees and beneficiaries.

Treat the plan as a living instrument, not a closed file. A plan drafted a decade ago rarely reflects your current family, business interests, or fiduciary appointments.

Revisit it on a real cadence, and reflect on the reasoning behind it, not only the numbers.

Think of your estate plan as a memoir, not a mechanism

I encourage clients to think of an estate plan less as a set of instructions triggered by death and more as a memoir — a document that ties back to the values and judgment you want to carry forward, not one that simply activates on your passing.

That reframing changes the starting point. Instead of beginning with distributions and structures, start with a harder question: What does this family stand for, and has anyone put it in writing where your heirs can find it?

Plans that skip that step have direction and no origin, and a plan built on nothing rarely survives contact with real money, real grief and real responsibility arriving at the same time.

The Great Wealth Transfer is not primarily a legal event unfolding in your attorney's office. It's a human one, moving through legal channels.

The families who come through it intact are the ones who treat it that way from the start.

Related Content

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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, Dolly Parton insisted she didn't want to leave her family with a "mess" after her passing.

She had no children, and her husband of over 50 years, Carl Dean, died in 2025. Because her estate involves much more than basic financial accounts — encompassing her brand, song catalog, theme park, charities, and a large extended family — she took proactive steps.

Following her death on August 25, reports indicate she used trusts, business entities and financial managers to keep the majority of her assets out of public probate court.

Unfortunately, even the best-laid plans can spark a fight where control and loyalty clash with money.

What's happening with Parton's estate

According to court papers reported by The New York Times and other outlets, Parton's longtime manager has sued her nephew and former head of security, Bryan Seaver, alleging he threatened staff and partners and vowed to "destroy the entire brand" unless he was paid.

In the article, Seaver denied threatening anyone associated with Parton's estate and said that his messages had been twisted to portray him as an antagonist. Parton's sister, Frieda, has said the family isn't fighting about the estate. Currently, the manager has requested a restraining order against her nephew.

Most inheritance battles are not about a $450 million empire. Instead, arguments often start with who has control of the estate, whether the inheritance was fair (or unfair), a surprise in the estate paperwork or the fact that no documents exist outlining your plan for the estate.

A new Kiplinger-Morning Consult survey highlights a generational divide in family financial planning: Two in five families have never discussed inheritance, and 30% of parents have no formal estate plan at all.

Ron Gura, co-founder and CEO of Empathy, provides some context based on a survey by the company:

• Less than one-third of families have formal estate plans (31%) or financial plans (30%) in place.
• More than half (53%) say existing estate documents are incomplete, outdated or simply unfindable.
• More than one in four rely on informal or verbal plans, which offer no legal protection and are not formally documented.
• 60% operate with fragmented or no knowledge of their family's financial plans.

While Parton's estate isn't typical, some aspects are similar to every estate: Who gets the house, will the assets be split fairly, who is left in charge and who thought they were promised more than the estate planning documents actually say, for example.

What are the best lessons to protect your estate from post-death fights? Let's break it down.

1. Put your plan in writing

A missing, outdated or half-finished estate plan is likely to spark a dispute, even in the closest of families. That's why it's important to update your estate planning documents every three to five years or after a major life event, such as a divorce.

2. Consider a trust

A will has to go through probate court before most assets can be distributed. That process is public, can take months and can be expensive in the long run.

A funded living trust usually avoids probate for any assets you name in the trust. The trustee can follow your instructions faster and privately, without waiting for a court to approve every step.

3. Specify who is in charge

Someone must carry out your plans after you're gone. But if you don't name an executor, a court or state law might name one for you.

Choosing who is in charge lets you pick an executor who is organized, trusted and able to follow your wishes. That might be a third-party trustee or executor with the authority to change locks, pay bills and follow your plan without waiting for your family to vote.

4. Explain unequal gifts while you still can

Most fights start with "why do they get this or that and not me?" If one child gets the business and another gets cash, explain your reasoning during a family discussion.

Phil Reed, estate and asset protection attorney at Reed Law, says fairness is inevitably the first concern. But fairness and equality aren't the same: "The primary thing to keep in mind when deciding how to divide your estate is communicating the reasons for that decision and having those memorialized in your estate plan specifically."

Read more: Why Leaving an Equal Inheritance to Your Children Could Backfire

5. Write down who gets what

Make a list of "who wants what" for things such as jewelry, artwork, the lake cabin, the '67 Chevy and more, and keep it somewhere safe. Dividing your personal property beforehand can temper fights after you're gone. Dividing it after your passing is often why siblings stop speaking.

6. Keep things private

Kim Hegwood, owner and managing attorney at Your Legacy Legal Care, says that if someone is seeking privacy, a will might not be enough.

"A will must go through probate for it to be enforceable. Depending on the person's wishes, the assets they own, and how they want things to be managed upon incapacity or death, a trust may be the best type of estate planning tool to help keep it from the public eye."

7. No-contest clauses

Hegwood notes that a no-contest clause basically says, "If you challenge this plan and lose, you forfeit what I have left you." It can be a strong deterrent, but only if the person has something to lose. If you disinherit someone, a no-contest clause won't mean much to them.

However, this clause isn't absolute. "In Texas, for example, a court generally won't enforce one against someone with probable cause who brought the challenge in good faith. A no-contest clause discourages frivolous fights, but it does not replace a well-crafted plan," Hegwood says.

Final word on estate disputes

Dolly Parton reportedly took a firm stance: Having seen what happens when celebrities die without a plan, she didn't want that chaos for her own family. Unfortunately, the first public fight after her death wasn't about who got the rhinestones — it was a battle for control.

The lesson? A solid estate plan ensures your assets and healthcare wishes are honored while supporting your loved ones. But as headlines show, things don't always go as planned. While an estate plan can't erase your heirs' grief, it can keep your legacy from turning into a family feud.

Hegwood adds, "We always say the kindest thing you can do for the people you love is to make sure they never have to guess what you wanted. Grief is hard enough without adding a legal fight."

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• Six Estate Planning Mistakes Prince and Other Celebrities Made
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Gen Xers and millennials are in line to receive trillions of dollars in the Great Wealth Transfer, but first the money must pass to the surviving spouse. Known as horizontal wealth transfer, women will benefit more, as they statistically outlive their husbands by an average of five years.

Of the $124 trillion in wealth expected to transfer hands during the next two decades, $54 trillion will move horizontally to the spouse, according to a 2024 Cerulli Associates report. Once the widow spends money on healthcare, travel and other expenses, what's left will go to the younger generations.

Inheritance of any size might be welcome, given that many Gen Xers and millennials, based on a new survey conducted by Morning Consult on behalf of Kiplinger, don't expect any windfall. That's even though 47% of parents expect to leave a meaningful one.

This gap between expectation and reality highlights a crucial step in the wealth transfer process: The horizontal shift between spouses. Understanding why it occurs and how surviving spouses can plan for it is essential to preserving family wealth for the next generation.

Why the horizontal wealth transfer happens

Making sure your spouse is taken care of usually drives horizontal wealth transfer, but if that's not enough, the tax code offers incentives to stay motivated. The Unlimited Marital Deduction lets an individual transfer an unlimited amount of assets to the surviving spouse free of estate and gift taxes. If the wealth was passed to an adult child or children upon the first spouse's death, it could trigger estate taxes in certain circumstances.

"The typical process is you leave your money to your spouse, and after that it goes to the kids," said Derrick Longo, a wealth adviser at Savant Wealth Management. "But there's no default right answer. It's very specific for every family and situation."

If you're a surviving spouse, do this

In the Great Wealth Transfer, surviving spouses will be the first to receive the wealth; they need to plan now to preserve it later.

Take the so-called widow's tax penalty for starters. This occurs in the year after a spouse dies and the surviving partner starts filing as a single taxpayer. At that time, their tax brackets are reduced by 50%, and the standard deduction is cut in half, forcing them to pay more taxes if they don't plan for it. But if they do prepare, they have options, including:

• If the surviving spouse has dependent children, they can delay filing as single for two years. After that, they might choose to file as head of household.
• They can file a married filing jointly return for the calendar year in which the spouse passed away.
• Space out income-generating events such as retirement withdrawals and Roth conversions from the inheritance.

On the positive side, the surviving spouse gets a big tax break on inherited real estate, stocks and taxable investment and savings accounts. The value of the assets resets to the current market value on the date of death, erasing capital gains built up over the lifetime (known as a "step-up" in cost basis). If you sell soon after, you might owe little to no capital gains tax, depending on state property laws and how the assets were titled.

The surviving spouse can also roll an inherited IRA or 401(k) into their own name, delaying required minimum distributions (RMDs) until they turn age 73 or 75, depending on their birth year. If a child inherits that same account, the 10-year rule usually applies, requiring them to empty the account (and pay the taxes) within a decade.

Manage healthcare to preserve future wealth

Expected drains on future generations' inheritances include long-term care and healthcare costs. In Kiplinger's survey, 24% of parents fear these costs will erode their wealth.

It makes sense. Fidelity estimates the average 65-year-old will spend about $185,000 on healthcare in retirement, and that doesn't include long-term care, which can get expensive. The average annual cost for a private room in a nursing home was $129,575 in 2025, while an in-home aide cost $80,080. Money once earmarked for the kids can quickly become money spent on aging without the proper planning.

When it comes to covering healthcare expenses in retirement, surviving spouses can take out long-term care insurance, self-fund future healthcare expenses from their savings, health savings accounts (HSAs) or investments.

Which option makes sense for you depends on your health, longevity and finances.

For instance, long-term care insurance might make the most sense if:

• You can afford the premiums.
• Your family or trusted friends can handle the paperwork and claims process for you.
• You crave peace of mind that comes with insurance.
• You're healthy enough to meet underwriting guidelines.

Meanwhile, self-funding your long-term care needs might make the most sense if:

• You're healthy.
• Your family health history is largely free of chronic or heritable debilitating illnesses.
• You've saved enough for your retirement.
• You have liquid assets you can access easily without triggering major tax consequences.

Figure out how to spend to keep the estate growing

An inheritance can bring a desire to spend more, but to ensure the surviving spouse has enough to go around, a retirement spending strategy is essential to the planning process. Spouses can use several withdrawal strategies beyond the traditional 4% rule, including the bucket approach, the flooring strategy and a delayed Social Security collection plan, among others.

If you need help staying disciplined and want to worry less because you know where your money is and how much you can spend, the bucket approach might be for you.

If you want a steady monthly income or are hesitant to spend because of stock market fluctuations, the me-first or flooring method of spending might be for you.

For surviving spouses who want to maximize cash flow later on, the delaying Social Security strategy could be the best approach.

The idea is to find a plan that matches you and stick to it. That will ensure you have enough money to live your ideal retirement and have some left for the remaining heirs.

Plan today to preserve for tomorrow

The horizontal wealth transfer is the first stop of the Great Wealth Transfer, and it's set to benefit women primarily. With $54 trillion expected to pass to surviving spouses, that's a lot of money to protect, preserve and grow.

The good news is the next-in-line spouse doesn't have to wait until their partner is gone to prepare. A little foresight now can help ensure the windfall lasts for generations to come.

More Trillion Dollar Talk

• How Real Families Are Handling The Great Wealth Transfer
• The $124 Trillion Great Wealth Transfer: Fact vs Fiction Quiz
• Could You Handle a Sudden Windfall?
• Before You Leave Your Home to Your Children, Ask These Questions

Being named an agent in a financial power of attorney is often viewed as a simple legal formality, but stepping into the role of a financial agent is a serious, hands-on job.

Beyond signing checks, an agent assumes strict fiduciary duties that demand meticulous recordkeeping, clear communication and a solid grasp of some complex administrative rules.

From overcoming bank pushback and family friction to managing Social Security rules and healthcare premiums, navigating the day-to-day reality of this role requires equal parts legal awareness and practical strategy.

This essential document is missing from too many estate plans. Of the 46% of people surveyed who have an estate plan, only 14% had a financial power of attorney (POA, or FPOA for financial), according to a report from Trust & Will.

What is a financial power of attorney?

A financial power of attorney (FPOA) is a legal document that authorizes someone else — known as an agent or attorney-in-fact — to make financial and property decisions on behalf of the principal.

The person creating the POA is called the principal. When someone names you FPOA, it does not mean giving up control of their own money or legal rights; it simply creates a legal concurrent authority for you, their agent, to manage financial matters according to their best interests.

The type of POA the principal chooses dictates when it takes effect:

• A durable power of attorney gives the agent financial access as soon as it is signed and stays active when the principal becomes incapacitated, ensuring immediate help during an emergency.
• A springing power of attorney, on the other hand, remains inactive until a doctor officially certifies in writing that you are unable to manage your affairs, which protects your control while healthy but can cause delays when urgent financial decisions are needed.

"A financial power of attorney is part of making sure the people you trust can easily step in if something happens to you. It’s a fantastic tool that helps limit uncertainty when your loved ones need it most," Heather Zack, senior vice president of Private Client Services at the Carson Group, told Kiplinger.

Your legal duties as a financial agent

When you're designated as a financial agent, you assume fiduciary duties, which is the highest legal standard of trust and care. An agent is legally required to:

• Act in their best interest: You must make decisions that benefit them, not yourself.
• Avoid conflicts of interest: You cannot mix your funds with their personal bank accounts (known as commingling) or use their assets for personal gain unless explicitly permitted by the document.
• Keep detailed records: You must track every transaction, receipt and decision made using the POA.

Important limitations of a FPOA

Possessing a financial power of attorney isn't a full access pass to the principal's finances, nor does it give you the right to enrich yourself. Your fiduciary responsibilities require you to put their interests first.

Two glaring limitations to your authority are the inability to access Social Security or Medicare accounts. If you're charged with paying their healthcare expenses and they are enrolled in Medicare, you will need additional forms completed and filed to grant you the necessary authority.

Here are three important limitations you need to know:

1. Does not override the principal. As long as the principal is competent, their decisions can override those of you, the agent. The principal can also revoke the POA at any time.
2. Ends automatically at death: A financial POA loses all legal validity the moment the principal passes away. At that point, the executor named in a will or a court-appointed administrator takes over estate management.
3. Medical decisions are separate: A financial POA strictly covers property, money and legal matters. Health care decisions require a separate medical power of attorney (or healthcare proxy).

How to access Social Security and Medicare accounts

The rules are different when it comes to accessing Social Security or Medicare accounts. If you're responsible for paying for their healthcare, access to their Social Security account is critical. Even if there is a financial or health power of attorney or you share a bank account with a son or daughter, it's not enough.

The easiest way to designate someone as a representative payee is through direct electronic submission in your my Social Security account. Otherwise, you can start the process by calling the SSA at 1-800-772-1213 (TTY 1-800-325-0778 if you are hearing impaired) or visiting your local SSA office.

To access the Medicare account of your parent or loved one, you'll need the Medicare patient to execute an Appointment of a Representative (Form 1696) and Authorization to Disclose Personal Health Information (CMS-10106) (PDF). You can complete and submit the form online, or print a PDF copy and send the completed form to: 1-800-MEDICARE Written Authorization Dept. PO Box 1270, Lawrence, KS 66044.

For more detailed information about how these appointments work, read: Secure Your Social Security: The Essential Role of a Representative Payee and How to Access Your Parents’ Medicare: Enroll and Manage Their Care.

Common administrative and financial hurdles

While serving as a financial agent under a POA is a significant responsibility, agents often face administrative, legal and interpersonal hurdles when trying to carry out their duties.

"Many financial institutions have their own review processes for powers of attorney, and some may even require additional paperwork before letting you take any action. Even when a POA is legally valid, banks, brokerages, and other financial firms often want to verify the document to confirm it meets their internal requirements," Zack explained.

Below are examples of the resistance you might meet and where.

Best practices to minimize friction

Even with a legally valid power of attorney in hand, navigating banks, family dynamics and record-keeping can present unexpected challenges.

"Whenever possible, it makes sense to have those conversations in advance. Many institutions will review or note a power of attorney before it’s needed, and addressing questions ahead of time can reduce friction during an emergency," Zack told Kiplinger. She emphasized that "estate planning shouldn't be a 'set it and forget it' exercise. One of the most important parts of planning is making sure the documents you have will actually work when you need them."

You can head off most of these problems before they start by following a few essential best practices:

• Preclear documents: Work with the principal’s primary banks and investment institutions to submit and approve the POA document before an emergency occurs.
• Keep strict separation: Maintain completely separate bank accounts for the principal, and keep detailed records, receipts and logs for every transaction.
• Communicate transparently: Provide regular financial updates or accounting summaries to immediate family members or co-beneficiaries to prevent suspicion and resolve misunderstandings early.

Financial power of attorney is a worthwhile duty

When an aging parent or relative grants you financial power of attorney, they're placing immense trust in your ability to manage their life's savings, pay their bills and protect their assets. However, many new financial agents are caught off guard by the bureaucratic roadblocks, strict fiduciary standards and unexpected conflicts that arise once they begin acting on the principal's behalf.

Understanding your legal authority — and where agency rules such as Social Security's Representative Payee system take over — is key to managing their finances smoothly and protecting yourself from personal liability.

Related Content

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• Secure Your Social Security: The Essential Role of a Representative Payee
• Filing a Deceased Person's Final Income Tax Return
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• What to Do When You're the Executor of an Estate