Picture a family sitting around the table for Thanksgiving dinner. They chat, laugh and enjoy the thoughtfully prepared meal. As they finish, the conversation shifts to what each family member is thankful for. They talk about gratitude in the context of family values and decide which charities to support during the holiday season.

Conversations like this can engage children in charitable giving early on. And while every family's discussion will be different, taking this kind of intentional approach is an essential first step in building and maintaining a lasting charitable legacy.

This is a hot topic for many families. After a decade of buildup, most agree that the Great Wealth Transfer is underway. According to Cerulli Associates, $124 trillion will be transferred by 2048. Most of that will come from baby boomers, and an estimated $18 trillion is expected to go to charitable causes.

Those who want to use the Great Wealth Transfer to build a meaningful legacy will need to focus on two distinct priorities. The first is effectively navigating tax provisions and making the right decisions around asset transfers — an elemental part of financial planning that requires constant vigilance.

The second is building an efficient succession plan that empowers heirs and future generations to carry the legacy forward.

Passing on assets, values and processes

Younger generations stand to inherit more than money. The biggest hope might be that they inherit some of the values and priorities that helped shape how their elders gave. But they often inherit the family process for charitable giving.

For families with a private foundation, this could mean board meetings, administrative responsibilities and managing considerable overheads. These systems may have worked for older generations, but they can feel confusing and burdensome to successors.

To make matters more complicated, many families will experience multiple inheritances as money passes from one generation to another. Married couples may leave money to their spouse as well as their children, for example. In fact, research suggests that $54 trillion will be passed on to widowed spouses as part of the Great Wealth Transfer.

Older spouses must therefore discuss their priorities and plans for how money will pass down. They can then begin talks with the next generation — and advisers — about how to make the process of charitable giving as effective and impactful as possible.

Using a flexible giving vehicle

When considering different approaches to transferring wealth, look for those that offer flexibility. Some families want to empower future generations while retaining some control, for example. A donor-advised fund (DAF) can be a useful tool for this kind of cross-generational giving.

A DAF offers a powerful framework for streamlining and managing elements of inheritance and sustained charitable giving. Specifically, a DAF's structure allows families to combine two common tactics in charitable succession planning: Bestowing to others and endowing to charity.

Bestowing to others enables future generations to assume account privileges and begin making strategic philanthropic decisions. With a Vanguard Charitable DAF, for example, up to two individuals (often a spouse or a child) can be named successor advisors.

The account can then be split into multiple new accounts, allowing families to segment funds and responsibilities how they see fit.

Endowing directly to charity, on the other hand, allows older generations to retain decisions about giving, even after they pass or no longer control the account. You can do this by recommending recurring grants from the DAF. These schedule repeating grants to one or more charities based on a percentage of remaining account assets.

Another benefit of a DAF is that it can accept assets from a private foundation. This simplifies administration, which can relieve many of the burdens inheritors may resist. It also establishes a clear structure for balancing giving priorities by bestowing to others and endowing to charity.

How to navigate family dynamics

With the right plan and giving tools in place, successions and inheritances become an opportunity to pass down one's priorities and lessons alongside wealth. But what happens when families don't agree on values and struggle to create a meaningful path forward?

There is no one-size-fits-all solution, as every family has its own dynamics to navigate. However, there are some best practices to keep in mind.

Clearly communicate expectations. There should be few surprises when an inheritance occurs. Through conversations and estate planning, make sure expectations, roles and wishes for future generations are well established and understood.

Incorporate responsibilities in stages. Just as a child's introduction to finances is traditionally an allowance, then a checking account, then perhaps a credit card, charitable giving and grantmaking can be taught in incremental steps. This can include opening a smaller DAF or another charitable vehicle to help younger generations better understand the process.

Create opportunities for conversation. Charitable giving is a significant and rewarding part of life for many individuals and families. Making time for conversations around philanthropic priorities and how they may evolve over time is critical.

No two families are alike. Those Thanksgiving and dinner table talks will vary. But creating a plan with the right tools and communicating that plan with younger generations — is a powerful way to create and maintain an impactful charitable legacy.

Related Content

• Great Wealth Transfer: How Families Can Get on the Same Page
• Why Wills and Trusts Aren't Enough in the Great Wealth Transfer, From an Attorney Who Knows
• High Earners Want to Give Money and Communities Need It: Impact-First Investing Can Bridge the Gap
• Giving Gamechanger: Why Now's the Time to Use a Donor-Advised Fund
• Donating Complex Assets Doesn't Have to Be Complicated

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 feel like we'll never actually retire."

"We make good money. But what retirement? It keeps moving further away."

"I don't want to abandon my kids. But I also don't want to work until I'm 67 to make sure they're OK."

These aren't quotes from struggling households. They're what I hear regularly from Gen X professionals, dual-income earners in their late 40s and early 50s with real portfolios and real incomes.

They're high earners with strong intentions — and a quiet but growing line item that almost none of them budgeted for: The Bank of Mom and Dad.

Picture this household: Both spouses are 49 with a combined income of $400,000 and an investment portfolio of $1.5 million. They want to retire at 60 to live on $175,000 a year in retirement, but feel as if they've finally earned the life they've been building.

Yet, $50,000 a year is quietly flowing out of that household to support two adult children, $25,000 each.

• One is 22, in her final year of college and living on campus but relying on her parents for tuition, a car, insurance and everyday expenses.
• The other is 27, recently engaged, living at home, needing help with a wedding and, eventually, a home down payment.

Neither child is a failure. Both parents are generous. But without a plan, that $50,000 is on its way to $70,000. In the 11 years before this couple wants to retire, that unstructured support will cost them far more than money.

People in these circumstances feel behind because they are. It's not because they failed, but because no one helped them plan for this.

The situation is fixable, but only if it changes before the window closes.

The Gen X retirement squeeze is real and getting worse

Research by the Alliance Retirement Income Institute found that Gen X is the least financially prepared generation for retirement by nearly every measure. While Baby Boomers dominate the headlines, Generation X faces an even greater retirement crisis.

In 2025, the eldest Gen Xers entered their 60s, with multiple studies highlighting their lack of retirement preparedness, compounded by their status as a sandwich generation simultaneously caring for aging parents and supporting young adult children.

Meanwhile, roughly one in three adults ages 18 to 34 in the U.S. live with a parent, according to 2025 Census data, up slightly from the year before. A growing share aren't just living at home; they're financially dependent, sometimes deeply so.

For the theoretical household described above, the $50,000 in annual support isn't the only problem. It's what that number becomes. If support continues growing with life events, the wedding, the down payment, extended college costs, ongoing lifestyle needs, that figure reaches $70,000 per year with no defined exit point.

Over the 11 years before their target retirement at 60, unchecked support will have redirected hundreds of thousands of dollars that could have been compounding in retirement accounts, brokerage investments, and tax-advantaged savings.

That's not a small gap. That's a retirement.

One question before we run the numbers

I want to start where I start with every client, with a question I've asked clients for years: "Are you content with the financial and emotional investments you have placed into your adult children thus far?"

If the answer is yes, that doesn't mean you continue indefinitely. It gives you permission to transition from guilt to intention, moving from reactive support to aligned support.

If the answer is no, that doesn't mean you've failed. It means you have clarity.

This question is the foundation of my work on boomerang parenting and what it costs Gen X families, and I've explored it in depth in my Bank of Mom and Dad planning guide.

What I've found across thousands of conversations is that most parents aren't irresponsible. They're unresolved. They haven't yet asked the question that turns support from a reflex into a plan.

What the numbers show

To fund $175,000 annually in retirement, using a 4% withdrawal rate as a planning baseline, this couple need about $4.375 million at age 60. They have $1.5 million today. That leaves a gap of roughly $2.875 million to build in 11 years, achievable with disciplined savings and compounding, but only if their dollars are pointed in the right direction.

Currently, $50,000 per year is flowing to adult children. If the 22-year-old transitions to financial independence after graduation but the 27-year-old's needs continue to grow through wedding costs, a down payment, ongoing lifestyle support after marriage, that figure reaches $70,000 or more per year with no defined end.

Ameriprise Financial found that working parents contribute 2.3 times more to their adult children than to their own retirement accounts each month. For this household, that ratio is quietly becoming true.

Just as the structure of an adviser's fee can quietly compound against retirement outcomes over time, so can unstructured household outflows. The Bank of Mom and Dad is one of the largest untracked line items in a Gen X financial plan.

The compounding cost of that drift is measurable. Here's the planning illustration:

That $510,000 to $625,000 difference is not a rounding error. It's the gap between retiring at 60 and working until 63 or 64. It is the gap between retiring with confidence and retiring with the same anxiety that followed this household through its peak earning years.

"We don't want to abandon them. We just don't know how to stop."

That's a conversation worth having before the numbers get worse.

The catch-up window: Use it or lose it

What makes the next decade specifically critical for this Gen X household is that the tax code is actively rewarding people in their situation, if they act.

For 2026, participants in most 401(k), 403(b), governmental 457 plans and the federal government's Thrift Savings Plan who are 50 and older can generally contribute up to $32,500 each year. That's a $24,500 base contribution plus an $8,000 catch-up for those 50 and older.

The SECURE 2.0 Act introduced super catch-up contributions for those ages 60 to 63. For 2026, the super catch-up limit is $11,250, higher than the standard $8,000 catch-up available to those 50 and older, and designed to help those closest to retirement maximize their savings in the final stretch.

For a dual-income household, this is significant. If both spouses contribute maximally in their 50s and into their early 60s, the combined annual contribution capacity in employer-sponsored plans alone exceeds $65,000 per year, before IRA contributions and brokerage investments.

One note for high earners: Starting in 2026, if you earned more than $150,000 in FICA wages in the prior year, catch-up contributions in employer-sponsored plans must be made on a Roth after-tax, basis.

For a $400,000 dual-income household, this almost certainly applies. This isn't a penalty. Roth contributions build tax-free retirement wealth, but it requires coordination with your plan and your adviser.

Every dollar redirected from unstructured adult-child support into catch-up contributions is a dollar that compounds tax-advantaged for 10 or more years and avoids taxation in retirement. For high earners in peak earning years, this is one of the most direct financial moves available.

The five-step plan for Gen X parents running the bank

Step 1: Get aligned with your spouse or partner first.

Before any conversation with your adult children, get aligned emotionally and financially with each other. Conflicting messages, one parent holding firm while the other quietly supplements, destroy planning integrity and create resentment in both directions.

This alignment conversation covers three questions:

• How much can we afford annually without compromising our retirement security?
• What are we willing to support?
• What's the exit strategy?

Unity is not about being harsh. It's about being honest with each other before you can be honest with your children.

Step 2: Audit the real numbers.

Many parents are genuinely surprised when they total what they're spending on adult children annually. Housing, food, cellphone plans, car insurance, credit card transfers, tuition extensions, medical costs and emergency payments that recur like clockwork all add up to a real line item. For this example household, $50,000 is only the beginning of an honest audit.

Compare that number with current retirement contribution rates, brokerage account contributions, debt-reduction acceleration and lifestyle goals that have been postponed. Seeing trade-offs clearly, in actual dollars, removes guilt and restores agency.

Step 3: Distinguish between support types and set a timeline.

Not all support is equal. A 22-year-old in her final year of college has a clear exit point. A 27-year-old recently engaged and still living at home, needing wedding funds and a down payment, represents a much longer and more open-ended financial commitment if left unstructured.

Ask explicitly: Is this support a bridge or a baseline?

• Time-limited essentials cover final semester costs, a specific medical event or a relocation deposit. These have natural endpoints. Fund them clearly and close the chapter.
• Intra-life transfers are intentional gifts toward wealth-building milestones such as a home down payment or an emergency fund. These can be profoundly impactful and might carry more meaning than a post-death inheritance. They should be deliberate, budgeted and non-recurring.
• Lifestyle subsidies include ongoing rent, car payments, credit card transfers and recurring lifestyle support. These are the most consequential category because they rarely have a defined exit and tend to grow, not shrink, over time.

For the 27-year-old in this household, a one-time, clearly bounded contribution toward a wedding or down payment with a specific ceiling is fundamentally different from continuing open-ended household support into the couple's first years of marriage. Define it now, before the number drifts.

Step 4: Redirect with intention.

If this household redirects $20,000 annually of unstructured support into retirement and after-tax accounts, starting in year three when the 22-year-old finishes college and becomes self-supporting, the compounding difference in the following eight years is substantial.

If both spouses max out 401(k) contributions including catch-up provisions starting at age 50, the annual retirement contribution capacity climbs well above $60,000 per year, enough to put the $4.375 million retirement target within reach.

An after-tax brokerage account deserves focused attention. Unlike retirement accounts, brokerage accounts provide liquidity before age 59½, flexible withdrawal options and the ability to fund retirement expenses from ages 60 to 72 before required minimum distributions begin. For a household targeting retirement at 60, this account isn't optional; it's essential.

Step 5: Have a compassionate, adult conversation.

The financial plan is only as effective as the conversation that introduces it.

With the 22-year-old, the conversation is relatively direct: There is a clear graduation date, and with graduation comes a transition to financial independence. You're there for genuine emergencies, a health crisis or an unexpected job loss, not ongoing lifestyle support. This is not rejection; it's the clearest expression of belief in her capability.

With the 27-year-old, the conversation requires more care. He's newly engaged, wants to build a life, and has been living inside the support structure of his parents' home. Be clear about what you can offer — perhaps a defined contribution toward a wedding or down payment with a specific amount and a specific end date — and equally clear that ongoing housing and lifestyle support has a sunset.

Frame it as preparation, not withdrawal. The boundaries you set today protect both your retirement and his long-term resilience.

Support without structure breeds resentment. Structure without compassion breeds distance. The goal is neither.

What intra-life transfers can do that inheritances can't

The most meaningful financial gifts you can give your adult children might be the ones you give while they're in their 20s and 30s, when a down payment helps them build equity for 30 years, or when early retirement account seeding gives compound growth decades to run.

In my experience, both parents and their adult children often say the same thing when this comes up: They would rather the money have meaning now, when it can change the trajectory of a young family's life, than arrive later as part of an estate settlement.

The key is intentionality. An intra-life transfer that is bounded, purposeful and budgeted into your financial plan is fundamentally different from ongoing support that grows without definition or consent.

For the 27-year-old preparing to buy a home, a structured gift of $20,000 to $25,000 toward a down payment, planned, finite and clearly communicated, might do more lifetime good than a far larger sum left in an estate. It also carries more meaning to both the giver and the receiver when it's given with intention rather than obligation.

Aligned generosity and aligned retirement savings are not in conflict. Your financial decisions should reflect how you actually want to live, not just how you feel in the moment.

Related Content

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• The Real Cost of Funding Adult Children: Postponing Retirement
• Before You Give Money To Your Kids, Ask Yourself These 3 Questions
• High-Income But Low Confidence? This 5-Point Plan From a Financial Planner Can Fix That
• Why Flat Fees for Financial Advice Work When They're Tied to Value Rather Than Portfolio Growth

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.

When our children were little, we taught them how to cross the street, brush their teeth and say "please" and "thank you." Many people started the kids doing chores and earning an allowance. We understood that those conversations were part of raising responsible adults.

Then they turned 18.

Somewhere along the way, many parents assumed that talking about money should stop because their children were now adults. Nothing could be further from the truth.

In fact, adulthood is when the most important financial conversations begin.

The American Dream has changed

Today's young adults are navigating a financial landscape unlike any previous generation. Student loan debt, soaring housing costs, rising insurance premiums, inflation, volatile markets and an uncertain job market have changed the traditional path to financial independence.

Many are delaying marriage, homeownership and having children — not because they lack ambition, but because the economics are dramatically different.

What does this all mean? Almost 80% of baby boomers own homes vs only 26% of Generation Zers being able to or choosing that path of homeownership.

And baby boomers are trying to ease their kids' pain (and perhaps creating more pain for themselves) — about 50% of these parents are helping to offset money pressures for their adult children.

Things aren't rosy for any generation

Meanwhile, older parents are facing their own financial realities. Many are working longer than expected, caring for aging parents while helping adult children and worrying whether their retirement savings will last 30 years or more.

In fact, among Americans 65 and older, about one in five is still in the labor force. And many more have odd jobs or are gig workers.

That creates a generation caught in the middle — and a lot of silence.

Silence is not golden

Silence is expensive.

I elevated the topic of teaching kids about money in the 1980s. I have taught families the lessons of finance for decades, and one truth remains constant: Families who talk openly about finances make better decisions together. Those who avoid the subject often create misunderstandings, unrealistic expectations and emotional landmines.

The goal isn't to lecture your adult children. It's to have a conversation between equals.

Start with your own story

Many parents hide financial struggles because they want to protect their children. Others hide financial success because they don't want to create entitlement. Others carry the baggage from when they grew up that the biggest secrets in the household related to money issues.

None of these approaches helps. Adult children benefit from understanding how their parents made financial decisions, overcame setbacks and learned from mistakes.

Tell your offspring about the first house you couldn't afford. The investment that didn't work. The credit card debt you finally paid off. The promotion that changed everything. How you had to take your Social Security early to make ends meet later in life.

Money stories teach lessons that spreadsheets never can.

Be honest about your retirement

One of the biggest misconceptions adult children have is assuming Mom and Dad will always be financially available. They may quietly assume you'll help with a home down payment, pay for grandchildren's education or leave a substantial inheritance.

Those assumptions can create disappointment —or, worse, poor financial decisions — based on deceit.

A healthier conversation sounds like this: "We've worked hard to secure our retirement because we don't ever want to become a financial burden to you."

That's one of the greatest gifts parents can give.

If you plan to help your children financially, explain what that help looks like. Is it a loan? A gift? A one-time opportunity?

What are the expectations? Clarity prevents conflict.

Discuss inheritance before it's necessary

No family enjoys talking about death. But avoiding estate conversations doesn't protect anyone.

Adult children should know:

• Where important documents are located
• Who has financial and healthcare powers of attorney
• Whether there is a will or trust
• Who the executors are
• The family's overall wishes — not necessarily for every dollar, but the overall plan

Surprises after a death rarely strengthen families. Money issues and unclear expectations can tear a family apart. Do you really want that to be your legacy?

Set boundaries without guilt

Many parents continue financially rescuing adult children well into their 30s and 40s. Sometimes that help is appropriate. Sometimes it delays independence.

Before doling out the next pot of money, ask yourself: "Am I solving a temporary problem or creating a permanent dependency?"

Financial assistance should come with conversations, not conditions. Explain why you're helping, how often you're willing to help and what success looks like. Healthy boundaries strengthen relationships.

Respect your kids' financial choices

Your adult children grew up in a different economy. They may prioritize experiences over possessions, rent instead of buy or work remotely instead of climbing a traditional corporate ladder. That doesn't mean they are being financially irresponsible.

Instead of criticizing, ask questions:

• "What made you choose that?"
• "How does that fit into your long-term goals?"

Curiosity builds trust. Judgment shuts conversations down.

The best financial conversations happen long before anyone needs money. Don't wait until there's a medical emergency, job loss, divorce or estate settlement.

Instead, create a family tradition. Have a semiannual "money dinner," where you:

• Review major life changes
• Discuss family goals
• Celebrate financial wins
• Update important documents

Make money as normal to discuss as your vacation plans.

The greatest inheritance

Many parents focus on leaving wealth. I believe our greatest inheritance is wisdom. Money can be spent. But values compound.

If your children inherit confidence, sound judgment, healthy financial habits and the ability to have honest conversations about money, you've already given them something priceless.

The question isn't whether your family should talk about money.

It's whether you'll begin the conversation before life forces you to. Because the families who talk together today are often the families who stay together tomorrow.

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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.

As the saying goes, "You're only as happy as your least-happy child." Any parent or grandparent knows how true that feels.

We may spend a lifetime building financial security, saving for retirement, buying insurance and drafting detailed estate plans. Some families even create spreadsheets spelling out who gets the wedding ring, the family home, the brokerage account, the antique table or the emerald earrings.

All of that planning matters.

But deep down, we do not simply want our children to inherit our assets. We want them to be happy, capable and grounded. That desire is not just emotional — it is deeply human. We are wired not merely to pass on our DNA, but to protect, nurture and help our children thrive.

That is why the greatest legacy we leave may not be financial wealth. It may be what I call "wisdom wealth" — the judgment, values, self-knowledge and purpose that help the next generation use money well and live well.

Financial wealth is what you own. Wisdom wealth is what you have learned.

Financial wealth includes your home, portfolio, retirement accounts, business interests, insurance proceeds and personal property.

Wisdom wealth includes your values, judgment, resilience, faith, gratitude, mistakes, life lessons, decision-making habits and your understanding of what money is actually for.

One can be transferred with documents. The other must be transmitted through lived experience, conversations, examples and intention.

And that is where many families fall short.

The most ignored inheritance

The coming decades will bring one of the largest transfers of wealth in history. Much of that discussion focuses on dollars: Who will inherit, how much they will receive and how taxes can be minimized.

These are important planning questions, but they are not the whole story.

Many families are prepared to transfer assets, but not wisdom.

• Parents may leave behind a well-funded trust, but no explanation of the values that shaped it
• They may leave a brokerage account but never explain how they handled fear during market declines
• They may leave real estate, but never talk about the sacrifice, discipline and patience that made ownership possible

The result is that children may inherit the money without inheriting the mindset that created it. That gap can turn a generous inheritance into confusion, conflict or missed opportunity.

Here are five ways to transfer wisdom wealth while you are still living.

1. Turn family time into wisdom time

In the age of TikTok, Instagram and constant distraction, wisdom is rarely transferred through formal "sit-down talks." It is transferred in ordinary moments, a long walk, a family dinner, a car ride, a vacation, a holiday gathering or a conversation after everyone else has left the room.

One of the most practical things parents and grandparents can do is create recurring time with their adult children and grandchildren. This may mean a combination of weekly dinner, Sunday breakfast, a monthly family gathering or an annual vacation.

Occasions such as birthdays, anniversaries, graduations and promotions are valuable opportunities to get together and celebrate. The tradition matters more than the venue.

Longer trips can be especially powerful. When families travel together, they are removed from daily distractions. Conversations become deeper. Grandchildren see how grandparents make decisions, handle inconvenience, express gratitude, treat strangers and spend money. These experiences often teach more than any planned speech.

If you have the resources, helping pay for these gatherings can bring joy to the entire family and support the transfer of wisdom wealth.

2. Share the stories behind the money

Many children know what their parents own, but not what their parents endured. They may see the house, the portfolio, the business or the retirement account, but not the years of discipline, risk, sacrifice, delayed gratification, mistakes and recovery that created them.

Parents should share the stories behind the wealth. Talk about the first job, the bad investment, the business risk that failed or almost failed, the home you stretched to buy, and the market decline that tested your nerves. Share memories about the period when money was tight, the career decision that changed your life, the opportunity you missed, the mistake you would not repeat.

These stories are not self-promotion. They help the next generation understand that wealth is not magic. It is usually built through compounding, patience, work, judgment, resilience and sometimes luck.

Do not share only victories. Share failures, heartbreaks and the difficulty of accepting what you could not control. In many families, children inherit a sanitized and polished version of their parents' lives. But wisdom often comes from the real and unpolished chapters — the moments of fear, regret, humility and growth.

A child who understands how you stood back up after a mistake is far better prepared to stand back up after their own.

3. Create a family investment conversation

One practical way to transfer wisdom wealth is to involve children in real financial decisions early, long before they inherit significant assets.

Parents can help children fund investment accounts and discuss the difference between saving and investing. They can explain why diversification matters, review basic asset allocation and talk about how emotions affect decisions during market declines.

These investments can open the door to important life and money lessons. Why did the portfolio rise or fall? Why avoid panic selling? How do taxes and risk affect long-term returns? How do you balance enjoying life today with preparing for tomorrow? How much to save and how much to give?

The purpose is not to make children investment experts. It is to deepen relationships, enhance financial literacy and help them build a calm, informed relationship with money before they are responsible for larger sums.

4. Help them build real-life capability

Financial help can be generous, but it is most powerful when it builds capability.

Helping an adult child buy a first home can be more than a gift. It can become a lesson in budgeting, mortgage payments, property taxes, insurance, maintenance, neighborhood selection and the discipline of ownership.

Helping with education can include conversations about career choice, debt, income potential and purpose. Helping with a business idea can include discussion of risk, cash flow, customers, failure and persistence.

The key is to pair financial support with financial education and a deeper relationship. Instead of simply writing a check, explain the thinking behind the help. What is the purpose? What responsibility comes with it?

The goal is not dependency. The goal is capability, the confidence to make good decisions long after your help is no longer needed.

5. Explain how and why your beliefs and values have evolved

Most of us do not see the world at 60 the same way we saw it at 30. Our views about success, money, marriage, parenting, faith, health, ambition, status, generosity and happiness often change through experience, but many parents never explain that evolution to their children.

Tell them what you once believed and what life taught you.

• Maybe you once thought success meant income, but later realized it also required health and relationships
• Maybe you once chased status, but now value peace
• Maybe you once feared risk, but learned that some risks are necessary
• Or perhaps your faith, gratitude or sense of purpose has shifted or deepened through hardship

These conversations give children something more valuable than advice. They give them perspective.

Wisdom wealth is not the claim that parents have all the answers. It is the humility to say: "Here is what I learned. Here is where I was wrong. Here is what mattered more than I expected. Here is what I hope you discover earlier than I did."

The best legacy is more than money

A good estate plan can transfer assets efficiently. A good family legacy can transfer values, judgment and purpose. Both matter.

But if we leave our children money without wisdom, we may leave them resources without direction.

Financial wealth can change a child's balance sheet. Wisdom wealth can help guide them toward a joyful, meaningful life supported by financial security.

Your children may inherit your financial wealth. The deeper question is whether they will also inherit your wisdom wealth.

To learn more about legacy, personal transformation and other related topics, you can order my new book (out today!), The Wisdom and Wealth Solution.

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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.

Receiving an inheritance is emotional. Even when it comes from a place of love and generosity, it often arrives during one of the hardest seasons of life.

Once the initial emotions settle, many people suddenly find themselves responsible for decisions they've never had to make before.

I've seen inheritors make thoughtful, life-changing decisions, and I've also seen smart people unintentionally create avoidable issues simply because they moved too quickly or didn't have a plan.

That's especially important to keep in mind as an unprecedented amount of wealth changes hands in the coming years. It is estimated that $105 trillion is expected to flow to heirs through 2048.

The good news is you don't need to become a financial expert overnight.

Before you start spending, investing, gifting or paying off debt, there are a few things to consider.

1. Don't rush to make big decisions

A common mistake people make after inheriting money is responding to pressure to "do something." An inheritance can create emotional urgency. Suddenly, family members have opinions. Friends may offer advice, and even social media might start providing investment-related content.

It can feel like you're missing out on opportunities or like you're falling behind if you don't act quickly.

In reality, slowing down is often the smartest move. In fact, you may not have a choice. Settling an estate is a big task, and if assets are not held in a trust, they will likely go through probate, which can take months and sometimes even years.

Take this time to create a plan. Think through some of your short-term and long-term financial goals, whether that's paying down debt, saving for retirement or even taking a vacation.

If the money is sitting in cash, in a bank account or a brokerage account, I suggest temporarily putting it into a high-yield savings account or a money market fund while you process your options. Remember, you don't need an instant solution.

2. Understand what you actually inherited

Give yourself time to begin gathering important documents and account statements for the assets you inherited. Not all inherited assets should be looked at the same way.

For example, an inherited IRA comes with distribution rules and potential tax consequences, while a taxable brokerage account may receive a step-up in cost basis, which can significantly reduce capital gains taxes. Real estate may come with maintenance costs, property taxes, and/or tenants and rental agreements.

Before making withdrawals or liquidating investments, it's important to understand the type of account, how it's titled and what rules apply. A single uninformed decision can create a large surprise tax bill.

3. Avoid treating the inheritance like "found" money

Psychologically, inherited money often feels different from earned money. People tend to spend inheritance funds more freely because they don't associate the money with years of work or sacrifice.

This behavioral bias is called "mental accounting," where people treat money differently depending on where it came from, even though it should be treated the same.

In fact, a study from ThinkAdvisor (paywall) shows that 42% of inheritors spend their inheritance within a year. That kind of behavior can quietly derail long-term goals.

This doesn't mean you shouldn't enjoy any of the inheritance. In many cases, using a portion for meaningful experiences or family memories can be fulfilling, but treating the entire inheritance like found money can lead to lifestyle creep that is difficult to sustain in the long run.

4. Lean on a trusted advisory team

Even knowledgeable inheritors may sometimes feel overwhelmed when dealing with money left to them, because the decisions can be complex. Questions around how certain assets pass, distribution rules around certain types of accounts, property transfers and tax strategies can quickly become more nuanced than people expect.

This is where having a strong advisory team can help make a meaningful difference. That team may include a financial adviser, CPA, estate planning attorney and even an insurance broker or agent.

Having experienced professionals by your side can help you avoid preventable mistakes and identify opportunities you may not know exist.

A good advisory team should help you slow down and think clearly. You don't have to navigate every financial, legal and emotional decision alone.

5. Create a legacy, one step at a time

This journey is personal and often overwhelming. The financial steps you take now can help bring peace and stability for the years to come, and create a legacy that honors your loved one.

You don't need to figure it all out in one day, but having a plan and the right team beside you can make all the difference.

Related Content

• Manage an Inheritance Like a Pro in Just Seven Steps
• Suddenly Inherited Money? The Critical Steps You Need to Take First
• Inherited Money or Property? What You Need to Know Before Filing Your Taxes
• What to Do After Losing Your Spouse: An Expert Guide
• Getting an Inheritance? Here Are 4 Things to Consider

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

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

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

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

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

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

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

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

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

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

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

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

Related stories

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

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

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

Who has legal and financial authority?

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

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

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

Do beneficiaries match intent?

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

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

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

How is property actually owned?

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

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

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

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

Are insurance and liquidity aligned with risk?

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

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

Does the estate plan reflect the family?

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

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

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

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

Turning intent into protection

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

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

Planning for the life you're already living

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

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

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• Protect Your Family's Future: Avoid These 12 Common Estate Planning Mistakes
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• An Estate Planning Attorney's Guide to the Importance of POAs
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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.

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

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

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

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

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

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

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

1. Protecting the surviving spouse

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

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

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

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

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

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

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

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

2. Protecting non-spouses

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

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

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

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

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

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

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

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

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

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

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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.

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

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

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

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

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

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

Three things business owners aren't considering

The same three blind spots come up again and again:

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

Why the math gets worse as the business grows

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

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

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

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

What early planning looks like

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

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

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

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

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

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

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

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

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

Four things to do now

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

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

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

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

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

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

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

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

The ones who wait? They pay for it.

Related Content

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

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

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

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

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

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

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

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

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

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

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

What wasn't going to work

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

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

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

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

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

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

Dodging issues postpones the inevitable

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

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

There are several obvious problems:

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

Avoiding procrastination

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

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

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

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

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

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

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

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

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

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

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

Don't wait to figure it out later.

Related Content

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

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

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

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

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

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

When big balances become a different kind of asset

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

On paper, that feels like a win.

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

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

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

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

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

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

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

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

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

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

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

The part most people miss: What happens to the kids

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

That changed with the SECURE Act.

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

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

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

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

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

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

The irony: You might not even need the account

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

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

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

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

A better way to think about it

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

The issue is concentration.

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

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

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

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

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

The window to fix it

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

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

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

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

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

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

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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.

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

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

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

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

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

Make sure you're financially secure first

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

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

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

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

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

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

What to know about tax rates

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

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

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

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

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

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

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

What's the gift's purpose?

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

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

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

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

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

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

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

Not quite.

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

Let's walk through why.

The problem: Tax-deferred accounts come with a bill

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

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

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

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

When a trust becomes the beneficiary

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

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

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

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

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

The real risk: Losing a chunk of the legacy

Let's look at a hypothetical example.

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

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

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

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

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

Why this happens so often

This mistake is rarely intentional.

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

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

Both are done correctly — individually.

But without coordination, the result can be suboptimal.

A better way to think about it

Not all assets are created equal.

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

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

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

Smarter strategies to consider

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

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

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

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

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

2. Leave tax-deferred accounts to other beneficiaries.

If you have multiple heirs, you might choose to:

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

This can help improve overall tax efficiency across the family.

3. Consider Roth conversions during your lifetime.

Strategic Roth conversions can:

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

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

4. Coordinate your estate plan and beneficiary designations.

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

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

The goal: Protection without unintended consequences

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

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

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

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

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

That single question can help you avoid a costly mistake.

Final thoughts

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

You're not just managing money.

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

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

That's the outcome that matters most.

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

Related Content

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

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

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

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

What is a QDOT, or Qualified Domestic Trust?

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

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

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

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

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

Why gift and estate planning is different with a noncitizen spouse

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

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

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

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

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

How a QDOT helps the noncitizen spouse

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

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

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

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

The citizenship "escape hatch"

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

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

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

The rules and requirements of a successful QDOT

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

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

Structural, administrative and distribution rules:

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

Enhanced security measures (The $2M rule):

Preserving your legacy and protecting your family

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

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

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Lately, I've been getting a lot of news releases about what's being called the Great Wealth Transfer — upwards of $124 trillion that could change hands between generations over the next 10 to 20 years. And much of that inheritance will likely end up in the hands of women — wives, daughters, siblings, granddaughters — if for no other reason than women tend to outlive men.

But before you count on that cash, a word of caution is in order. "I have been hearing about a generational windfall for the last 30 years, and I haven't seen it materialize," says Alexandra Armstrong, a certified financial planner and author of On Your Own: A Widow's Guide to Emotional and Financial Well-Being. She has worked with clients who counted on inheriting from their parents, only to find that "their parents didn't die anytime soon, and there wasn't that much left anyway."

"What gives me pause is the combination of longer life spans and the cost of medical care," says Elizabeth Zelinka Parsons, a lawyer and author of Encore: A High Achiever's Guide to Thriving in Retirement. "I certainly would not suggest that clients build an inheritance into their financial plan."

At the other end of the spectrum, "30% of people who inherit money have basically spent their inheritance within a year," says Natalie Colley, partner and senior lead adviser at Francis Financial in New York City. "For people over age 50, that jumps to 40%."

One problem, she says, is that people often receive an inheritance at "possibly the worst time of their lives." Not only are you likely to be grieving the loss of a family member, but you might also have feelings of guilt or resentment and be faced with managing your new financial situation. "Avoidance is a common reaction," says Colley.

On top of that, navigating the legalities of taking possession of an inheritance can be daunting. "Even people who are savvy with financial matters have trouble with this," says Parsons. "Inheriting is a lot of work."

Where to start

To make the process as smooth as possible, Parsons gives her clients a road map. For the first 30 days, she says, "just catch your breath" and use that time to get all of your documents in order. For example, you would need copies of any will, trust, or estate plan that exists, as well as account statements for all assets, plus any insurance policies, loan documents and real estate deeds. And get at least six copies of the death certificate.

You need to come up with an inventory of everything you have received and the value of those assets, which will determine whether the estate or trust has a tax liability. Your lawyer should be able to help you, and you also might want to consult a certified public accountant or other tax professional or a financial adviser. If you have a clear picture of your inheritance after 60 days, "you're in good shape," says Parsons.

One issue you might face is getting access to certain assets. For example, if your husband had a bank account in his name, with no joint ownership or pay-on-death provision, you might need a court order to access it.

Depending on what you've inherited, you may also be responsible for certain ongoing activities. With real estate, for instance, you may have to make mortgage or tax payments or create a maintenance checklist.

Any planning you can do in advance — say, between two spouses or between parents and adult children—can make the whole process go more smoothly. "Sit down once or twice a year with your spouse to go over your accounts and how to get into them," says Parsons. "Become as literate as you can before there's a compelling need."

Janet Bodnar is editor at large of Kiplinger Personal Finance. Contact her at janet.bodnar@futurenet.com

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.

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

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

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

Market volatility

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

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

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

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

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

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

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

How an all-asset plan already reduces investment risk

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

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

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

Steps to manage the investment risk

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

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

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

How much risk is left?

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

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

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

Managing risks through plan adjustments

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

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

What we do is look at two time frames:

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

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

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

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

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

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

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

About the recent news regarding inflation

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

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

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

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

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

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

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

Why now?

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

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

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

The other articles in this series

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

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

The Great Wealth Transfer is estimated to comprise $124 trillion in assets by 2048, according to the CFA Institute.

Now that we are over halfway there, we can see how differently the new wave of ultra-high-net-worth (UHNW) Millennials approaches investing, saving and overall values around wealth compared to previous generations.

Baby Boomers, for example, have been known to value legacy, privacy and long-term stewardship. As a result, their wealth plans have been rooted in building wealth through hard work and typically lean towards structured estate planning and cautious investments.

In contrast, recent spending habits among UHNW Millennials indicate a shift toward values such as personalization, flexibility and personal expression. They prefer flexible options, such as access to subscription-based luxury items, bespoke travel experiences and even tailored investment strategies.

When it comes to financial planning, there's a growing preference for customization rather than a one-size-fits-all approach.

For this generation, wealth is increasingly seen as a matter of curation rather than mere accumulation. And this departure from the philosophy of previous generations raises a new question: How is legacy being recontextualized, and how can these two groups work together to bridge their differences?

Bridging values

Values are shaped by lived experiences, both social and personal, and it's only natural that they differ across generations. The world that built the wealth of many first-generation creators is no longer the same one their children or grandchildren inherit.

For wealth to endure, it must evolve, and that evolution depends on adaptability and cooperation.

Today's wealth holders came of age during periods of economic volatility when preservation and self-reliance were paramount. Even for those not directly affected by hardship, their values were rooted in preparation: Work hard, save diligently and build a cushion for uncertain times.

In contrast, Millennials have come of age in an era of exponential change. Shaped by social media and globalization, they prioritize authenticity, purpose and social impact. They want to make their mark on the world, not just maintain what's been built.

Bridging these differing value systems requires one critical skill from financial advisers: Relationship management. Advisers can encourage wealth creators to use storytelling — sharing how their wealth was built, the challenges they faced and the lessons learned — to help younger generations appreciate both the responsibility and the privilege of it.

Equally important, advisers should invest time in understanding what the rising generation values most and guide them on ways to integrate those priorities into their financial strategies. It may take years for ideas to become investments, but every conversation starts the process.

Ultimately, it's the adviser's role to facilitate these exchanges, helping both generations articulate what matters, find common ground, and ensure no one is "missing each other" along the way.

Managing each generation as a collective

The current playbook has been shaped around the preferences of a generation focused on preservation, privacy and long-term control. But for younger UHNW clients, wealth isn't just something to grow, it's something to shape.

They're looking for strategies that reflect who they are and what they care about, not just what they have inherited.

This shift in mindset can be challenging to navigate, but it's also an opportunity for advisers to connect with and guide a new generation. When families and advisers make space for evolving priorities, they're not just preserving wealth — they're creating a legacy that actually resonates.

What does this mean for family offices tasked with guiding evolving wealth conversations?

Family offices will need to work to bridge generational gaps by helping families align on values.

This means creating space for changing priorities and designing strategies that reflect what wealth means to each generation, not just what it has meant historically.

A few ways to support this shift:

• Invite younger clients into planning conversations. The earlier they can be involved, the more they understand the process and shape the legacy they are a part of.
• Start with values. Ask the younger generation: What does legacy look like to them and why?
• Offer flexible planning tools that allow for evolution over time. This way, everyone has the opportunity to express themselves and feel heard.
• Revisit strategies annually to ensure there is still alignment across all parties. Interests and priorities change, and an annual pulse check provides the opportunity to facilitate productive and meaningful conversations.

The role of customization in building generational continuity

When financial plans feel outdated, it's easy for people to check out. However, when the approach reflects who they are and how they live, it becomes something they want to preserve.

Customization can serve as a strategic bridge that keeps families engaged in their long-term plan. A prepared financial adviser will curate strategies and recommendations that meet the needs of both generations so that, when it comes time to pass on wealth, it feels like a continuation of shared intent — not something suddenly imposed.

This might be done by:

• Designing strategies that invest assets, transfer wealth, manage risk and maximize philanthropic impact
• Supporting UHNW families to deepen connectivity to institutional resources, financial analysts, industry leaders and like-minded peers

Together, these two factors can support a comprehensive and personalized plan that adapts as the family evolves.

But families are not one-dimensional, and neither are the challenges that come with preserving values and wealth across generations. Strategic planning alone cannot account for individual family members' lifestyle differences.

That can only be managed on a personal level, and Lifestyle Advisory by Morgan Stanley can be complementary in supporting each family member's individuality. (Note: I am a managing director at Morgan Stanley and serve as head of Family Office Resources Platform & Partner Management.)

Through a curated network of specialists, families can access guidance across leisure and experiences, health and wellness, home and security, and personal pursuits and enrichment, offering them a chance to bring the practical realities of daily life into the broader legacy conversation as they experience them.

Similarly, Morgan Stanley Trust Services provides families with highly customized, multigenerational wealth transfer strategies through a carefully selected platform of corporate trustees, coupled with investment management expertise and personalized service.

Corporate trustees are objective and professional in executing the wishes of the grantor and take family dynamics out of the equation when one family member is appointed to serve as trustee.

These tailored lifestyle solutions and trust services exemplify how Morgan Stanley integrates personal interests with sophisticated wealth planning to support families in every aspect of their legacy.

When individual interests and lifestyles are acknowledged, customization becomes less about complexity and more about inclusion. Customization might mean letting the next generation take ownership of one element of the wealth plan — such as philanthropy, alternatives or sustainability — or simply building in optionality across trusts, investments and giving strategies. The goal is to use customization as a tool for inclusion, not division.

Getting everyone on the same page requires more than good intentions. Both generations need to be part of the conversation early and often. That means creating room for honest discussions, not just making decisions after the fact.

Advisers can help families identify shared goals, capture points of overlap and return to them when differences inevitably arise to turn potential tension into continuity.

Related Content

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• Debunking the Myth of the Silver Spoon
• Why the Ultra-Rich Still Lose Sleep Over Money
• In Family Philanthropy, Embracing Differences Can Pay Off
• Investing in Fine Wine: Six Trends Affecting the Market

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

Editor's note: This is the third article in a five-part series about all-asset retirement planning that is covering such topics as using annuities and housing wealth, making the most of tax benefits and managing investment portfolio risk. Articles one and two are It's Time to Redefine Retirement for Retirees With $500,000 to $5 Million: Here's How and Unlock Housing Wealth and Tax Benefits by Adding Lifetime Annuities to Your Retirement Plan.

For most Baby Boomers, their home represents 50% of their net worth, yet retirement planning software and advisers virtually ignore this asset in designing retirement income plans.

A Federal Reserve study shows that the share of net worth in primary residences among households headed by people ages 60 to 69 rose from roughly 40% in 1989 to just over 50% by 2022.

For those age 70 to 79, the share climbed from about 38% to 50% over the same period. In the 15 million mass affluent households led by Boomers from age 60 to 75, the principal residence has an average home equity of $750,000, out of an average net worth of $1.75 million.

In this article, we explore the reasons housing wealth is ignored and why consideration of it can increase retirement income and liquid savings to cover large health-related and uncovered expenses.

Reasons housing wealth is not included in planning

Most retirement planning leaves out housing wealth and ignores the potential of that wealth to generate income or produce liquid savings. This is despite the fact that reverse mortgages, mostly home equity conversion mortgages (HECMs), are heavily marketed.

Our research indicates that planning tools often treat HECMs simply as a "liability for loans made" rather than as a "dynamic liquidity asset" that grows over time. In fact, most planning systems treat a HECM and its growing line of credit essentially as a swap for selling the house to access that cash.

Some reasons for this planning limitation:

Possible objections to HECM. Common arguments include high closing costs and service fees, along with the fear of having the home taken because the loan eats up its value. Also, the "common wisdom" has often been "no mortgages in retirement."

Planning only for income. Income is essential, but full and robust retirement planning should also meet the objectives for liquidity and legacy. The Three L's — Lifetime Income, Legacy and Liquidity — address retiree objectives and should drive planning strategies and tactics.

Just like a business plan, if you prepare and decide first on the objectives of the Three L's, you will significantly improve your chances for a successful retirement.

Adviser licensing. Those advisers doing retirement planning for prospects or clients might be licensed to execute only a portion of a plan, from investments to lifetime annuities and finally to HECM.

They or their firms must form partnerships to implement a plan with all the product solutions that should be considered. That may require one or more large financial firms to create these partnerships or internal organizations that are multi-licensed.

Adviser training and available software. Advisers are often taught to think that housing wealth is a significant but relatively illiquid asset for retirees, which is true if selling the house or borrowing through a traditional home loan are the only approaches considered for accessing equity. Very few planning systems consider the HECM line of credit to provide liquidity.

I've read about these reverse mortgage objections from pundits and heard the same from friends, but as we are focused on providing the best retirement planning results, we had to do our own analysis.

Why housing wealth should be included in planning

Here are some reasons to include housing wealth in your retirement planning:

Addressing unmet needs. As I wrote in the previous article in this series, Unlock Housing Wealth and Tax Benefits by Adding Lifetime Annuities to Your Retirement Plan (link above), a HECM used with lifetime annuities can help mass affluent retirees secure additional lifetime income, tax advantages and liquid savings to cover late-in-life expenses beyond what their 401(k) or IRA savings alone could provide.

Events like long-term care or additional support for children and home renovation when aging in place are unpredictable, which is why an additional source of liquid savings, like a HECM, may be essential.

Cost of accessing liquid savings. There is significant savings in being able to access the value of the home without selling it. The average cost of selling a home is 10% to 15% of its sales price, not to mention the stress involved with moving.

In addition, if the house is sold at a gain, the tax cost can be another 10% to 20% — meaning that selling a house now worth $2 million to generate liquid savings might have a total cost of $250,000 or more.

Special HECM protection. HUD backs every HECM loan, ensuring that the borrower's family will not owe money at the passing of the borrower or eligible surviving spouse, even if the outstanding loan balance is more than the value of the house. HUD insurance covers any difference for the lender.

Consideration of historical results. Assumptions about HECM interest rates and projected housing values are often conservative and misunderstood, particularly if not considered as part of a full range of products.

We did our own study of the past 30 years of house prices and interest rates, available in my article Treat Home Equity Like Other Investments in Your Retirement Plan: Look at Its Track Record. You will see that the results were more positive than generally available projections.

One helpful development is that the National Association of Insurance and Financial Advisors (NAIFA) is building a curriculum that will look at this "most underutilized asset" to better understand how housing wealth fits into retirement planning conversations.

(Breaking news: We just received an invitation to a course on "Learn How to Incorporate Housing Wealth into Retirement Planning" from another organization. Do I spot a trend here?)

Retirement planning that builds in housing wealth

To design the all-asset planning method means thinking about housing wealth differently and aggregating all sources of savings — personal savings, rollover IRA savings and housing wealth — so they all work together during retirement.

Critical to that process is to design a plan with the Three L's guiding your options and using investment portfolios and lifetime annuities to manage taxes and risks. We'll cover those topics in the next two articles.

To start the process of making an informed decision about housing wealth, review one plan "with" and a second "without" that resource. Easier said than done since most planning systems are not enabled to do so.

One can also think of the "with" housing scenario as one suited for retirees who want to age in place (favored by at least 80% of retirees) and the "without" as selling your house to generate income or liquid savings and investment dollars.

The first step in the "with" plan is to access housing wealth through HomeEquity2Income, as described in my earlier mentioned article about unlocking housing wealth, by combining HECM with a qualifying longevity annuity contract (QLAC) to provide not only lifetime income, but also a source of liquidity to pay for unplanned expenses.

For the "without" scenario, we assume the house is held until sold at age 85 with the net proceeds invested as liquid savings along with other savings. A multitude of other scenarios are possible, which should be tested with the retirement planning tool.

Comparing 'with' and 'without' H2I plans

Below is a comparison of two retirement plans for our average retiree, a 67-year-old man with $1 million in each of the three savings sources. The analysis focuses on income, liquid savings and legacy savings.

What we learn from the comparison

The plan "with" H2I is able to support higher starting income ($117,000 vs $131,000) and a higher legacy at age 95 ($7.2 million vs $5.7 million) than the plan "without" H2I.

The primary sources of the "with" H2I advantage:

• HECM drawdowns from age 67 to age 84
• Avoidance of closing costs and taxes on the sale of the home

To be fair, this is a little-explored area and probably needs even more analysis.

Both plans do benefit from the inclusion of lifetime annuities and the reduction of longevity risk, as covered in the unlocking housing wealth article.

The "economic returns on investment" are consistent between the two plans, meaning that the method of aggregating and disaggregating housing wealth is more or less economically neutral.

To me, the advantages of at least considering your home's equity in retirement planning are clear. An asset that amounts to 50% of the savings built over a lifetime can benefit retirees and their families in the near future and in the long term.

Be on the lookout for the next two articles, which will cover tax efficiency and risk management of planning models.

Building a comprehensive retirement plan requires an understanding of what different products and approaches provide — as well as an understanding of how separate advisers on investments, lifetime annuities and HECM might guide you. We believe it's well worth it. To find out for yourselves, order a complimentary plan and let us introduce you to a qualified adviser.

Related Content

• An Expert Guide to How All-Assets Planning Offers a Better Retirement
• This HECM-QLAC Power Move Can Unlock Guaranteed Retirement Income
• For a Richer Retirement, Follow These Five Golden Rules
• Transform Your Retirement Plan With This Powerful Combo
• How Combining Your Home Equity and IRA Can Supercharge Your Retirement

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

When people think about estate planning, they often focus on wills and trusts. But one of the most important decisions about where your money goes after you die might not appear in those documents.

Beneficiary designations on retirement accounts, life insurance policies and annuities often override the instructions in your will or living trust.

Buried within those designations are two little-known terms that can dramatically change the outcome for your family: per stirpes and per capita.

Most families have never heard of them. But understanding the difference can determine whether your grandchildren receive an inheritance or are unintentionally left out.

Beneficiary designations matter more than you think

Assets such as IRAs, 401(k)s, 457 plans, life insurance and annuities pass directly to the named beneficiaries. These accounts don't follow the instructions in your will or trust unless the trust is specifically listed as the beneficiary.

That's where problems often begin.

Many people assume estate planning is simple: name primary beneficiaries, add a contingent beneficiary and move on. But the bigger question is: What happens if one of your beneficiaries dies before you?

The answer depends on whether the account is set up per capita or per stirpes.

Per capita vs per stirpes, in plain English

Per capita means "by head." If one beneficiary dies before you, that person's share is redistributed equally among the remaining living beneficiaries.

Per stirpes means "by branch." Instead of being redistributed, the deceased beneficiary's share passes down to their children (your grandchildren), divided equally among them.

The difference might sound technical, but the real-world impact can be significant.

A simple example

Imagine Jane inherits an IRA after her husband, John, passes away. She names their two children, a son and a daughter, as equal 50% beneficiaries. Each child has two children of their own.

Now suppose Jane later dies, and her daughter has already passed away.

• Per stirpes: The son receives his 50%. The daughter's 50% is split equally between her two children.
• Per capita: The son receives 100% of the IRA because he is the only surviving beneficiary. The daughter's children receive nothing.

For families who want assets to stay within each child's branch of the family, this distinction matters.

Don't assume your trust will control everything

A common misconception is that a living trust determines how all assets are distributed. In reality, beneficiary designations operate separately and take precedence over your will or trust.

That means even a carefully written estate plan can be unintentionally overridden by outdated or incomplete beneficiary forms.

It also means retirement accounts don't automatically follow your trust unless the trust is specifically named and the strategy has been coordinated with a professional.

One more complication: Custodian defaults

Another issue most people never consider is that financial institutions don't all use the same default rules.

Some custodians default to per capita. Others allow per stirpes only if you specifically request it. In some cases, the option might not be available.

If you don't know the default method on your accounts, you might be leaving a major family decision up to your provider.

Steps to take now

To avoid unintended outcomes, consider these actions:

• Review beneficiary designations on all retirement accounts, insurance policies and annuities
• Confirm whether each account is set up per stirpes or per capita
• Ask your custodian what the default distribution method is and whether per stirpes is available
• Make sure your beneficiary designations align with your overall estate plan
• Revisit designations after major life events such as deaths, marriages, divorces or the birth of grandchildren

The bottom line

Estate planning isn't just about documents. In many cases, the most important decisions are made on beneficiary forms that haven't been reviewed in years.

Understanding the difference between per stirpes and per capita is a small step that can make a lasting difference. It helps ensure your assets pass the way you intend and protects the next generation from being unintentionally overlooked.

Related Content

• Who Will Be the Beneficiaries of Your Wealth?
• Don't Disinherit Your Grandchildren: The Hidden Risks of Retirement Account Beneficiary Forms
• Now That You've Built Your Estate Planning Playbook, It's Time to Put It to Work
• From Pets to Paintings: The Little Things That Can Cause Big Estate Trouble
• From Wills to Wishes: An Expert Guide to Your Estate Planning Playbook

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 received an inheritance recently, you might be wondering how it affects your tax situation. The answer depends on the type of inheritance, when you received it and what your long-term goals are for the money.

First, determine the size of the estate you inherited. The good news is, thanks to the recent One Big Beautiful Bill Act (OBBBA), the federal estate tax exclusion is $15 million per person. Most estates are under this.

If the value of assets is more than $15 million, you could owe federal estate taxes in the amount of 40% on anything above that threshold.

In addition, some states have estate taxes and/or inheritance taxes which you should be aware of (for example, Maryland has a 16% tax on anything above $5 million, and Pennsylvania has a variable inheritance tax from 0% to 15% depending on your relation to the deceased).

How inherited assets could be taxed

Once you've determined whether you owe estate taxes, you can move on to phase two — determining the type of asset and how it might or might not be taxed.

Cash. If you inherited cash (in a safe, a bank account, money market, etc.), there is no tax due. Keep in mind that any interest that accrued after the date of death would still be taxable at income tax rates.

Life insurance. Life insurance death benefits are always income and capital gains tax-free.

However, if you wait to claim the death benefit, the insurance company is required to pay you interest until you receive the claim, and this interest would be taxable, similar to a savings account (income tax rates).

Brokerage accounts/stocks, bonds and mutual funds. These accounts get a stepped-up basis upon death, meaning you won't owe any tax if you sell them for whatever the value was at the time of death.

Any growth that happens after the date of death would be taxed at capital gains rates if you sell. Any dividends or interest payments may be taxed as long- or short-term capital gains.

Real property. Real estate also gets a stepped-up basis. However, since the value isn't very easy to determine later, it's important to get a valuation (usually a third-party certified appraisal) as soon as possible after the date of death.

This valuation is what you would use to determine if there are additional gains between the time of death and when you sell the house in the future.

If you intend to sell right away (within a year), you can skip the third-party appraisal and use the sale price as the estimated value of the house.

Gold/silver. This also gets a stepped-up basis. Capital gains (after the date of death) are taxed differently for gold and silver (your current income tax rate or a maximum of 28%, whichever is lower).

It would be useful to get a valuation done in case you sell it in the future, but there is no tax to inherit.

Annuities. Specifically for non-qualified annuities,* you have several options. For all these options, there is no stepped-up basis. You'll ultimately owe income tax on any gains above the previous owner's original contribution (basis).

For example, if the original contract owner put in $500,000 and the account was worth $1 million at the date of death, you would owe income tax on the $500,000 of growth. But the good news is you have several choices regarding when and how to pay those taxes:

• Lump sum. This is often the most inefficient; all taxes are due this year.
• Five-year rule. This is usually the default option; you can take as much or as little as you want out at a time, but the whole account must be drained within five years. The downside is that nonqualified annuities are taxed as "LIFO" (last in, first out) which means you have to take the taxable gains out before the tax-free principal.
• Annuitization. This exchanges the entire value of the current annuity for a guaranteed lifetime pension. There would be an exclusion ratio calculated based on your life expectancy, which means a specified percentage of the monthly payment is taxable and a percentage is always tax-free. The downside with this option is it's irrevocable; you give up control of the money in exchange for the pension.
• Nonqualified stretch. This feels similar to annuitization, but it's flexible and can be changed in the future as long as you take a minimum amount out each year. Payments aren't guaranteed, but you can still earn interest inside the annuity that's tax-deferred. In practice, this feels similar to a required distribution on an IRA.

* If the annuity is qualified (an IRA or Roth), throw out everything mentioned above and treat it the same as any IRA or Roth, as shown below.

IRAs/401ks. Prior to 2010, inherited IRAs and 401(k)s were possible to stretch like a nonqualified annuity. But after the SECURE Act, the qualified stretch was done away with.

Instead, we have the new 10-year rule for IRA distributions. Unless you are the spouse of the decedent (in which case you merge the IRA with your own), or unless you qualify for one of the few exceptions, you have 10 years to withdraw all the funds in the account.

During the 10 years, you're required to take out at least as much as the decedent would have had to take out if still living (the required minimum distribution, or RMD). Anything left in the 10th year must be withdrawn in a lump sum.

Keep in mind that 100% of this money is taxable at your current income tax brackets, and there is no way to convert an inherited IRA to a Roth. (You could, however, convert it to life insurance over time to preserve tax-free access to future growth, if you qualify for the right kind of policy.)

It's usually a good idea to not take only the minimum out, as that usually leaves a huge tax bill for the 10th year. But there is flexibility; you can take more or less out each year as long as you take at least the RMD amount.

Roth IRAs. Inherited Roth IRAs are now subject to the same 10-year rule as IRAs, just with no taxes (since Roth accounts are income tax-free).

Even though the deceased might not have had to take any RMDs, you as the beneficiary might have to take an RMD as if the money had been an IRA (just without the taxes).

It often makes sense to take only the minimum out, so as to get as much tax-free growth as possible on the inherited Roth up until the 10th year.

Related Content

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• 10 Reasons to Leave Your Heirs a Roth IRA
• What Not to Do After Inheriting Wealth: 4 Mistakes That Could Cost You Everything
• What Is a Good Inheritance? Six Great Assets to Inherit
• Will Inheriting the Family Money Make You or Break You?

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.

March is one of my favorite months, as it's filled with several key dates that celebrate women:

• March is Women's History Month
• March 8 is International Women's Day
• March 26 is the symbolic Equal Pay Day for 2026

These aren't just symbolic dates. They're markers of progress — and a call to action.

It's hard to believe that until 1974, a woman in the United States couldn't obtain a credit card in her own name without a male co-signer. Married women needed their husbands' approval. Unmarried women still needed a man to sign.

That wasn't generations ago. That was during my lifetime.

We've come a long way. But when it comes to financial confidence, retirement savings and long-term security, there's still meaningful work to do.

Women's economic power is undeniable

Women already hold enormous economic influence, whether we recognize it or not. We influence or control roughly 85% of consumer spending in the U.S., play a central role in about 91% of home-buying decisions and make nearly 80% of health care spending decisions for our families.

This is only the beginning. By 2030, women are projected to control or inherit an estimated $34 trillion — close to two-thirds of U.S. wealth.

The shift is significant. The real question is whether we're prepared to manage it with confidence.

This unprecedented transfer of wealth will largely occur as women inherit assets from Baby Boomer parents and/or their spouse/partner, as they statistically outlive their spouses.

In addition, more women today are actively involved in financial decisions within their relationships. That shift is significant.

The question is not whether women will control wealth; it's whether they feel fully prepared to steward it.

The confidence gap is real

While women increasingly participate in investing, research continues to show a confidence gap, as well as a gap in retirement savings.

Only 28% of women say they feel very comfortable making investment decisions, compared with 39% of men, and more than half say investing feels intimidating.

Interestingly, studies repeatedly show that women often earn better returns than men. Women are generally less likely to attempt to time the market, more likely to stay focused on long-term goals and more likely to work with a financial adviser. That patience and consistency can be a powerful advantage.

The other significant factor that negatively impacts women is that they're not able to save as much as men. In 2023, the average 401(k) balance for men was about $89,000, compared with $59,000 for women — a gap of roughly 50%.

The gap narrows among Millennials, but remains significant across generations.

There are two structural reasons why this happens:

• Women are still underpaid relative to men in similar roles
• Women are more likely to step away from the workforce to care for children or aging parents

The issue isn't ability. It's engagement and confidence, along with societal constraints.

Five actions every woman should consider

Whether you manage the finances in your household, share the responsibility with a partner or simply want to be more informed, there are practical steps you can take to strengthen your financial foundation.

1. Establish and maintain credit in your own name.

Have at least one credit card in your own name and use it regularly. Being an authorized user on a spouse's card might help your credit score, but you do not control that account.

If a divorce or death occurs, access can disappear overnight. The worst time to apply for credit is during a crisis. Build your credit history before a disaster strikes.

2. Maximize retirement contributions — even during career breaks.

If you're working, prioritize contributions to your employer-sponsored retirement plan. Take full advantage of any employer match.

If you step away from the workforce but are married and filing taxes jointly, consider contributing to a spousal IRA.

As long as household earned income meets contribution requirements, you might still be able to fund retirement savings.

Time out of the workforce doesn't have to mean time out of retirement planning.

3. Invest: Don't sit on cash out of fear.

Many women report feeling intimidated by investing, which can lead to holding excess cash. While cash provides short-term comfort, it often erodes purchasing power over time due to inflation.

Create a diversified investment strategy aligned with your long-term goals. If you're unsure how to begin, seek guidance. Confidence grows with understanding and experience.

Make sure any cash you keep on the sidelines is earning a higher yield; consider FDIC-insured, high-interest savings accounts at online banks.

4. Review estate documents, titling and beneficiaries.

Do you know how your accounts are titled? Who is listed as a beneficiary on retirement accounts and life insurance policies?

If a spouse dies without proper documents or with assets titled solely in their name, the estate might go through probate.

In some states, dying without a will (intestate) can lead to unintended outcomes, including children inheriting portions of the estate outright. It could also tie the surviving parent's hands by limiting the use of a portion of the estate.

Proper planning helps to ensure assets transfer efficiently and according to your wishes.

5. Be an active participant — even in a strong partnership.

Even in healthy marriages, I often see one spouse handle most financial decisions. That can work, until it doesn't.

Both partners should understand where accounts are held, how investments are allocated, what debts exist and what estate documents are in place.

Both partners should also be familiar with their team of professionals —financial adviser, attorney and CPA.

Financial awareness is not about distrust. It's about preparedness.

Honoring the women who came before us

The women who fought for the right to open a bank account, apply for credit and own property did not do so for us to remain passive observers of our own finances.

Every time a woman reviews her retirement plan, negotiates her salary, opens an investment account or asks questions about estate planning, she honors that progress.

Women are poised to control historic levels of wealth. That power carries responsibility — not just to spend, but to invest, protect and grow it.

This Women's History Month, don't just celebrate progress, but participate in it.

Take ownership. Ask questions. Build confidence.

Financial independence isn't just about money. It's about freedom, security and choice — for you and for the generations that follow.

Hightower Advisors, LLC is an SEC registered investment adviser. Registration as an investment advisor does not imply a certain level of skill or training. Securities are offered through Hightower Securities, LLC, Member FINRA/SIPC

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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.

When it comes to estate planning in a second marriage, there can be competing goals — making sure your current spouse is provided for and ensuring assets go to your children from a previous marriage.

Luckily, there's an estate planning tool available to address this challenge — the qualified terminable interest property trust, or QTIP trust.

The 'Brady Bunch' safety net

About one-third of married Americans age 55 and older are in a second marriage. In a typical second marriage, leaving assets outright to a spouse can be risky.

If you pass away first, those assets become your spouse's property. He or she could leave them to their own children or even a new partner.

A QTIP trust solves this by splitting the interest in your property:

• For your spouse. They receive all the income generated by the trust assets for the rest of their life. These trusts can be drafted in such a way that principal can also be used for the benefit of the spouse under certain circumstances.
• For your children. They're named as the remainder beneficiaries. They receive the principal only after your spouse passes away.

Key benefits at a glance

• Control. You, not your surviving spouse, decide where the remaining assets go
• Tax deferral. Even though your spouse doesn't own the assets outright, the IRS treats the QTIP as marital deduction property
• Asset protection. Because the assets are held in trust, they're generally shielded from your spouse's future creditors or a litigious new partner

Passing an IRA to your children via a QTIP

Using a QTIP trust as the beneficiary of an IRA is a complicated strategy, and it requires precision to avoid a massive tax bill.

Normally, naming a trust as an IRA beneficiary can trigger accelerated distributions, forcing the entire account to be emptied (and taxed) within 10 years.

To use a QTIP for an IRA without losing the tax advantages, you must follow strict IRS see-through or conduit rules:

1. The 'income' requirement.

To qualify for the marital deduction, the IRS requires that your spouse receives all income from the trust.

However, for an IRA held inside a trust, the IRS mandates that the spouse must receive the greater of:

• The income generated by the IRA assets (dividends, interest)
• The required minimum distribution (RMD) calculated on your surviving spouse's life expectancy

2. The trustee's role.

Your trust document must explicitly state that the trustee has the power to request funds from the IRA and pass it directly to your spouse. This ensures the IRA remains a "qualified" asset and maintains its tax-deferred status.

3. Protecting the principal for the kids.

While your spouse gets the annual "income" or RMDs to live on, the bulk of the IRA stays protected within the trust. When your spouse passes away, your children from your first marriage inherit the remaining IRA balance.

Tip: Be careful with the 10-year rule. Under the SECURE Act, most non-spouse beneficiaries (such as your adult children) must empty an inherited IRA within 10 years. By using a QTIP, you ensure the money lasts for your spouse's lifetime first, then the 10-year clock starts for your children once the spouse passes.

Is a QTIP right for you?

A QTIP trust is more expensive to set up and maintain than simply transferring assets by a will or beneficiary designation. You'll need an independent trustee to handle the annual trust tax returns and income distributions.

However, if you have significant assets in an IRA and want to ensure your children from an earlier marriage are protected without leaving your surviving spouse empty-handed, it's often the best solution.

With proper planning, you can provide for your surviving spouse and ensure your assets ultimately pass to your children.

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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.

Editor's note: This is part two of a two-part series that looks at the best ways to ensure an inheritance creates financial freedom, not a financial burden. Part one is Will Your Children's Inheritance Set Them Free or Tie Them Up?

At age 18, my client — let's call her Josie — received a trust that provided thousands of dollars a month in inheritance, more than enough to ensure she'd never have to work. So, she didn't.

For more than two decades, Josie raised a family, redecorated her home, drove luxury cars and kept up with the latest fashions, using funds from her trust.

Meanwhile, her husband worked full-time to cover basic expenses. Between his income and her trust, they were set financially for day-to-day, comfortable living.

However, by his 50s, her husband realized he couldn't keep going forever and started looking toward retirement. Despite their high income, they had saved almost nothing.

The trust had made a lavish lifestyle possible for decades, but not indefinitely. They were at a crossroads.

This story isn't unique. According to a Choice Mutual survey, 66% of young Americans have received or expect to receive an inheritance. The amounts received vary widely, from modest sums to sizable trusts like my client's.

And as we witness the largest wealth transfer in history — an estimated $124 trillion is expected to change hands by 2048 — millions of heirs may soon find themselves in a position of financial security.

Unfortunately, nearly half of Americans feel unprepared to manage even small amounts, let alone substantial windfalls.

Freedom or handcuffs?

Money from an inheritance can be the ultimate flex or a lead to a big financial flop. It can open doors or quietly close them by removing the need to plan.

In Josie's case, what was missing was basic money management skills. She spent every dollar the trust distributed on a lifestyle that looked grand, but didn't build wealth.

She never pursued a career, nor did she save or invest, leaving her husband to shoulder the burden for their future.

By the time they understood the consequences, her parents were gone, her kids were grown, and they were staring down retirement with little to show for decades of spending. It was only when her husband had had enough that the tide began to turn, and planning for their future began.

Without the financial literacy to back it up, a windfall can quickly turn into a cautionary tale of a squandered opportunity.

Finding life's purpose with help from past generations

At its best, an inheritance can give you the freedom to pursue your passions without compromise.

One of the most inspiring uses of an inheritance I've seen is a family that funded careers of passion that might otherwise be financially impossible. In this family, each of the siblings received enough money at age 25 to pursue their dreams without worrying about basic survival.

One child became a symphony musician in New York City, hardly a high-paying profession in one of the world's most expensive cities.

The second turned a lifelong passion for horses into work as a trainer.

The third was able to take entrepreneurial risks that might otherwise have been impossible without the financial security of their inheritance.

This family embraced Warren Buffett's philosophy: Give your kids enough money so they can do anything, but not so much that they can do nothing. The inheritance didn't replace the need for work; it enabled each of them to find personally fulfilling work.

Building a business with an inheritance

Inheritance can also provide seed capital for entrepreneurial ventures, allowing people to take a thoughtful approach to their businesses. I once worked with a woman who was able to leave her corporate job to start an interior design business, thanks to an inheritance.

She used the funds her grandparents gave her to launch her own design firm, but she also leveraged their social connections to find clients and locate high-end estate sales for sourcing antiques.

The result: A business that reflected her values and allowed her to be selective with projects and clients. The inheritance and smart planning enabled her to create a sustainable and satisfying business that she continues to run.

Planning for the next generation

Many families focus their estate plans on their children. But smart planning can go a step further to provide the generation beyond with a meaningful financial head start.

Grandparents can use their annual gift exclusions ($19,000 from each person in 2026) to fund life insurance premiums. When the grandparents pass, each grandchild can receive a substantial, tax-free death benefit that has had the opportunity to grow.

This strategy can support real financial freedom for the next generation. It can potentially enable grandchildren to get a debt-free education, start a business or make a down payment on a first home without financial strain.

When paired with a letter explaining the gift's purpose, this structure instills values and supports independence for decades to come.

When emotions complicate inheritance

At its best, an inheritance is a gift of possibility. But family history is rarely that neat. Sometimes money arrives with emotional baggage. A child receiving an inheritance from a parent who was controlling, distant or absent may feel conflicted. Even an inheritance from a loving family member can present challenges.

One young man I worked with received a sizable inheritance from his mother but couldn't bring himself to spend it. To him, the money still belonged to her. He felt that using it would dishonor her memory, even though it had been left to support his future.

Other people look at their inheritance as an attempt to make up for a difficult childhood. One woman I know used the money from an emotionally distant parent to fund educational programs in her community.

This allowed her to honor her financial good fortune, despite her conflicted feelings. In the meantime, it freed up her salary to build her retirement and work on other financial goals.

Regardless of circumstances, financial coaching can help you come to terms with your wealth and helps you understand the emotions behind your money habits. It can help you see money not as a burden, but as a resource, freeing you to tap into what's most important to you.

The dating dilemma

Inherited wealth can also complicate romantic relationships. One young heir I knew purposely lived in a modest apartment and drove an economy car. He worried that potential partners would be more interested in his bank account than in him if he showed his wealth.

His approach helped him protect his values. But it also highlights the unique pressures that come with wealth. Transparency, boundaries and honest conversations are essential to building authentic relationships when money is involved.

The path to true financial freedom

As the Great Wealth Transfer picks up speed in the coming decades, more families will face these inheritance decisions. The key is preparation and sound financial support.

Whether your inheritance is modest or significant, it holds the potential to unlock freedom. It could allow you to start a business, go back to school, take a bucket list trip or support your children in ways that once felt out of reach. But you can only realize that potential through intention.

If possible, talk to your parents about their hopes for how the money will be used. Then, take ownership of your plan.

Josie's story didn't have to end in financial strain, and yours doesn't either. The difference between those who build lasting wealth and those who watch it slip through their fingers comes down to preparation and education. Make your inheritance the foundation of your financial freedom.

Related Content

• Manage an Inheritance Like a Pro in Just Seven Steps
• What Not to Do After Inheriting Wealth: 4 Mistakes That Could Cost You Everything
• To Buck the Third-Generation Curse, Focus on the Family Story
• Do You Know a Financial Hoarder? 4 Steps to Untangle the Mess
• Thanks, Granny: Money Quirks (Good or Bad) Can Be Inherited

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

For families focused on long-term wealth management and estate planning, few conversations are more important or more delicate than a well-run family meeting.

Done well, these meetings help parents and grandparents communicate not only the mechanics of their estate plans, but also the experiences, values and life lessons they hope to pass on to the next generation.

There are countless reports detailing how most family wealth is lost by the third generation, and it is easy to see why. The further down the family line wealth goes, the less those later generations can connect with the effort it took to create the wealth.

Those future generations weren't at the office late into the night, they weren't road warriors. They weren't feeling the guilt of missing another recital, concert or baseball game. One of the beautiful things about a family meeting is allowing the history to be shared to bridge the gap between generations.

A successful family meeting should bring clarity to estate and wealth transfer plans, establish follow-up actions for family members and, ideally, strengthen family relationships in the process.

Several problems arise when families do not have these types of meetings. The foremost is that estate and wealth-related issues tend to happen at the worst time for a family, usually after a death.

Without taking the time to communicate and explain a wealth transfer plan, emotional fans are flamed when the rest of the family is reeling after an unexpected surprise. Confusion about how assets are titled can lead to unnecessary stress.

The lack of communication can also lead to resentment by family members who feel things were not done equally or there should be more for them.

One practical way to prepare for and run an effective family meeting is to think through the five W's: Who should attend, what should be discussed, where and when the meeting should take place, and why it matters.

Who should attend?

Beyond the heads of the family, attendees should include any immediate or extended family members who are involved in or impacted by long-term planning decisions. This often includes adult children, spouses and, in some cases, grandchildren.

When deciding on who to involve, include the people who will be decision makers, such as successor trustees, executors and designated people with power of attorney.

Also, beneficiaries can be included, with discretion. Having a 15-year-old grandchild sit in on the meeting may not be as important as a 30-year-old grandchild who can use this meeting to help structure his or her own estate.

In addition, financial advisers and estate planning attorneys are typically present. Their role is to prepare and present materials related to family entities and estate structures, answer financial and legal questions, and act as a mediator during discussions.

It is equally important that the advisers can maintain control of the conversation and set proper expectations for decorum and language. When situations arise where family members, either heads of families or younger members, start airing grievances or try to start negotiating changes, the goals of the meeting are forgotten quickly.

Having trusted professionals in the room can help keep conversations productive and focused, particularly when sensitive topics arise.

What should be discussed?

During a family meeting, family heads typically review their overall estate and wealth transfer plan. Depending on how much information they want to share, monetary values may or may not be included during these conversations. The following topics are usually always included:

• Trust structures — different types of trusts for different people or different generations
• Roles and responsibilities — who are successor trustees, executors, powers of attorney, etc.
• Liquidity planning — whether it is around plans to sell a business or pay estate taxes, knowing where and when liquidity can come from is very important
• Philanthropic goals — is there a charitable component to the wealth transfer plan and who is responsible for carrying out those goals

For everything that a family may discuss, it is also important to identify what is intentionally not discussed. Some families do not want to share dollar amounts. They feel that sharing the amount of money they have will lead to poor behavior or lack of incentive for their children or grandchildren.

While there are no rules on what can or cannot be shared, it is important to note that the family meeting does not have to be completed in one sitting. Depending on comfort level and the amount of information to go through, it is okay for meetings to stretch over multiple sessions.

It's equally important that family meetings provide space to share stories, experiences and life lessons. These conversations help pass on the non-financial aspects of a family's legacy, such as values, priorities and expectations, that are often just as meaningful as the assets themselves.

When should the meeting take place?

While there is no single perfect time to hold a family meeting, many families choose to schedule one after finalizing an estate plan, when the heads of the family feel ready to share details more broadly.

Others hold meetings around major life events, such as the sale of a family business, a significant liquidity event or the passing of a family member.

The key is timing the meeting when families are prepared both logistically and emotionally to have the conversation. As mentioned, the family meeting does not need to be and should not be a single event. It should be a jumping-off point for family communication that allows for transparency, guidance and future planning discussions.

However, the meetings do not need to sound like a broken record and be held every year. If a meeting lasts multiple sessions, those sessions should be held in close proximity to each other for timing and retention reasons. Follow-up sessions can be done when changes are made that have a material impact on stakeholders.

Examples of a material change that would warrant a follow-up meeting are changing of trustees or how assets flow.

An example of a change that may not need another meeting is if the patriarchs and matriarchs change which charity they leave money to.

Where should the meeting take place?

Ideally, family meetings take place in person, with as many participants present as possible. Whether scheduled during a family vacation, a holiday gathering or a dedicated in-person meeting, being in the same room can make discussions more impactful and help foster open communication.

While virtual meetings can work when logistics demand it, an in-person setting encourages deeper engagement and fewer distractions. It is easy to appear present on a screen while actually being tuned out, which can cause confusion down the road.

Family members can close down or open up depending on how formal the meeting setting appears. This is why the family home tends to be a popular choice as there is an inherent sense of comfort and familiarity, and people tend to speak more openly and truthfully.

Another option can be an adviser's office as it can be seen as a neutral site, especially for families where members may not be on the best terms with one another.

Why does a family meeting matter?

At its core, the purpose of a family meeting is to strengthen family connections and build trust. These gatherings are often emotional, as families reflect on their history and the values they hope to carry forward.

From a financial planning perspective, family meetings also increase transparency and efficiency. When children and grandchildren understand what is already in place, they can design their own estate plans in parallel, reducing the risk of duplicating efforts or inadvertently contradicting existing structures.

Running a successful family meeting takes time and thoughtful preparation. Working alongside trusted advisers to develop clear materials and set expectations in advance can make a meaningful difference.

When done well, a family meeting becomes more than a planning exercise — it becomes an investment in both the family's financial future and its relationships.

Setting the right expectations

It is also important to be clear about what a family meeting is not. It is not a legal reading of documents or a forum for reviewing dollar amounts line by line. And it is not about forcing consensus or requiring every family member to agree on every decision.

Setting these expectations upfront helps keep the meeting focused on communication, understanding and alignment, rather than turning it into a negotiation or a source of unnecessary tension.

Related Content

• Want to Avoid Leaving Chaos in Your Wake? Don't Leave Behind an Outdated Estate Plan
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• Holidays Are a Rich Time to Talk Money With Young Adults: A Financial Adviser's Guide for Parents

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

Editor's note: This is the first article in a two-part series on navigating the Great Wealth Transfer. Part two will explore key decisions for couples.

Over the next two decades, American families will pass down trillions of dollars in wealth. Yet many families enter the process unprepared.

Conversations often happen late — sometimes too late — leaving heirs without the context or clarity they need.

As a wealth adviser, I've seen grantors approach this stage with good intentions. But good intentions alone can't prevent confusion. Without clear communication, heirs are left to navigate grief, logistics and unanswered questions at once.

This article focuses on how grantors can reduce that burden, which begins with thoughtful, honest communication shared on your terms and at your comfort level.

Why silence creates complexity

Most parents or grandparents expect to share their plans "someday," but that day can come later than they intend, or later than their heirs need. Some hesitate because the topic is emotional; others worry about sharing too much too early or feel overwhelmed by the planning process.

From my experience, silence creates two challenges:

Families can be blindsided. Heirs may know their parents value charitable giving but still be surprised by the size or structure of a bequest if it wasn't discussed.

Last-minute changes can spark conflict. In one family, a mother updated a beneficiary designation late in life but told only one daughter. When she fell ill, the lack of communication created tension between the surviving siblings.

Silence doesn't protect loved ones. It can leave doubt, resentment and fractured relationships long after assets transfer.

Shift from logistics to legacy

Most grantors handle the paperwork. What's harder is articulating why the wealth exists and what you hope it will accomplish.

Reflection questions include:

• What do I hope this wealth makes possible?
• How should it support — and not replace — grit or purpose?
• What balance should exist between family and philanthropy?
• What stories shaped how I built or cared for this wealth?

Effective legacy planning gives heirs clarity, not just about what they receive, but why.

Start earlier than you think, but at your comfort level

Many families wait for a major milestone or a health scare to start these conversations. But beginning earlier, when life is stable, allows for more thoughtful dialogue.

Early conversations often start informally with one child:

• "We've been thinking about the long-term plan for the family …"
• "We want to make sure you're protected …"
• "We're considering a trust structure for the grandchildren …"

Families who discuss financial values early, sometimes even during high school or college, tend to move more easily into inheritance conversations later.

Start where you're comfortable. Share what feels appropriate. Build from there.

Simplify what you can today

One of the greatest burdens on heirs — especially executors — is the logistical load. Grantors can reduce stress by tackling foundational items now.

Review and update your current plan. Estate planning is iterative, not "set it and forget it." Revisit your plan every few years, or more often if later in life, or if you have a family or health change.

Organize documents and designations. This includes:

• A current will and perhaps a revocable trust
• Beneficiary designations
• Powers of attorney
• Advance directives
• Life insurance details
• Succession instructions for donor-advised funds
• A clear inventory of assets

Consider the impact of growth. Wealth often grows significantly over time. A plan created when assets were far smaller may no longer reflect your intentions. Modeling how the estate may grow over five to 15 years helps ensure the structure still fits.

Document decisions for non-financial assets. Sentimental items and family property can spark the biggest conflicts. Clear instructions minimize that risk.

Create a pattern of communication

Communication isn't a single event. It's an ongoing pattern.

Start small and informal. Initial conversations often begin one-on-one before expanding to include the full family.

Host periodic family meetings. These touchpoints may cover:

• Family values or mission
• High-level legacy structures
• Roles such as executor or trustee
• Updates after plan reviews

Whether to include spouses or in-laws depends on your comfort level.

Bring financial advisers into the dialogue. Introducing heirs to your adviser creates continuity. Advisers can help translate technical details, mediate sensitive topics and support constructive conversation.

A purposeful transfer starts with you

The Great Wealth Transfer is more than financial. It's relational. It's an opportunity to leave your family with clarity and direction.

That begins with:

• Reviewing your plan
• Communicating intentionally
• Updating decisions as life changes
• Ensuring your legacy matches your goals

Most importantly, it means sharing your plans in a way that feels comfortable and true to your values.

In the next article, we'll turn to spouses and partners, who are often the first to inherit. We'll explore how couples can prepare together for complexity, key decisions and long-term financial continuity.

Related Content

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• To Buck the Third-Generation Curse, Focus on the Family Story
• Estate Planning and Unequal Inheritances: Talking Is Key
• Discussing Family Legacy Plans? 5 Tips to Navigate 'the Talk'
• 4 Reasons Families Fail When Transferring Wealth

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

Editor's note: This is part one of a two-part series that looks at the best ways to ensure an inheritance creates financial freedom, not a financial burden. Part two is Will Inheriting the Family Money Make You or Break You?

Farm life is hard. When my clients, a farm family, began their estate planning, they faced a dilemma many such families experience: How to preserve their legacy without forcing an unwanted burden on their children.

Their concerns were well-founded. They'd watched neighboring farms disappear, sold off to developers piece by piece or absorbed by corporate agriculture. The thought of their hundreds of acres of prime farmland meeting the same fate kept them up at night.

But asking one of their four children to take over — all of whom had scattered across the country, building careers and lives far from the fields that had sustained their family for generations — felt like a burden they didn't want to impose.

However, to their delight, their daughter, the youngest of the four, wanted to give farming a go. Not only was this an opportunity to keep the farm in the family, but more importantly, it was a chance to secure financial freedom for all four of their children.

Though not everyone will own a farm, the essence of their situation isn't unique. Across America, families are grappling with similar decisions regarding inheritance as we witness the largest wealth transfer in history.

When executed well, an inheritance can help the next generation gain financial freedom. When executed poorly, you may cause more harm than good, working directly against your positive intentions.

The Great Wealth Transfer is underway

We're in the midst of the largest wealth transfer in American history. An estimated $124 trillion will change hands by 2048 as Baby Boomers pass their assets to their Gen X and Millennial children.

Don't think this applies only to the ultra-wealthy. The Great Wealth Transfer is affecting families across all income levels, from modest inheritances to sizable estates that include family businesses, farmland, real estate holdings and investment portfolios.

Inheritance is an opportunity to help the next generation create financial freedom for themselves.

But all too often, it isn't given the attention it deserves. Many parents fail to see it as an opportunity to create lasting financial security for the next generation, setting the stage long-term to help them realize their own dreams.

Success lies in proper planning and communication. Without those, even well-intentioned inheritances can become financial and emotional burdens.

Inheritance done right

My farm-family clients understood this instinctively. They knew that an inheritance must be structured correctly for it to truly become a source of financial freedom for future generations.

Over the years, the couple had detailed conversations with all four children about their estate plan. They established clear parameters: Whoever wanted to continue farming would need to live on the property and maintain a minimum amount of acreage so the integrity of the farm would be maintained.

To ensure that the non-farming siblings weren't sidelined, the parents' estate plan spelled out that the heir to the farm would purchase the land from the other siblings at a discount. Those terms were laid out in advance and agreed to. This is inheritance planning done well.

Another family I worked with faced a similar challenge with their family business. Two of their children were active in the company, and the third chose her own career path.

Rather than force a strained buyout after their deaths, the parents bought life insurance to guarantee that all the siblings received the same amount.

What set these two families apart from others attempting wealth transfer is how clear-eyed they were. They set their intentions openly, sought their children's input to understand whether it was an arrangement that worked for them and structured the inheritance in a way that didn't leave anyone out.

When inheritance becomes a burden

Sadly, it doesn't always go this way. Often, an inheritance can leave the next generation feeling unprepared or even burdened.

For starters, some heirs carry a psychological weight. They may feel like an inheritance is somebody else's money, and they're reluctant to spend it. Others might feel like they're not up to the task of being stewards of someone else's hard work.

There's also family discord that can erupt when siblings have different ideas about what to do with their inherited assets. Or they might experience paralysis when they receive a substantial sum without proper preparation or guidance.

None of these are ideal scenarios when you're also dealing with the loss of a loved one.

One couple I worked with was swimming in debt. They spent wildly because they anticipated an inheritance coming their way at some point.

Unfortunately, when they did inherit, nearly half went toward paying off debt, and the other half went toward supporting a spending habit. The inheritance didn't last them long.

When done well, an inheritance becomes a bridge to genuine financial freedom for the next generation. But this doesn't happen automatically. Your heirs need your guidance to help them turn money into lasting financial security, so it doesn't become a temporary windfall that quickly disappears.

Starting the conversation

The key to transforming inheritances is communication. However, that can be difficult, especially if it stirs up old family dynamics and resentments. My advice is always to forge ahead well in advance, decades before any documents are signed.

The worst thing you can do is keep your family in the dark about your intentions. By leaving these conversations to the end — or worse, only after your death — you also lose the opportunity to help your heirs shape how their wealth will be used.

That's not to say that you need to disclose everything, especially if your children aren't yet financially responsible. It can be counterproductive to tell children in their 20s that they stand to inherit. But cluing them into your wishes can be an important family conversation.

Here's how to go about setting your heirs up for long-term financial security:

Understand your own intentions

Start by getting clear on what you hope your inheritance will allow. Do you want to provide basic financial security? Enable your children to take risks they couldn't otherwise afford? Preserve a family legacy?

If charitable giving is important to you, share that with your heirs. If you want the family business to continue, discuss what that means and what commitments will be required of your children.

However, be prepared to adjust your plans if your intentions don't line up with your children's goals and capabilities.

Work to align expectations

The most successful inheritances happen when parents and children work together to decide how an inheritance will be used.

One of my clients was a young woman who used the substantial inheritance from her grandparents to quit her corporate job and launch the interior design business she'd always dreamed of.

Because her grandparents had communicated their desire for her to pursue her dreams, she felt empowered to take a meaningful risk.

Address psychological barriers

Many heirs struggle with what I call "ghost money syndrome" — the feeling that inherited wealth belongs to the deceased, not to them. These psychological barriers are real.

Help your children avoid emotional paralysis by explicitly granting them permission to pursue their own dreams and goals with their inheritance.

Be specific about logistics

In complex situations like family business or farms, spell out the mechanics of an inheritance clearly.

Vague intentions lead to family disputes, but specific terms create clarity that allows all heirs to move toward their own version of financial freedom.

The gift that keeps on giving

The Great Wealth Transfer is more than money changing hands. It's an opportunity to extend your values and influence beyond your lifetime. When handled thoughtfully, an inheritance becomes a launching pad for the next generation's dreams rather than a burden they must bear.

The families who get this right share a few similarities. They start the conversation early, communicate their intentions clearly, and work collaboratively with their heirs to ensure that everyone's needs are met.

They understand that the best gift they can give is one of family harmony and the freedom to allow each generation to build their own version of success.

Related Content

• How to Leave Different Amounts to Adult Children Without Causing a Rift
• What Would You Like to Leave Behind? A Financial Planner's Guide to Family Wealth Discussions
• I'm a Wealth Adviser: This Is How to Prevent Your Heirs From Frittering Away the Family Fortune
• Thanks, Granny: Money Quirks (Good or Bad) Can Be Inherited
• The Holidays Are a Time for Sharing (Your Wishes)

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 retirement gets closer, most planning conversations stay comfortably focused on income and investments.

What often gets delayed — or avoided entirely — are the more important elements of retirement planning: Estate planning, philanthropy and protecting assets against long-term care and health events.

The reason is simple. These topics force more difficult conversations. They touch on health, dependency and mortality — subjects most people would rather postpone talking about. But framing this planning as "end-of-life" thinking misses the point entirely.

This isn't about preparing for the end. It's about protecting what you've built and preserving your ability to live the life you want — for as long as possible.

When these issues aren't addressed early, they tend to be dealt with later under pressure, often during a health event or family crisis. At that point, decisions are reactive instead of intentional, and the cost — financial and emotional — is usually much higher.

This is about more than documents

Estate planning, at its core, is not about documents. It's about control. It's about helping to ensure that your assets are managed and transferred according to your wishes, not default rules. It's about reducing friction for the people you care about and preventing wealth from being lost to inefficiency or confusion.

Philanthropy fits into this same conversation. For many retirees, giving isn't an afterthought — it's an expression of values. Thoughtful charitable planning allows you to support causes you care about in a way that aligns with your overall financial strategy, rather than competing with it.

Then there's asset protection, particularly around long-term care. This is one of the most misunderstood and avoided areas of retirement planning. The reality is that extended care is not a remote possibility — it's a planning variable. Ignoring it doesn't eliminate the risk; it simply transfers it to your portfolio, your spouse or your family.

When protection planning is done well, it doesn't restrict lifestyle — it helps preserve it. It creates flexibility. It helps safeguard income. And it helps ensure that a lifetime of disciplined saving isn't quietly eroded by one unplanned event.

Thoughtful retirement planning is not about pessimism. It's about intention. It's the difference between hoping things work out and designing a strategy that supports your health, your independence, your legacy and your ability to enjoy retirement on your terms.

This is the stage where planning moves beyond accumulation and income — and becomes about stewardship.

Turning unspoken legacy goals into intentional strategy

Most people carry clear legacy goals in their minds, but those goals are rarely on paper or included in conversations. These people know what matters to them. They know who they want to protect. They often have a strong sense of who should carry forward their values, traditions or resources. What's missing isn't intention — it's articulation.

This is where professional planning begins to work. When legacy goals are finally named and communicated, planning shifts from transactional to intentional. The conversation expands beyond "who gets what" to "who should be supported, empowered or protected" — and why.

These discussions frequently reveal priorities that were never reflected in the financial plan. A surviving spouse's security. A child who may need more guidance or protection. Grandchildren, charitable causes or family members who share a common set of values. Legacy planning isn't about equal distribution — it's about aligned distribution.

Once these goals are clear, something important happens: The financial strategy can finally be coordinated around them.

Tax planning, in particular, becomes more purposeful. When assets are viewed through a legacy lens, it often makes sense to reconsider how tax-deferred accounts will eventually be taxed — and by whom.

In many cases, this opens the door to intentionally converting portions of tax-deferred assets into tax-free assets over time, with minimal tax impact, because the strategy is coordinated rather than reactive.

This isn't about avoiding taxes at all costs. It's about paying them on your terms, at the right time and for the right reason — in service of preserving what you're trying to pass on.

Preserving independence, choice and control

The same principle applies to long-term care planning. Too often, the conversation gets stuck on expensive, stand-alone insurance policies that feel disconnected from the rest of the plan. But protecting assets from health care-related erosion doesn't have to be separate from growth or legacy planning.

When approached intentionally, solutions for long-term care can be integrated into the allocation engine itself — supporting growth while also helping provide protection. The goal isn't to plan for decline; it's to preserve independence, choice and control without sacrificing opportunity.

When legacy, taxes, growth and protection are designed together, trade-offs become clearer, and outcomes become more predictable. This is what transforms a collection of accounts into a coordinated system — one that reflects your values, protects the people you care about and supports a life well lived.

This level of planning doesn't happen by accident. It happens when conversations move from what's comfortable to what's meaningful — and when strategy is built around intention rather than default outcomes.

Creating the outline of an intentional retirement plan

Once legacy, protection and tax awareness are part of the conversation, the next step is not to jump to solutions — it's to create a clear outline of what the plan is actually meant to do. Before strategies are selected, because structure matters.

Step No. 1: Clarify who and what you care about.

Every well-designed plan starts with people and values, not products.

• Who do you want to protect?
• Who do you want to support?
• Who do you trust to carry forward what's important to you?

This includes family, but it often extends beyond it. Many people care deeply about causes, organizations or missions they've supported quietly for years. Others want certain values — responsibility, generosity, independence, education — to be felt by the next generation, not just funded.

These priorities are often clear internally but unspoken. Writing them down and communicating them creates alignment. It also determines how assets should be positioned, distributed and protected. Legacy planning is not about perfection — it's about intention and trust.

Step No. 2: Understand where you're exposed to future taxes.

With legacy goals defined, the next step is understanding how your assets will actually be taxed over time.

• How much of your wealth is sitting in tax-deferred accounts that will be subject to future tax increases and required minimum distributions?
• How much is already tax-free?
• How much sits in after-tax or taxable accounts?

This segmentation matters. Not all dollars are created equal. Each "bucket" behaves differently, is taxed differently and should be assigned a different role in the plan.

When assets aren't clearly segmented, tax planning becomes reactive. When they are, tax mitigation becomes intentional.

This is often where opportunities emerge — particularly when tax-deferred assets can be repositioned or converted in a coordinated way, over time, with minimal tax impact.

The goal isn't to eliminate taxes. It's to manage when, how and at what rate they're paid in support of income, protection and legacy.

Step No. 3: Assign roles to each asset.

Once assets are segmented, the plan begins to take shape.

• Some assets are best suited for income
• Some for growth
• Some for tax efficiency
• Some for legacy transfer
• Some for protection

Trying to make every account do everything usually leads to inefficiency. When assets are intentionally designated for specific roles, the entire system becomes more durable and easier to manage. This is where coordination replaces complexity.

Step No. 4: Design the long-term care "faucet."

Long-term care planning is not theoretical. In my experience, clients who have cared for parents, siblings or spouses — or who are navigating care themselves — understand this immediately.

When a health event occurs, income needs don't increase by hundreds of dollars per month. They often increase by thousands.

In many cases, the cost of care can exceed $100,000 annually. This isn't an edge case — it's a reality for a significant portion of retirees.

The real question isn't if care will be needed. Statistically, most people will require some level of support. The real question is where will the money come from — and who bears the burden?

• How much pressure do you want to place on a spouse?
• How much responsibility do you want to place on your children?

A well-designed plan identifies an intentional "faucet" — a source of funding that can be turned on when a health event occurs, without dismantling the rest of the plan. This may involve insurance, asset repositioning or integrated solutions that support growth while also providing protection.

What matters most is that the decision is made in advance, not during a crisis.

When these steps are taken together — values clarified, assets segmented, taxes coordinated and protection designed — retirement planning stops being a collection of accounts and becomes a system. One built to support independence, protect relationships and preserve the life you've worked hard to create.

Before making changes to investments and making important decisions about long-term care or tax strategy, it's critical to understand whether your current retirement plan is aligned with what comes next. The WealthSync™ Process, built from decades of experience, helps business owners and high-achieving families navigate this transition with intention. The 7-Minute WealthSync™ Diagnostic uncovers hidden inefficiencies, silent tax leaks and gaps between your income needs and your vision for retirement. In just a few minutes, it provides clarity around how well your income, taxes and investments are working together — and where misalignment may exist. Complete your diagnostics here.

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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.

If you inherited an IRA from a parent or loved one in the past few years, you may be facing a hidden tax trap. Since the passage of the SECURE Act, the rules governing inherited retirement accounts have shifted dramatically, and missteps can be costly.

While the SECURE Act rules were initially confusing, the IRS issued final regulations in July 2024 that clear the air but also set the stage for significant penalties if you fail to act.

The death of the 'stretch IRA'

For decades, beneficiaries could "stretch" distributions from an inherited IRA over their own lifetime, allowing for decades of tax-deferred growth. The SECURE Act essentially eliminated this for most non-spouse beneficiaries, replacing it with a strict 10-year rule.

Under this rule, the entire inherited account must be emptied by the end of the 10th year following the original owner's death.

Important exceptions:

• Spouses. The 10-year rule generally only applies to non-spouse beneficiaries.
• Inherited Roth IRAs. While these are exempt from annual required minimum distributions (RMDs), the entire account must still be depleted by the end of the 10th year.
• Minors inheriting an IRA. There are special rules that permit a delay in the 10-year rule until age 21 for minors inheriting an IRA.

2025: The new RMD deadline

The original SECURE Act was ambiguous about whether you had to take money out during those 10 years or just by the end of it. The IRS has now clarified that for many, annual RMDs are required.

Because the initial law was murky, the IRS granted relief for tax years 2020 through 2024. However, that grace period is over. You must now take your RMDs or face a 25% penalty on the amount that should have been withdrawn.

A common mistake

A common mistake for those calculating their own RMDs is using the wrong IRA life expectancy table and an inaccurate calculation method.

Beneficiaries should use the IRS Single Life Expectancy table (Table I in IRS publication 590-B) to calculate their life expectancy as of the year following the original IRA owner's death. That initial life expectancy should be reduced by one each subsequent year to determine the divisor.

The danger of the 'minimum'

The traditional rule of thumb regarding IRA distributions is usually to try and keep as much in the IRA as possible for compounded tax-deferred growth.

However, that conventional wisdom should be reassessed when it comes to inherited IRAs. The reason? Waiting until the final year to empty the IRA can create a massive "tax trap".

Consider Julie, a 51-year-old who inherited a $450,000 IRA. Julie and her husband are still working and if she only takes the minimum RMD while the account grows at 5%, the IRA could be worth roughly $475,000 by year 10. Forced to withdraw that entire balance at once, over half of her inheritance could be taxed at a 35% rate based on her current income.

A smarter strategy: Equalizing distributions

Instead of taking minimum distributions each year until the final year, the goal should be to spread distributions strategically to keep your marginal tax rate as low as possible.

Take the example of Bob, who is 60 and plans to retire in three years. He also inherited a $450,000 IRA.

Years one to three. Bob takes only the minimum RMD (about $19,000) while he is still in a higher tax bracket from his salary.

Years four to 10. Once retired and in a lower bracket, he takes the remaining balance in equal amounts (about $112,000 per year).

This strategy allows Bob to maintain his lifestyle, potentially retire early, and keep his marginal tax rate in the 22% bracket rather than jumping into much higher territory.

Your inherited IRA action plan

The clock is ticking on inherited IRAs, and "Uncle Sam" is waiting to take a big bite if you don't have a plan.

Whether you are years away from retirement or ready to stop working now, if you inherit an IRA, you need to calculate your life expectancy factor (using IRS tables), take at least the minimum RMD amount each year and map out a 10-year distribution strategy that maximizes your after-tax wealth.

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• Retiring Early? This Strategy Cuts Your Income Tax to Zero

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.

Retirement planning isn't complete without factoring in the people most important to you. A crucial component of your legacy strategy involves your investments and how they're structured.

Many people fail to review their investment accounts or the future tax impact. That lack of oversight can be damaging to your beneficiaries.

The investments you make in your 50s and 60s can positively or negatively impact your estate and your beneficiaries' future taxes, depending on your approach.

Strategic decisions regarding asset location and account types — taxable, tax-deferred, and tax-free — can help preserve more wealth for your loved ones and minimize estate, capital gains, and income taxes.

Here are the tax impacts of different retirement account types:

Traditional retirement accounts. Contributions to 401(k)s and IRAs are pretax, and the money grows tax-deferred. Beneficiaries must pay ordinary income tax on withdrawals.

Under the SECURE Act, most beneficiaries other than your spouse must withdraw all assets within a 10-year period, potentially pushing them into higher tax brackets.

Roth IRAs. Contributions to Roth IRAs are made with after-tax dollars, but qualified withdrawals are entirely tax-free (as long as you are age 59 ½ and have held the account for five years).

Roth IRAs can be an excellent vehicle for legacy planning because beneficiaries receive tax-free distributions (also generally subject to the 10-year withdrawal rule) and also because Roth IRAs are not subject to required minimum distributions.

Taxable brokerage accounts and real estate. These assets generally receive a step-up in cost basis, a tax provision in which the original cost of an inherited asset is adjusted (or "stepped up") to its fair market value on the date of the original owner's death. This adjustment significantly reduces or can even eliminate the capital gains tax that the beneficiary would owe if they sell the asset later.

Life insurance. Proceeds from life insurance policies are generally not subject to income tax for the beneficiary and can provide immediate liquidity to the estate to cover any potential estate tax bills, avoiding forced sales of less liquid assets like real estate.

Investment and planning strategies for your 50s and 60s

A common mistake people make is not adjusting their asset allocations as they approach retirement. If you have a substantial amount of money in your qualified accounts, for example, that allows you to be a little more aggressive from an investment perspective in your non-qualified accounts.

The most overlooked part of the legacy planning process involves RMDs. Some people have the preconceived notion that the only money they're going to withdraw from their 401(k)s and IRAs is for the RMDs —- the amount the government requires you to withdraw from those accounts each year, usually starting at age 73.

Proactively managing those accounts ahead of the RMDs can give you more financial growth and flexibility while putting your beneficiaries in a better tax position once they start receiving the funds.

If you have a significant amount of money in tax-deferred accounts and don't need the income on a yearly basis, the RMD is just an extra tax to pay.

Here are some strategies to consider:

Asset location. Place high-growth investments that generate significant capital gains in taxable accounts to leverage the step-up in basis at death.

Another option is to place investments that generate ordinary income (such as bonds or some dividend stocks) in tax-deferred or tax-free accounts.

Roth conversions. Consider converting a traditional IRA to a Roth IRA when you are in your 50s or early 60s, particularly in years when you are in a lower tax bracket (e.g., if you're no longer working full-time but have not yet started Social Security or pension income). You pay the income tax on the conversions, but the entire account grows and is distributed tax-free to beneficiaries.

Strategic gifting. Use the annual gift tax exclusion (currently $19,000 per recipient per year as of 2025) to transfer assets out of your taxable estate during your lifetime.

Review and adapt. Tax laws and personal circumstances change. Routinely review your estate plan with an estate planning attorney and financial adviser to help ensure it remains tax-efficient and aligns with current laws and your evolving goals.

Ultimately, aligning your investment strategies with long-term legacy goals requires careful consideration and professional advice. Your decisions can impact your legacy and estate by determining wealth growth and preservation and minimizing tax burdens for beneficiaries.

When strategic investment decisions are integrated with a comprehensive estate plan, you can be assured of a smooth transfer of assets across generations.

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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• An Expert's Guide to the Estate Planning Documents Everyone Needs

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 first months of a new year are often a time to reflect, reset priorities and make plans for the future. Many people use the moment to review their finances, revisit goals and make resolutions designed to create greater peace of mind.

Yet, one critical part of a financial plan is often overlooked: The estate plan. Even a well-crafted estate plan can become ineffective if it no longer reflects your current life, relationships or financial situation.

Having a plan in place during your lifetime is an important step toward long-term security. But what happens if you are no longer able to manage your affairs because of incapacity — or when your plan is put to the test after your death?

An outdated or incomplete estate plan can lead to confusion, delays and unnecessary costs for your family at exactly the wrong time.

There are important estate planning documents everyone should have so they can be prepared for life's uncertainties. These include a will, a revocable trust (if appropriate), financial and health care powers of attorney and up-to-date beneficiary designations for retirement plans and life insurance.

An estate plan helps ensure that the people you want to benefit from your wealth receive the right assets in the right way.

While the directions you provide in these documents can usually be changed, failing to have a plan — or failing to keep it current — can leave important decisions to state law and create added stress for your loved ones.

Planning for incapacity

It is difficult to imagine a future where you are unable to manage your affairs because of a serious injury or incapacity. But there are basic documents you can put in place now to help plan for the future.

Financial power of attorney. A power of attorney is a legal document in which an individual (the principal) designates another individual, such as a spouse, child or close family member (the agent) to act on his or her behalf.

A power of attorney is usually "durable," meaning that the powers granted to the agent continue to be effective even if the principal loses capacity. The power of attorney allows your agent to take care of financial matters for you in a variety of situations.

For example, your agent can manage banking and investment transactions, sign legal documents or apply for benefits on your behalf.

However, the power of attorney is no longer valid after your death. At that point, the terms of your will or revocable trust control the disposition of your assets.

While a power of attorney is important for those facing illness or old age, parents should also encourage their young adult children to put a power of attorney in place, since parents can no longer make decisions for their children once they reach the age of majority.

Health care power of attorney/living will. In a health care power of attorney, you name an agent to make health care decisions for you when you are no longer able to do so.

Your agent can also obtain access to medical information and records and authorize admission to a long-term care or rehabilitation facility.

You should also have a living will (also referred to as an advance directive), which can be part of your health care power of attorney or a separate document. In a living will, you express your preference for end-of-life measures such as pain management, nutrition and hydration and name a surrogate to carry out your wishes.

Planning for wealth transfer

It is equally important to plan for the transfer of your wealth and ensure you have the right team in place to carry out your wishes. Here are the documents that you may need:

A will. A will is a key document in all estate plans. In your will, you set the rules for distribution of assets held in your individual name and designate an executor to oversee the administration and distribution of those assets.

You can also name guardians for your minor children in your will, making it an especially important document for young families.

A will must be admitted to probate, and the cost and complexity of probate proceedings vary by state.

Revocable trust. In many states, a revocable or "living" trust is the central document of an estate plan. A revocable trust can avoid the need for a probate proceeding after your death. It can also facilitate the handling of your property during your lifetime in the event of incapacity.

With a revocable trust, you transfer title to your assets into the name of the trust. You can serve as sole trustee during your lifetime or name a co-trustee.

During your lifetime, you are the beneficiary of the trust and can typically access the trust property in the same manner as an account in your own name. You can revoke or amend the terms of the trust at any time.

If you have a revocable trust, your will is usually a "pour-over" will, directing that any assets you may not have titled in the name of the trust during your lifetime should be added to the trust at your death.

If you lose capacity, the successor trustee you name in the trust instrument can take immediate control of the trust property to meet your needs.

Upon your death, the trust property is distributed to the people and organizations you name in the trust instrument.

Trusts. If you have a large estate or a more complicated family picture, you may want to leave assets in a trust. Trusts can be used for lifetime gifting or the transfer of assets at your death and are often used to take advantage of the federal estate tax exemption, for marital and charitable deductions and for income tax planning.

Beneficiary designations. For many individuals, retirement accounts and life insurance policies make up a substantial portion of their wealth. Remember that these assets are not controlled by the terms of your will or revocable trust.

Instead, their distribution is governed by the beneficiary designation forms you have filled out with the plan administrator or life insurance company.

Your insurance company or retirement account administrator should be able to provide you with a copy of your current beneficiary designations as well as the forms necessary to make any changes.

Naming the right team to carry out your wishes

One of the most important things to consider when putting an estate plan in place is naming a team you can trust to carry out your wishes. The executor of your will, trustee of any trusts and agents under powers of attorney all play key roles.

They act as a fiduciary with duties of loyalty and prudence. Depending on the circumstances, these individuals may be responsible for gathering and valuing your assets, assessing and paying debts and liabilities, filing and paying taxes, arranging for funeral expenses and distributing your assets according to the terms of your documents.

For an executor, this job can last for many years. For a trustee of continuing trusts, it could be decades. It is important that the individuals you name have the organizational and financial skills to carry out these duties. Of course, they also can hire professionals to assist as needed.

At the end of the day, you need to know that your affairs will be handled in the way you planned. Talk to the individuals you are considering to ensure they understand and accept their potential roles and responsibilities.

Depending on the complexity of your plan and family situation, you might also consider naming a corporate trustee to provide expertise, experience and objectivity.

Review and update

Your estate planning documents are most effective if they are up to date and reflect your goals. It is important to review and update your documents whenever you have a significant life change, such as marriage, divorce, the birth of a child, death of a beneficiary or relocation.

There may also be other reasons to update them, such as a change in your financial status, changes in federal or state tax laws or changes in your relationships with named beneficiaries, executors, trustees or agents.

Regularly reviewing and updating your documents helps ensure that your assets will be distributed to the right people in the right 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.

Deciding how your assets will be transferred once you're gone is essential, but that doesn't mean it's easy. Estate planning forces people to have tough conversations with their closest family members — and that can be emotionally challenging.

Talking about it appears to be particularly difficult for Baby Boomers, according to a recent Fidelity study, which reveals a major disconnect between older and younger and generations.

According to Fidelity's 2025 Family & Finance study, 97% of respondents recognized the importance of discussing estate plans with their loved ones, yet only about half of them had actually engaged in those conversations.

Another report from Fidelity's Center for Family Engagement found 76% of the next generation wants to know whether they're named beneficiaries, but only 35% of Baby Boomers feel they need to talk with the person being named. This raises the question: What's behind the disconnect?

Inherited values and fears

As an estate planning attorney, I work with a lot of Baby Boomers. While a lot of Gen Xers and Millennials know they are set to inherit because of the Great Wealth Transfer, they also want to hear it from their parents, and in some cases, they want to discuss how much they'll receive.

However, Baby Boomers grew up during a time when money wasn't discussed. Many of them don't want to disclose their financial plans because that's simply not how they were raised.

Another factor contributing to their desire to withhold information is the fear of running out of money. Baby Boomers, born 1946 through 1964, grew up with parents who lived through the Great Depression.

As a result, frugality became a necessity, financial conversations were viewed as stressful or taboo, and saving and protecting what you had was a means to survival.

Even though they were born during a time when America's economy was booming, they absorbed the financial attitudes and perspectives of their parents.

Therefore, core beliefs such as "don't waste," "work hard and protect what you've earned," and "don't take unnecessary risks," were passed on once they began having families of their own.

Additionally, many Baby Boomers fear entitlement. They're afraid that if their child knows they're receiving an inheritance, especially if they know they're getting a certain amount, it will encourage them to rely on that money and discourage them from providing for themselves.

Others are worried they'll be financially abused or taken advantage of by their beneficiaries in anticipation of their expected inheritance. And for some families, designated beneficiaries may simply not be ready or financially responsible enough to take on that inheritance.

Those with complex family dynamics or blended families may choose to stay tight-lipped in an effort to keep the peace.

The risks of staying silent

While keeping certain information about your estate plan private can be beneficial, keeping too much information to yourself can lead to chaos, especially after you're gone. It's not just about who gets what.

If family members don't know who the parents worked on the estate plan with, such as the estate planning attorney, financial adviser, CPA etc., they're completely lost.

In this situation, surviving loved ones feel like they have to dig for answers on how to handle the estate because they don't know who put the plan together or whom to contact with questions.

Another issue is that families may disinherit children, particularly in second and third marriages, but the children don't find out until the parent has passed.

Figuring out a sibling may have gotten more, or that certain conditions must be met in order to access the inheritance, particularly when a trust is established, can also lead to confusion and disappointment.

Information you should disclose

When it comes to communicating your estate plan with beneficiaries, treat it as a balancing act. It's a good idea to share the contact information of the estate planning team you're working with so that your loved ones can potentially meet with them ahead of time, while you're still alive, to ask questions and better understand your wishes.

If that's not possible, at least they'll have a phone number or email address they can use to reach your team if needed.

If the inheritance is locked in a trust and has certain conditions that need to be met in order to access it, that can be disclosed with the beneficiaries. That way there's full transparency about how the funds should be accessed and used.

Any specific end-of-life or funeral arrangements you have should also be disclosed so that your loved ones have clear direction on how to proceed once you're gone.

Information you should keep private

Information that should be kept private includes specific dollar amounts, details on asset distribution, where assets are located, investment strategies and account numbers.

These are sensitive components of your plan and disclosing them should be treated with extreme caution while you're still living.

Before designating beneficiaries or disclosing information, several questions and considerations should be addressed with your estate planning attorney, including:

• The financial habits and/or character assessments of potential beneficiaries.
• Complex family dynamics or past conflicts that could impact the distribution of the estate.
• Identifying whether any beneficiaries have special needs, debts or legal issues that require specific planning.
• Understanding what information should be disclosed now and what can be disclosed after your passing.

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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.

Financial windfalls are a dangerous blessing. A settlement, lottery winnings or an inheritance are just a few ways you can find yourself suddenly wealthier than you were the day before. But many have found that losing wealth can come almost as quickly as gaining it.

Millions of Americans could face this issue over the next few decades as a result of the Great Wealth Transfer. According to SmartAsset, Americans over the age of 55 currently control nearly 75% of the country's wealth, and Baby Boomers alone carry more than 50% of it.

That wealth — estimated to be between $84 trillion (about $260,000 per person) and $124 trillion (about $380,000 per person) — will transfer primarily to Gen X and Millennials over the next 20 to 30 years. Women are expected to control a substantial portion of this wealth due to their longer life expectancies.

So how can you make the most of inherited wealth? Here are four mistakes to avoid if you find yourself participating in the Great Wealth Transfer.

1. Making quick decisions

Waking up wealthier than you were yesterday can cause numerous temptations. It can be hard to resist living a more lavish lifestyle when your circumstances change. But without a proper plan in place, spending can get out of control fast.

The true number is hard to determine, but the American Bankruptcy Institute reports that a large proportion of lottery winners wind up bankrupt.

You may quickly regret that big purchase. You may overestimate your inheritance when you pay off that debt, finding yourself cash-poor. You may entrust the wrong party with the complicated inheritance process.

If you find yourself thrust into this world, react cautiously. Take a measured approach to each decision, and ensure you've fully thought through your steps before you take them.

2. Pressure from loved ones

With lottery winnings, some states allow anonymity when claiming your prize, while others do not. In any case of financial inheritance, word travels fast.

It's common for family or friends to come calling for financial favors. Some may offer potential investing opportunities and make use of your previous connection.

Saying "no" to loved ones is never easy, but saying "yes" to everyone will almost certainly guarantee a quick depreciation of your newfound assets.

It is highly recommended that you employ a financial professional to help manage your new wealth. Your financial adviser's role is to grow your wealth, not take a slice of the pie. They will help you manage not only your finances, but also the difficult decisions you will no doubt need to make.

3. Ignoring tax implications

Receiving your inheritance can trigger estate, capital gains or income taxes depending on your state and situation. Don't rush to liquidate your assets. Withdrawals from inherited IRAs or 401(k)s are taxed as ordinary income because they were funded pre-tax.

Additionally, many of the assets you inherit can be updated in cost basis according to fair market value at the time of the original owner's passing. As the beneficiary, you can use this adjustment to minimize the impact of capital gains taxes.

Once again, unless you're a tax professional yourself, strongly consider hiring a financial adviser, CPA or estate attorney. Trying to navigate these intricacies alone could lead to major losses.

4. Failing to create new long-term goals

This is the greatest mistake an inheritor can make. If your financial situation changes, so should your long-term financial goals.

How much were you saving for retirement previously? What investment strategies are now available to you? What do your dreams look like in your new circumstances? What may have seemed unreachable before could become a reality, but only if you adjust your plan and create a new, realistic timeline.

It's reported that 70% of inherited wealth is depleted in the second generation. According to AMG National Trust, by the third generation, that metric reaches 90%, and generational wealth has suddenly evaporated.

An inheritance is a blessing and gift that exists because someone else thought of you and took the time and energy to build a plan for your future. Honoring that work is a tremendous way to thank them for their thoughtfulness and love.

The most important action you can take is to remain mindful of your decisions and approach them in a way that honors not just the gift, but the giver.

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• Five Strategies to Keep Your Heirs From Blowing Their Inheritance

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

As a mom, there is nothing more important to me than knowing my kids will always be safe. Not just physically safe, but financially safe, too.

I never want them to find themselves in a terrible situation simply because they didn't have enough money or didn't know how to navigate a financial decision.

That protective instinct runs deep. In fact, according to a Bankrate survey, more than three in five parents of adult children are sacrificing their own financial well-being to help their children feel secure and supported.

This is the story of three generations of women who love each other deeply and used a little-known tax strategy not just to grow wealth, but to protect it and pass it on with intention.

With the support of Natalie Colley, a senior lead financial adviser and partner at my firm, Francis Financial, they were able to turn a tax code into a tool for love.

Meet the family: Susie, Mary and Francie

Let's begin with Mary, aged 60. She worked hard, saved well and several decades ago used $55,000 of her savings to purchase an up-and-coming company called Apple (AAPL). She now holds more than 11,000 shares of stock, and they're worth more than $3 million.

The bad news is that Mary cannot sell the stock without facing a huge tax bill, as the stock has grown by well over $2.9 million.

If Mary sells the Apple stock, she will owe taxes on the growth of the investment, which is the difference between what she originally paid and what it's worth today. The original amount she paid is called her cost basis. Think of cost basis as the starting line of an investment.

Mary's daughter Susie is 30, working hard and building a life. Like so many women her age, she's managing a career, raising her children and struggling to set aside savings for the future.

Then there's Francie. She's 82, lives with Mary and is warm, funny, sharp and deeply devoted to her daughter and granddaughter. Francie doesn't have many assets of her own, so she's not facing any estate tax issues.

This is a family that cares for one another and wants to make the best decisions they can, together.

The dilemma: A gift with strings

Mary knows that she has more money than she needs and is not sure how to share her wealth in a way that will not trigger a huge tax bill. Mary considered giving the Apple stock to Susie right now. But when she brought this idea to her financial adviser, Colley, she learned there is a catch.

When appreciated stock is given as a gift during your lifetime, the recipient inherits the giver's cost basis. That means Susie would receive the Apple shares with Mary's original $55,000 cost basis. If Susie sold even part of those shares, she'd face a massive capital gains tax bill.

It would look like a generous gift. However, if Susie sold later to create a diversified portfolio that would be more appropriate for her, she would face taxes on nearly $3 million of capital gains. It would be a devastating tax bill dressed up as a generous gift.

The solution: Step-up in basis

Colley introduced a strategy, called a step-up in basis, that could make all the difference.

When someone dies and leaves you an investment, the IRS resets the cost basis to the value on the date of death. This is referred to as the step-up in basis. It means that all the growth from the original purchase up to that moment is completely wiped away for tax purposes.

In Mary's case, that meant Susie could receive the Apple shares after Mary's death and avoid the tax bill altogether. But Mary is healthy and young. Susie could be waiting decades. So their adviser proposed a surprising, loving and innovative idea.

The strategy: Upstream gifting

What if, instead of giving the stock to Susie, Mary gave it to Francie?

Francie is older and does not have enough in assets to trigger any estate tax at her death. By giving the stock to her, then allowing Francie to pass it to Susie later in her will, Susie could still receive the step-up on the basis of the Apple stock. This would effectively eliminate more than $2.9 million in capital gains taxes.

The difference for Susie could be hundreds of thousands of dollars in avoided taxes, which she can use to build a future, create stability or put toward her own children's education and financial security.

The risks: Trust and timing

Upstream gifting isn't perfect. Once Francie owns the stock, it's hers. She could change her will. She might need the money for medical costs or care. Or she might not live the required full year for the gift to qualify.

This isn't a strategy for every family. But for Mary, Susie and Francie, the love and transparency they share gave them confidence to move forward.

What assets should be given upstream?

Not everything should be given upstream.

Mary also recently bought Nvidia (NVDA) for $180, and it's now trading around $191. There's barely any gain. This is the kind of asset that works beautifully for downstream gifting to Susie. The basis is close to the current value, and the growth potential lies ahead.

Rules of thumb:

• If an asset has large unrealized gains, consider holding it for a step-up in basis
• If the asset has little to no gain, or you expect strong future growth, consider gifting it now

More ways families can preserve wealth

You don't need millions to take advantage of these smart tax strategies. Here are a few ideas we often share:

• In 2026, you can give $19,000 per year per person tax-free.
• You also have a lifetime federal gift exemption of $15 million (as of 2026). The federal gift exemption is the total amount of money or assets you can give away over your lifetime at death without owing federal gift taxes.
• Donating appreciated stock to charity lets you avoid capital gains taxes altogether.
• Use trusts to control how assets are passed and protect them from divorce or lawsuits.

Advanced planning is key, but the most important thing is to talk to your family. The best estate plans begin with honest conversations and shared values.

Estate planning, for most, is about creating a financial legacy that lifts the next generation forward, free of unnecessary burden or fear.

If you'd like to explore how to build this kind of plan for your family, you can reach out to Natalie Colley at Francis Financial (natalie@francisfinancial.com). She brings not only deep expertise in estate, tax and investment planning, but also the kind of care and heart that makes all the difference.

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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.

Many people spend decades saving and investing, only to discover that their well-funded portfolio doesn't necessarily equal a well-planned retirement.

To build lasting security, it's important to create a plan that can help you realize your goals while also protecting your income and independence. In the run-up to retirement, or when newly retired, you should therefore focus on these six key areas:

1. Taxes: Avoid the stealthy erosion of wealth

People are often surprised to learn they could end up in a higher tax bracket in retirement than while working. Income-based taxes on Social Security and Medicare and required minimum distributions (RMDs) that start in your 70s can push tax bills higher than you might expect.

The good news is that you may have more control over the taxes you pay in retirement than at any other time in your life.

If you've stashed a chunk of your money in tax-deferred accounts (a 401(k), 403(b) or traditional IRA, for example), you may want to look at the benefits of doing a Roth conversion now to minimize your tax burden later. You might also consider:

• Placing your investments in account types based on how they're taxed (called asset location)
• Using qualified charitable distributions to optimize the tax benefits of gifting and reduce your RMDs
• Applying income-timing techniques that can help smooth out taxable income over time

You may not be able to avoid taxes altogether, but with the right strategies, you can make them more predictable and ensure that more of your money continues to work for you.

2. Health care: Preparing for retirement's most underestimated expense

According to Fidelity Investments' most recent Retiree Health Care Cost Estimate, a 65-year-old retiring in 2025 can expect to spend an average of $172,500 on health care and medical expenses throughout their retirement — and those costs can rise sharply if long-term care is required.

Building health care into your financial plan, rather than treating it as an afterthought, can make a dramatic difference in how much you'll spend.

That means reviewing your Medicare options annually to make sure you still have the best plan for your needs. (If you're still working, you may want to consider investing in a health savings account.)

The sooner you explore the options for long-term care coverage, the more confident you can be that you'll be protected from what could be one of the largest expenses you'll encounter in retirement.

3. Risk in the market: Safeguarding what you've built

The stock market doesn't care that you've just retired and that you're depending on your nest egg to last for decades.

Experiencing a downturn early in retirement, while you're taking money out of your accounts but no longer putting money in, can drain your portfolio much faster than you expected.

One way to guard against this phenomenon, known as sequence of returns risk, is to separate your assets into three separate "buckets":

• Safe reserves for near-term income
• Balanced holdings for the next phase
• Growth assets for later years

The goal of a bucket strategy isn't to completely eliminate risk but to position it so that it serves you, and not the other way around.

4. Income: Turning savings and benefits into a reliable paycheck

After years of diligently accumulating money, many retirees struggle to come up with a withdrawal strategy that works for their needs. Withdraw too much, and you risk running short in the future. Take too little, and you may not enjoy the lifestyle you worked so hard to earn.

A plan that thoughtfully blends multiple income sources — Social Security, pensions, dividend and annuity payments, and systematic withdrawals — can create a steady paycheck that remains reliable even when markets fluctuate.

5. Vitality: Extending your health span, not just your lifespan

Money is a means to sustain your active and fulfilling retirement, not a scoreboard to measure it against.

Studies consistently show that physical activity, purpose and social connection can improve quality of life and extend longevity.

Your financial plan should support the habits and hobbies that keep you energized, including travel, time with family and friends, continued learning and/or volunteering and giving back to your community.

6. Estate and legacy: Living fully and making your wishes known

A legacy plan is about more than the distribution of your assets when you're gone. It's about ensuring your loved ones know and understand your wishes, have access to up-to-date and professionally prepared legal documents, and can navigate decisions without confusion or conflict.

Don't delay. It's important to keep your beneficiary designations current, establish powers of attorney and communicate your wishes to your financial adviser and those you care about.

Coordination is key

It's often the blind spots that cause the most problems — and the most regret — for retirees.

In truth, many hard-working retirees don't have a money problem; they have a coordination problem. They've accumulated various assets over the years, but they have no idea how, or if, those investments will work together.

It's like trying to assemble a 1,000-piece jigsaw puzzle without looking at the picture on the front of the box.

That's how retirement feels for many people — scattered, uncertain and more complex than it needs to be.

When you have a plan in place to cover the six foundational areas — taxes, health care, risk, income, vitality, and estate and legacy (or THRIVE) — your wealth can transform from a collection of accounts into a framework for living well.

And with the help of a financial adviser, preferably someone who is a retirement specialist, you can feel more confident that you're prepared for the exciting time ahead.

Kim Franke-Folstad 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.

Editor's Note: This is part four of a four-part series about how to create and use your own Estate Planning Playbook. Earlier articles covered the fundamentals, the key components and the value of assembling a personal playbook. Today, we focus on using your plan as an active, ongoing tool that supports clarity, trust and long-term family harmony.

It's said that in martial arts, you begin learning in a deeper way once you earn your black belt, which signals readiness for the next phase, not the end of the journey.

Estate planning works in a similar way. Once you create a revocable living trust and organize your playbook, you have a foundation.

Now the real work begins, because families evolve, laws change and your wishes might shift over time. A healthy estate plan keeps pace with those changes.

Hold a family meeting

A family meeting can be one of the most effective steps you take after your documents are in place. It doesn't need to feel formal, but it should be intentional.

This is your opportunity to outline your wishes, explain the structure of your plan and help your beneficiaries understand the purpose behind your choices.

These meetings matter because misunderstandings often lead to conflict. When heirs never hear directly from you, they might interpret unequal distributions or complex structures through their own assumptions.

Addressing those decisions now can prevent unnecessary tension later.

What to cover during a family meeting:

• Provide each beneficiary with a copy of your revocable living trust
• Explain who is serving in key roles, such as a successor trustee or executor
• Clarify any unequal inheritances and the reasoning behind them
• Discuss your general intentions for your wealth, values or charitable goals

Some families prefer to hold this meeting with their financial adviser or attorney present. Others handle it privately.

The right format is whichever one makes the conversation productive and clear.

Use your playbook to fill the gaps

Your revocable living trust outlines who receives the assets within the trust. It doesn't tell your family where the accounts are held, how much they contain or who the beneficiaries are on assets that pass outside the trust.

Retirement accounts and certain insurance policies often fall into that category.

This is where the playbook becomes essential. A complete playbook gives your loved ones a clear path during what is often a stressful time.

Your playbook should include:

• Recent statements for investment, bank and credit union accounts
• Copies of life insurance policies
• Grant deeds for real estate
• Funeral instructions or preferences
• A current list of your CPA, financial adviser, attorney and insurance agents
• Contact numbers and policy or account identifiers

When you walk your family through these items, they know whom to call and where to find everything. Without this information, assets can be overlooked or lost.

I still work with a client who believes his grandfather left more behind than the family ever located because no one had a full picture of the accounts.

Prevent common oversights

Many families run into practical obstacles that are surprisingly easy to avoid. Documents might be locked in a safe deposit box without a shared key.

Passwords might be stored on a home computer that no one can access.

Beneficiaries might not know which accounts trigger tax liabilities.

A bit of preparation now can make things significantly easier later.

Ways to avoid common mistakes:

• Tell your heirs how to access your computer and secure files
• Ensure someone knows where the safe deposit box key is kept
• Confirm that each beneficiary understands which accounts pass through the trust and which do not
• Review your assets that carry tax considerations, such as retirement accounts and non-IRA annuities

Most financial advisers are eager to meet your beneficiaries early. These introductions help everyone build rapport and give your heirs a trusted resource when difficult decisions eventually arise.

Bring your plan to life

A thoughtful estate plan does more than distribute assets. It reduces stress, minimizes taxes and gives your family clarity during an emotional time.

When you combine open communication with a well-organized playbook, you create a legacy built on confidence rather than confusion. That level of preparation often becomes one of the most meaningful gifts you can leave for your loved ones.

Securities offered through Osaic Wealth, Inc., member FINRA/SIPC. Artisan Capital Partners is a DBA powered by NWF Advisory Group LLC. Investment advisory services offered through NWF Advisory Services, Inc. Osaic Wealth is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic Wealth.

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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’re equally proud of your investment banker daughter and her sister, the kindergarten teacher, but it’s clear to you who needs your money more. Maybe one of your children has hit hard times — say, a prolonged layoff or a costly divorce — while the others have flourished.

Possibly you’ve already lent a big financial hand to one of your offspring, anything from the down payment on a home to paying off debt, while the others have never asked you for a dime.

Whatever the personal circumstances that led you to this point, you’re now considering leaving different amounts of money and assets to your children in your will, either to even the scales or to direct help to whoever needs it most. You’re also worried about the possible emotional repercussions of that decision on your family — the hurt feelings and sibling rifts that could result.

“The most difficult question in estate planning is how I can be fair to my children,” says Larry Macklin, president of the National Association of Estate Planners & Councils.

It’s a challenge that's likely to grow as aging baby boomers transfer an unprecedented amount of wealth — an estimated $84 trillion or more in the next 20 years — to the children who follow them.

Combine money, grief and family dynamics, and the potential for drama about inheritances is high, even when parental assets are divided evenly among children, experts say.

Add a different split to the mix and tensions can boil over — unless you take steps in advance to mitigate the potential fallout.

The solution is not necessarily to change plans for distributing your assets but to do what you think is right and fair, then clearly communicate your intentions and reasoning to the people you love. Here’s how experts suggest you go about it.

Have 'the talk'

Children, whether they’re young or adults, tend to equate a sibling getting more money or resources from a parent with love and affection, says Laurie Kramer, a professor of applied psychology at Northeastern University who has researched parental differential treatment.

In the absence of an explanation, she says, children tend to form their own ideas about why their parents are treating them differently and what it signifies.

“When they feel that one sibling is getting more love and affection from a parent, there’s nothing that they can say to themselves to make it okay,” Kramer says.

Kramer’s research also shows, though, that when people believe their parents are giving more to a sibling to meet an important need that their brother or sister has, they can understand it. Kramer says, “They can think it’s fair or warranted, and in that case, there is no negative impact on family relationships.”

The clear takeaway for anyone who plans to bequeath different amounts to their children? Explain yourself ahead of time.

The first step, says Mitchell Kraus, a certified financial planner in Santa Monica, California, is to document your wishes in a formal will or estate plan, then have a conversation with your children about the approach you’ve taken.

You don’t have to get specific about the numbers, he says, but give them a general idea of what to expect when it comes to the division of your assets and why you’ve chosen to do things this way.

If your children have no inkling about your plans, they might feel blindsided after your death — no matter where they are in the inheritance divide.

Macklin recalls a client with two adult children, a spendthrift son who had trouble keeping a job and no savings, and a married daughter with children who was well off financially.

Concerned the son would plow through his inheritance, the father left money to him in a trust so it would last his lifetime, while the daughter received her inheritance outright.

His children didn’t discover this until the father died, and it upset the son, especially because the father named the sister to manage her brother’s trust. The daughter was so uncomfortable that she hired a bank as co-trustee. That way, Macklin says, “she could always blame the bank for making decisions that the brother didn’t like.”

If you’re worried you’ll strain your relationship with your kids by letting them know in advance you’re planning an unequal distribution, Kramer suggests you write each child a letter explaining your reasons. Then give the letters to the lawyer who drafted the will, who can give them to the kids upon your death.

Aim for equity instead of equality

The default choice to minimize sibling struggles is to split assets evenly, but every family dynamic is different, Kraus says. There could be outstanding loans that the parents gave their children, money given unevenly while the parents were alive, or a special-needs child who requires additional resources. One child might have helped the parents more as they aged. “There is no single right answer,” says Kraus.

Kramer suggests thinking about the division of your assets in terms of equity rather than equality, considering each child’s circumstances and needs. If that exercise leads to an unequal asset distribution, that’s OK, as long as you let your children know your thinking.

Keith Singer, a CFP and estate planning attorney in Boca Raton, Florida, agrees that children can get on board with an unequal distribution if they understand why it’s fair.

One of his clients, he says, has a business worth a few million dollars, as well as several million in other assets. One of his three sons worked with him in the business; the other two built successful companies of their own. The father plans to give his business to the son who worked with him and split the remaining assets equally.

When Singer pointed out that the client would be giving one child significantly more than the others, the father said, “Well, he earned it, because he helped build that business.” Singer said the father subsequently discussed his intentions with his sons, who all agreed with his decision.

Get creative to achieve balance

You can lessen the sting of an unequal inheritance for the child receiving less money by leaving other assets that will help them feel valued — say, a treasured painting or family heirloom. “That shows them, in a different way, that they are loved,” Kramer says.

The key, says Brenna Baucum, a CFP in Salem, Oregon, is to “think through the types of assets that you have and what fits each child.” For example, she says, if one child is struggling with housing, you might consider leaving that child your house instead of a portion of the investment portfolio.

Ask a neutral party for help

If you're uncomfortable discussing your plans with your children, enlist help from a financial planner, estate planning attorney, financial psychologist or other pro trained in financial matters and family dynamics. The expert can coach you on how to handle a conversation with your kids or be present at the meeting to guide it.

Gary Shunk, a coach consultant with Aligned Family in Chicago, often works with families and financial advisers to help broker these discussions. He recalls working with a widow in her seventies who had two children, one who never married and another who was married with three kids.

“There was a potential conflict, since there were more heirs on one branch,” he says. Shunk coached the mother to meet with both children and focus on explaining her interest in investing in the grandchildren’s education. The single child accepted that, with no hard feelings.

If you plan for the emotions attached to an uneven split of assets, as well as the physical division, that’s the type of outcome you can get, as well.

“The hard-earned assets that you’ve worked your life for will live beyond you,” Baucum says. “That’s what most of my clients want to see — their kids utilize this money meaningfully to live an enjoyable life.”

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.

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Roth IRAs are a valuable tool for savers, but they remain underused. As of 2024, only 26% of U.S. households owned one.

However, among those households, 65% said they have a defined strategy for managing income and assets in retirement.

That suggests those who embrace Roth strategies often do so within a broader, disciplined plan.

Roth conversions can be a useful part of that plan, but they shouldn't be considered lightly. Before initiating a conversion, you should take a holistic view of your finances, work with your adviser and make sure you're well informed about the implications.

Why convert to a Roth IRA?

Roth IRAs offer tax-free growth after age 59½ and a holding period of five years, which can increase your net income in retirement and help you build a stronger legacy for your loved ones. However, if you have held a Roth IRA for five years and are age 59½ or older, you don't have to worry about a separate five-year rule for each conversion and can withdraw all growth penalty- and tax-free.

Shifting some of your pretax retirement assets into a Roth can lower future required minimum distributions (RMDs), thereby reducing taxable income. And under the SECURE Act's 10-year rule for most non-spouse beneficiaries, inheriting a Roth is more beneficial than inheriting a traditional IRA.

Because of the 10-year rule, it's advisable for beneficiaries to spread withdrawals over the decade from an inherited pretax retirement account to avoid a huge tax bill in the final year.

While an inherited Roth is also subject to this rule, RMDs are not required until the last year, and that final withdrawal is tax-free. This flexibility allows beneficiaries to invest more aggressively in an inherited Roth than in an inherited traditional IRA.

If markets are down in the 10th year, beneficiaries can also make an in-kind distribution to a taxable account, without triggering additional taxes.

Planning around taxes and timing

Of course, there are trade-offs. Taxes are owed on each Roth conversion, which increases adjusted gross income (AGI) for that year. The five-year rule also applies separately to each conversion, unlike a contributory Roth IRA.

To maximize the benefit, taxes should ideally be paid from after-tax funds. Those without sufficient after-tax liquidity may not be good candidates for a Roth conversion.

Managing brackets and hidden costs

A Roth conversion may push you into a higher tax bracket, particularly at jumps like 12% to 22%, or 24% to 32%.

To limit that impact, consider converting only enough to stay within your existing bracket. The 24% bracket is especially broad, allowing for larger conversions without higher rates.

Additionally, single filers face higher brackets than joint filers. (A conversion opportunity may therefore arise after a spouse's passing, while the surviving spouse can still file jointly.)

Other potential drawbacks include higher Medicare Parts B and D premiums owing to the income-related monthly adjustment amount (IRMAA), which is based on modified adjusted gross income (MAGI).

For retirees, MAGI is usually slightly higher than AGI because it adds back certain items, such as the non-taxable portion of Social Security benefits and municipal bond interest.

State and local tax rules can also present challenges. In New Jersey, for instance, retirees with incomes below certain levels qualify for pension exclusions and property tax benefits, both of which could be affected by higher reported income from a Roth conversion.

Similarly, New York offers a $20,000 exemption per taxpayer on private pretax retirement income, on top of a full exemption on public pension income, allowing couples to convert up to $40,000 without state tax.

Finally, high-income earners should be aware of the phase-down of the State and Local Tax (SALT) deduction, which further limits the ability to offset federal taxes. This change can reduce the overall benefit of large conversions for those already near SALT deduction caps.

Advanced conversion strategies

For those with a high income and ineligibility for direct Roth contributions, a "backdoor" Roth strategy may be an option, making non-deductible traditional IRA contributions, and then immediately converting to a Roth.

In addition to the 59½ and five-year rules, the pro-rata rule must also be considered. Taxes on the conversion depend not only on the converted amount but on the total pretax IRA balance. This includes traditional, SEP and SIMPLE IRAs, but not 401(k)s.

Those with large existing traditional IRA balances may not be ideal candidates for a backdoor Roth IRA, whereas those with a large 401(k) and no other pretax IRA assets may benefit more.

Even among plans that allow Roth conversions, adoption remains limited: Only 32% of plan administrators said some of their plans permit Roth conversions, and 26% said most did.

That gap underscores how underused these strategies remain, even as tax diversification becomes more valuable. There are two distinct backdoor Roth strategies:

• The IRA backdoor Roth, which involves contributing to a non-deductible traditional IRA and then converting to a Roth.
• The 401(k) or plan-based backdoor Roth, available only if an employer plan permits in-plan Roth conversions or allows after-tax contributions that can later be rolled over. Note this can only be done once the elective deferral limit is reached and permitted up to the annual additions limit, which includes all elective deferrals, employer contributions, and after-tax contributions.

While after-tax contributions can be rolled over to a Roth IRA, any growth on them is still considered pretax, unless immediately converted.

If the conversion feature becomes available only after significant after-tax growth has accumulated, participants should consider rolling over contributions to a Roth IRA and the growth on them to a traditional IRA before converting, to minimize taxes.

This approach helps avoid taxes on the initial conversion and ensures a clean starting point. Opening a Roth IRA early also starts the five-year clock on tax-free growth sooner, avoiding delays when future rollovers occur.

If you are phased out of a contributory Roth conversion and worried about the pro-rata rule, consider a small one-time backdoor Roth IRA contribution.

The bottom line

A Roth conversion isn't right for everyone, but when done thoughtfully, it can be a powerful way to enhance retirement income, reduce future taxes and gain more control over your financial future.

The right strategy depends on your income, time horizon and ability to pay the upfront tax bill without dipping into retirement savings.

When approached carefully, with a clear understanding of how it fits into your broader goals, a Roth conversion can provide lasting benefits: flexibility in retirement, protection against rising tax rates and a more tax-efficient legacy for your heirs.

Make sure to talk to a qualified financial adviser who can help you evaluate your options and make the right decision for your personal situation.

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• Inherited an IRA? Key Distribution Rules to Know for 2025

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 Baby Boomer generation is currently the largest holder of assets — but not for long.

There's about to be a period in which the largest wealth transfer in history takes place, called the Great Wealth Transfer.

By 2048, an estimated $124 trillion, according to Cerulli Associates, is expected to be passed down from Boomers to younger generations.

How do you deal with assets that high when transferring them to heirs and receiving them as an heir?

It's a complex situation in which there's no cookie-cutter approach, but there are things to know about transferring wealth that could help you understand how to best position yourself to receive that money, how it could affect your financial situation and, ultimately, how to weave it into your financial plan.

How to approach the transfer of ownership of assets

The reality is that not everyone wants their children to know about their financial situation or their distribution of assets in the same way.

Many of those fears are for good reason. Studies show that 70% of families lose their wealth by the second generation, and an astonishing 90% lose it by the third generation.

A variety of factors can contribute to this, including taxes, frivolous spending and a lack of understanding of how to handle transferred assets.

For example, if you inherit an IRA, you might think you must pay all taxes on the account now instead of stretching it over 10 years, as the rules currently state.

Instead, you can apply strategies to better utilize or combine that money to allow yourself to retire earlier than you thought possible.

In some cases, an effective wealth transfer can even accelerate a retirement timeline. You might be able to strategically use some rules that enable you to liquidate assets to bridge that gap.

For example, let's say you're in a position to retire early at age 54, but you can't touch your 401(k) without penalty until age 59½, whereas if you worked until age 55, you can, thanks to the so-called Rule of 55. If you inherit assets, it could free you to avoid touching those retirement assets.

Take the funds that you're forced to take from an inheritance to bridge the gap until you get to a point where you can access retirement money.

Otherwise, you'd have had to work five more years just to be able to access what you put into a retirement plan. Here are the three steps that can help to see you and your heirs through a transfer of wealth:

Step 1: Know what you're inheriting and what buckets you receive

The first step is knowing what you're inheriting and what buckets you've received. Sometimes when people inherit money, they think they're going to have a huge tax burden.

But most of the time, if you do it strategically, you won't have a lot of taxes due at one time, based on the current rules on a stepped-up cost basis.

If you inherit a home and sell it immediately, there shouldn't be any taxes. The same is true if you inherit a stock portfolio. The tax basis will update to the date-of-death value.

Depending on the process, you can have a bucket in which assets aren't taxable but available to do such things as help you pay off your mortgage, lowering the amount of money you need monthly. This could put you in a window in which retirement is a possibility.

When it comes to retirement, you must think about your cash flow and how you fill that bucket. What's going to be available for emergencies? What kind of growth vehicle am I going to need for inflation? Depending on what you inherit, that could fill a bucket that you don't currently have today.

If it's a situation in which you feel good about your pension and Social Security income but don't have enough flexibility for emergencies, maybe those assets will bridge that gap. You could have a great situation today, but you are worried about longevity. You could position assets for long-term growth potential.

It's about trying to figure out how to weave that strategy into what you're already doing, because we tell people inherited money is a lot like lottery money.

If you don't know you're going to get it or what you plan to do with it, the money tends to disappear very quickly.

Make sure you're strategic to a point, but don't count money before you have it. I think everybody would like their parents to finish well and have enough money for long-term care and other things that could put a dent in the expected inheritance that you get, especially if you're dividing it between siblings.

Never make tactical decisions before you have money, but it's good to make strategic planning choices or have awareness so you're prepared when you do receive assets.

Step 2: Be as efficient as possible

If you want to transfer wealth as efficiently as possible, there are several actionable steps to make sure your assets are accurate and structured according to your preference.

This will ensure as many of your assets go through beneficiary designations as possible and you aren't waiting on a probate timeline, which helps reduce the risk of someone thinking they're entitled to money they aren't.

Have basic estate planning documents in place so you can end your life well, but also make sure anything that doesn't have a beneficiary's name attached to it is dealt with appropriately.

This time is also about education and having conversations with your children so they're not blindsided. Leave your heirs with a plan, not a puzzle. Determine who needs to have a voice in the conversation and who needs to have a vote in the conversation.

If you want to handle the wealth-transfer process right, communication is key with the next generation.

For example, let's say you have three siblings; two are in good financial shape, but the third has hit hard times. Logically, it would make sense to shift more of the estate in their favor.

But if there's no communication and they see the documents, they might think their parents loved that sibling more than them.

People attach a lot of psychology to money decisions, especially later in life. The more communication you have and get buy-in from the kids, the better it will be for everyone. Don't ruin your legacy through a lack of communication.

Step 3: Be strategic in your gifting

In the same way the recipient must be strategic in how they receive money, parents should be strategic in how they give or leave money.

If they're in a position in which they're financially able, they could gift funds annually while still living, passing money to their heirs that doesn't have the same restrictions or taxation.

Remember to think about the tax buckets. For example, suppose half your money is in a house and the other half is in a retirement account. You want half your money to go to charity and the other half to your kids.

In this case, you'd want to gift the house to the kids, because they would get more and the charity would get more if you gift the entire retirement account.

It might sound simple, but if you switch those, the whole estate is going to be smaller and less impactful simply because you didn't gift from the right bucket to the right places. Strategy matters.

This could make Roth conversions more valuable because inherited Roth funds are the only funds you can receive that have a tax-free life after the person who funded the Roth.

Try to use that as motivation to say, "If I know I'm never going to use that money and I want to try and maximize its impact, then maybe it makes sense for me to start paying taxes on this money for the benefit of kids or grandkids to be able to have a tax-free runway."

Some clients I work with recognize the impact of Roth conversions on their situation, but when I ask about their parents, they tell me they're 89 years old, living on Social Security and are forced to take money out every year.

Because of that, their total income is probably not a lot, especially compared with their heirs.

Could it make sense for the parents to convert so that the money the children receive will then be able to grow tax-free during their lifetime and retirement years?

It's easy to get into your upper 80s and not realize how beneficial a Roth conversion is when you're just pulling whatever the government makes you take out since required minimum distributions (RMDs) started for you almost 20 years ago.

It's about being strategic with what you want to have happen and how you can leverage the decisions that you can make today and maximize the impact.

Related Content

• This Is How You Can Guide Your Heirs Through the Great Wealth Transfer
• You've Built Your Wealth, Now Make Sure Your Family Keeps It
• Great Wealth Transfer: How Families Can Get on the Same Page
• Wealth Transfer Is About More Than Just Money
• Six Ways to Make Talking With Family About Estate Planning Easier

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 holidays give many families a rare chance to gather in one place, sharing meals, stories and traditions. But amidst the festivities, there is also a unique opportunity to have conversations about the future.

Even a small step now — sharing your thoughts on aging, care or estate plans — could help prevent confusion, conflict or stress down the road.

Many people find these conversations challenging, and understandably so. They touch on mortality, money and independence.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Yet, in my experience with clients, the greatest gift you can give isn't always measured in dollars; it's the clarity and peace of mind that come from a well-communicated plan.

Whether you are the matriarch or patriarch of the family, or the adult child looking to support aging parents, here is how to approach these conversations this season.

For the older generation: Stewardship and clarity

If you are the one who built or stewarded the family's wealth, you are likely focused on two main objectives: maintaining your own comfort and easing future responsibilities for your children. Clear communication supports both.

Long-term care and living wills

Talking about long-term care doesn't have to be a technical discussion about insurance policies. It can be as simple as expressing a wish: "I want to make sure my health care preferences are clear if I can't speak for myself."

From there, you can share whether you would prefer to age at home or elsewhere and confirm that your power of attorney and health directive documents are current. This isn't about giving rigid instructions — it's about ensuring your family isn't left guessing during a crisis.

Estate plans and legacy

A smooth, organized transition is one of the most meaningful legacies you can leave. You don't need to get into specific dollar figures at the dinner table. Instead, focus on the logistics:

• Where are the key documents kept?
• Who are your attorney, tax professional and wealth manager?
• What is the general structure of the plan?

If your plan involves unequal distributions, offering brief context now can spare significant tension later.

Family values and philanthropy

If discussing assets feels too heavy, try starting with values. Bringing your family into your charitable giving can be a gentle way to discuss legacy. Asking which causes matter to them turns the conversation toward shared purpose rather than inheritance.

For adult children: Curiosity and respect

Adult children often want to support their parents but fear overstepping boundaries. The key is approaching these topics with curiosity and respect, rather than demands.

Asking about preparedness

You would feel better knowing where your parents' key documents are and who to contact if something happens. Frame the question practically, not intrusively.

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Understand what key professionals are involved — the attorney, wealth manager, accountant and anyone else supporting the family. Identifying these individuals is not only part of maintaining an "orderly estate," but it also helps reduce the risk of miscommunication.

Crucially, it can help prevent your parents from becoming victims of financial fraud and hacking by ensuring there is a trusted team watching over their affairs.

Understanding the care plan

If your parents have said they want to age in place, it helps to ask what that means in practice. How do they imagine the family coordinating support?

Discussing this now keeps everyone aligned and avoids accidental misunderstandings later.

Aligning on educational support

Holidays can also be a good time to talk about help for the grandchildren's education. Asking whether they would like to contribute to 529 plans — or use another approach — keeps things coordinated and tax-efficient.

Conversation starters

If you aren't sure how to break the ice, try one of these openers.

Parents could say:

• "We're not getting any younger, and I want to make sure we're on the same page about elder care. We'd like you to be the point person for our care when we're older. Is that something you'd be open to?"
• "At some point next year, I'd like you to sit down with our wealth manager and attorney to understand what to expect when I'm gone. Can we get something on the calendar?"

Adult children could say:

• "I'm not sure how to think about planning for the children's education. Is that something you'd be willing to contribute to during your lifetime instead of leaving it up to the will?"
• "If you got hit by a bus tomorrow, where is everything saved? Do you have a doomsday file on your computer?"

Putting it all together

Not every topic will be resolved over a single holiday dinner — and that's okay. The goal is simply to begin.

By opening the door to these conversations, your family can create a shared commitment to clarity, stability and long-term well-being. That is a gift that lasts far beyond the holiday season.

Related Content

• Your Estate Plan Isn't 'Done' Until You've Completed These Five Steps, From an Estate Planning Attorney
• What Would You Like to Leave Behind? A Financial Planner's Guide to Family Wealth Discussions
• Resist the Taboo: Talk to Your Kids About Family Wealth
• Prepare Your Family for the Financial and Legal Aftermath of Your Death
• You Don't Want It, But You Should Plan for It Anyway: An Expert Guide to Long-Term Care

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

A growing number of women inheriting wealth are redefining philanthropy.

Rather than focusing on luxury or one-time donations, many are channeling their resources into lasting, purpose-driven movements that can shape communities for generations.

One powerful example is Alice L. Walton, the richest woman in the world, who recently opened her own medical school and is covering tuition for its first five graduating classes, as reported by Time magazine.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Walton's $154 million investment in Bentonville, Arkansas, reimagines medical education by focusing on preventive health, holistic wellness and the principle that doctors must learn to heal themselves before they can heal others.

Her vision exemplifies how today's women of wealth are shifting from traditional philanthropy to creating sustainable systems to fund philanthropic gifts into perpetuity.

A strategic and generous model of giving

This new model of giving is not just generous, it's strategic. It's reshaping how ultra-affluent women think about wealth management and legacy.

To facilitate this movement, many are turning to family offices and multifamily offices to help them transform legacy into meaningful impact.

This CFO-type relationship enables women to focus on enabling significant change rather than managing their daily financial complexities.

Women of wealth today expect far more than traditional portfolio oversight. They seek solutions that align wealth with purpose, impact and legacy.

According to HSBC's 2025 report The Giving Shift, 60% of female respondents said financial giving is extremely or very important, prioritizing causes tied to family, health and community over status or prestige.

This values-based approach underscores how women use wealth to strengthen connections and drive measurable impact.

This evolution extends to how women choose their wealth managers.

A 2024 New York Life survey found that 48% of women feel more understood by a female adviser, up from 29% just five years earlier, and nearly half value collaborative, educational relationships.

They're not seeking transactions; they're seeking strategic partners.

How the family office model delivers

The family office model delivers this by providing detailed and timely financial analysis to address all the complexities of multigenerational wealth — tax, estate and philanthropy.

This clarity provides the time and ability for these women to pursue their passions.

Unlike traditional firms with standardized offerings, family offices are designed to be nimble to the complexity of clients' entire lives.

The timing of this shift is significant, as the Great Wealth Transfer has begun. Bank of America Institute's Women and Wealth report projected that roughly $54 trillion will pass to surviving spouses, 95% of whom are women.

Concurrently, Deloitte's Global Family Office Report provides insight that there are more than 8,000 single-family offices worldwide, up from approximately 6,000 in 2019. That figure is projected to increase by 75% or exceed 10,000 by the end of the decade.

A powerful truth

Together, these trends reveal a powerful truth: The next generation of female-led wealth is redefining stewardship. For women, that stewardship often centers on three main pillars:

• Wealth preservation and growth
• Family mission
• Next-generation education

The first priority is the security and growth of wealth throughout future generations with proper entity structure and risk management. The family's mission channels resources toward philanthropic causes that support family values and beliefs.

Family wealth counseling prepares children and grandchildren not only to inherit wealth, but to continue the stewardship in perpetuity.

Family offices help support these pillars by turning intention into an actionable plan of execution, helping to ensure a successful outcome of the long-term family strategy.

One example includes coordinating a charitable giving strategy with an income tax event in the same year. Within the Great Wealth Transfer, a significant portion of assets will come from qualified retirement plans.

Non-spouse beneficiaries of these plans are required to take mandatory annual distributions and must fully withdraw all assets within 10 years of the original account owner's passing.

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Because these distributions are taxed as ordinary income, working with a family office that understands your entire financial situation is essential. This coordination enables proactive tax bracket management and the use of charitable deductions to offset income, supporting both tax efficiency and the family's broader legacy objectives.

Documentation is critical

Another example is the structure and organization a family office provides when navigating complex, multigenerational strategies — particularly those involving estate exemptions and the transfer of assets to the second and third generations.

Many of these plans evolve over decades, making documentation vital. Tools such as our proprietary Family Legacy Book^® serve as a central record of gifting history, ownership structures and entity relationships.

This living road map ensures that if the matriarch or patriarch passes unexpectedly, the family retains a clear and current financial picture, providing continuity, confidence and peace of mind.

These examples reflect a broader movement among affluent women leveraging wealth with intentionality.

Increasingly, they recognize that family offices don't just preserve capital, they simplify complexity, saving them time and allowing them to focus on what truly matters: health, family purpose, personal passions and family legacy.

Beginning with the end in mind

For women of wealth, the takeaway is clear: Building a lasting legacy begins with the end in mind. Rather than chasing returns, they build the management around meeting their targeted objectives, incorporating investments, trusts, philanthropy and education under one coordinated strategy.

A well-run family office makes this possible, serving as the hub that turns intention into successful outcomes.

Start by defining what you want your wealth to accomplish, whether that's long-term stability, meaningful philanthropy or empowering the next generation with financial confidence. Surround yourself with professionals who listen, educate and collaborate.

True stewardship isn't about managing assets; it's about ensuring your wealth continues to advance family values and the future vision across generations.

Related Content

• Ten Ways Family Offices Can Build Resilience in a Volatile World
• Do You Need a Family Office? Four Signs for the Very Wealthy
• How Women Can Handle Their Growing Wealth Like a Pro
• Financial Planning: Sisters Should Be Doin' It for Themselves
• Melinda French Gates Models Three Strong Lessons for Philanthropists

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.

In the next two decades, the largest intergenerational wealth shift in history will unfold.

Baby Boomers and the Silent Generation are transferring assets at a pace never before seen. Cerulli Associates estimates that about $84 trillion will change hands in the U.S. through 2045, with $72 trillion flowing to heirs and nearly $12 trillion going to charity.

Numbers this large can dominate the headlines, but the real story is about preparation and protection. Families who believe they've completed their estate plans once the technicalities, such as documents, valuations and tax strategies are in place, might be overlooking critical risks.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Without further steps, heirs might face confusion, conflict or costly mistakes. Those who go further to invest in communication, education and shared purpose might avoid common pitfalls and turn inheritance into a lasting legacy.

Start while you're living

One of the most powerful ways to protect family wealth is to prepare heirs before they inherit. Families who wait until death to hand down responsibility often leave heirs without the experience or judgment needed to manage wealth wisely.

By contrast, sharing wealth — and decision-making — during your lifetime creates a controlled environment for learning, growth and risk reduction.

Make lifetime gifts part of your wealth plan. Instead of waiting for a full inheritance, gifting a manageable amount of cash or stock allows heirs to practice stewardship.

In family businesses, small equity stakes help the next generation learn operational and governance responsibilities, reducing the risk of disruption later.

Tie transfers to life milestones. Linking wealth to achievements such as graduating college, landing a first job or completing financial training provides natural opportunities to build maturity.

These standards help prevent premature or mismanaged transfers.

Involve heirs in philanthropic decisions early. Giving younger family members the responsibility to allocate charitable funds teaches disciplined decision-making and values alignment, reducing the risk of misaligned giving or disconnection from purpose.

By integrating these practices, families can help ensure that heirs have tested their decision-making, experienced consequences in a safe setting and built the confidence needed to manage larger sums — all before the full estate is transferred.

Prevent conflict with clear, updated plans

Having legal documents in place is essential — but not sufficient. Failure to keep them updated or to clearly communicate plans to heirs is one of the most common causes of estate disputes, legal delays and unintended outcomes.

Engage wealth advisers early. Working with legal, tax, and financial professionals ahead of time allows for thoughtful, iterative planning — avoiding rushed decisions in crisis moments.

Update documents after major life or financial events. A marriage, divorce, new grandchild or business change can render old plans obsolete, leading to misallocations or disputes. Regular reviews help keep intentions aligned with current reality.

Provide heirs with a clear inventory and instructions. Without access to key documents or understanding of how to manage complex assets such as real estate or private businesses, heirs can be left vulnerable to costly mistakes, delays or litigation.

Clarity eliminates ambiguity. When heirs understand the plan and where to find everything, transitions are smoother, legal risks are minimized and conflict is less likely to arise.

Break the silence around money

Many families avoid talking about money, hoping to protect harmony and keep heirs motivated to build their own successes. But silence can lead to confusion, mistrust and division.

Open, structured communication is one of the most effective ways to reduce the risk of future conflict.

Schedule regular family meetings. These create a cadence of transparency and engagement. Reviewing investments, charitable goals or business strategies together keeps the family aligned and prevents future surprises.

Create a mission statement or legacy letter. Explaining the "why" behind the plan gives heirs context and a shared philosophy, helping them make decisions that honor the family's intentions and avoiding future misinterpretation or misalignment.

Share access to key documents and digital records. When everything is centralized and accessible, it reduces stress and confusion during transitions and lowers the risk of costly delays or missed opportunities.

These communication habits build trust, reduce uncertainty and ensure that wealth transfers happen in the context of shared understanding and purpose — not assumptions and guesswork.

Financial literacy is a safeguard, not a luxury. Even with a clear plan and open dialogue, the technical complexity of wealth management remains a major risk area.

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Without training, heirs might feel overwhelmed or make irreversible mistakes — jeopardizing the legacy.

Provide formal financial education. Courses or workshops on investing, taxes and estate planning give heirs the tools they need to make informed decisions—and avoid costly errors.

Encourage heirs to shadow advisers and take on responsibilities. Involving them in investment reviews or charitable evaluations creates real-world experience and gradually builds competence, reducing the risk of poor judgment later.

Teach liquidity and diversification. Understanding the difference between liquid and illiquid assets helps heirs avoid scenarios in which they must sell under pressure or make short-sighted decisions in times of need.

Proactive financial education ensures that heirs are not only confident but also capable, reducing the risk that inherited wealth is mismanaged or quickly depleted.

Align wealth with values and impact

Families that treat wealth as a tool for impact — rather than just a resource to preserve — tend to see greater alignment across generations and fewer internal conflicts.

Involve heirs in grant-making. This teaches responsible capital allocation and connects financial decisions to deeper values, reducing the risk of detachment or aimlessness.

Use family foundations or donor-advised funds as training grounds. Assigning real roles and responsibilities builds skills in governance, collaboration, and administration, all of which may help reduce the risk of dysfunction.

Encourage heirs to define how wealth should serve others. When each generation articulates their vision of impact, it ensures the legacy remains relevant and grounded and can help to avoid drift or disconnection.

Philanthropy isn't just an outlet for generosity — it's also a powerful mechanism for teaching responsibility and fostering unity, while shielding the family from the risk of purposeless wealth.

The real measure of success is preparedness

The Great Wealth Transfer will shape the global economy, but for families, its effects are deeply personal. The greatest risk is not taxes, markets or inflation. It is unprepared heirs.

Success will not be measured solely in account balances but in how well heirs uphold values, strengthen relationships and manage responsibilities.

Families that begin early, communicate clearly, maintain updated plans and invest in financial education are far more likely to avoid common pitfalls and preserve their legacy for generations to come.

The money will move either way. The outcome — whether it becomes lasting wealth or fleeting fortune — depends on how well families prepare.

Related Content

• From Wills to Wishes: An Expert Guide to Your Estate Planning Playbook
• Great Wealth Transfer: How Families Can Get on the Same Page
• An Expert's Guide to the Estate Planning Documents Everyone Needs
• How to Organize Your Financial Life (and Paperwork)
• How to Decide How Much Money You Can Afford to Gift in Your Lifetime

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 2025 winds down, many affluent families are taking stock, not just of markets and account balances, but of what those numbers really mean.

For years, financial success has been measured by numbers, such as beating market benchmarks and increasing net worth.

But with tax laws now clarified under the One Big Beautiful Bill Act (OBBB), inflation still weighing down portfolios and family priorities evolving, people are asking a different question: Do our financial plans support the lives we want to live?

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

This moment feels like a turning point. The estate tax exemption is set at $15 million for 2026, removing years of what-if uncertainty.

But clarity on the law has not erased other pressures. Rising costs, unclear borrowing rates and political tensions all make it harder to feel secure about the future.

Add to that generational differences, with some families leaning on tech-driven DIY investing and others relying on long-term adviser relationships, and it's clear the definition of financial success is shifting.

When wealth aligns with life

Financial success goes beyond tax efficiency and investment performance. It's about how money supports a meaningful life. I see this most clearly with families who have complex goals that can't be solved by numbers alone.

I've recently worked with a couple in their second marriage, each with children from prior relationships. Their concern was that their estate could spark conflict, with assets unintentionally flowing to the wrong heirs, or family members feeling shortchanged.

Together, we built a plan with trusts that provided for both spouses during their lifetimes, while ensuring assets ultimately passed to the intended children and grandchildren.

The design offered more than tax benefits; it gave both spouses the confidence that their legacy would reflect their wishes and preserve family harmony long after they were gone.

That peace of mind is often what clients are truly seeking. Many accumulate wealth only to discover that bigger account balances don't bring greater fulfillment.

The turning point usually comes when they pause to ask: What is this money really for? For some, it's creating memorable experiences with family. For others, it's supporting charities or investing in future generations.

When wealth is aligned with purpose, the plan becomes more than financial; it becomes personal.

Money can also strain relationships. Spouses might have different money "scripts," shaped by their upbringing. Children might see their parents' assets as an inheritance rather than resources meant to support the parents' own goals.

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Open conversations, whether around the dinner table or in structured family meetings, can shift that dynamic. By explaining why decisions are being made, families reduce uncertainty and build understanding, even if every detail is not disclosed.

These strains don't stop at family dynamics. Financial stress often spills over into physical and emotional health. Those who overwork to accumulate more, overspend to keep up appearances or stress about markets often find their financial choices eroding their physical and emotional well-being.

By aligning spending with values, such as education, travel, philanthropy or simply enjoying time together, you can create financial stability and a richer quality of life.

Practical steps for 2026

Redefining financial success requires both reflection and action. The following steps can bring clarity to your goals, create alignment with your family and allow you to move into 2026 with a plan that feels both purposeful and achievable.

Step No. 1: Clarify your values. Write down the principles that guide your decisions, whether family security, philanthropy, lifestyle goals or something else. This list becomes the filter for every financial choice.

Step No. 2: Prioritize your objectives. Separate "must haves" from "nice to haves." Paying for children's education might be essential, while a vacation home is a bonus. Ranking goals prevents competing priorities from derailing the plan.

Step No. 3: Define your legacy. Look beyond the question of who will inherit your assets and consider how you want to be remembered. Do you want to create traditions, support charities or establish trusts that last beyond your lifetime?

Step No. 4: Engage a holistic adviser. Look for an adviser who goes beyond investment performance to address taxes, estate planning, insurance and family dynamics. Ask how they incorporate well-being and values into the planning process.

Step No. 5: Schedule a family conversation. Bring your spouse or heirs into the discussion. Even a simple conversation about what matters most can ease tensions and set expectations for the future.

Step No. 6: Check alignment annually. At least once a year, revisit your goals and compare them with your financial plan. Life events, tax law changes or shifting priorities may require adjustments.

Step No. 7: Watch for red flags. Warning signs include strained family conversations, stress that undermines health or an inability to answer the question, "What is this money for?"

These steps don't require perfection, but they do require intentionality. The goal is not to build the largest portfolio, but to create a financial life that supports your well-being today and in the years ahead.

Wealth alone doesn't equal success. As 2026 begins, redefine financial success in broader terms: well-being, family harmony, health and legacy.

By aligning financial strategies with priorities, wealth can become a tool for building a more meaningful life.

Related Content

• The 'Go Live Your Life' Rule of Retirement Spending
• Why More Americans Are Redefining Retirement, Just Like I Did
• Financial Planning's Paradox: Balancing Riches and True Wealth
• For a Richer Retirement, Follow These Five Golden Rules
• Are You Retired? Here's How to Drop the Guilt and Spend Your Nest Egg

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

Editor's note: This is part three of a four-part series about how to create and use your own Estate Planning Playbook. Part one introduced the concept and why it matters. Part two focused on the family love letter, a heartfelt guide to end-of-life preferences. In this article, we cover the often-overlooked details that can cause real stress if not addressed: family heirlooms, pet care and day-to-day bills.

When most people think of a will, they imagine a formal document that lays out how money, real estate and high-value possessions will be distributed after death.

While those financial assets are important, the biggest family disputes I see rarely center on a bank account or a piece of jewelry.

The greatest tensions often arise over personal, sentimental items.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

These are things with little monetary value but deep emotional meaning. It might be the teacup Grandma always used, the painting that hung above the fireplace or the stand mixer pulled out every year for birthday cakes.

These items stir memories, and when they're not discussed or accounted for, they can create confusion and heartache.

When meaning matters more than money

Mike, a close friend, experienced this after his father passed away. Of everything his dad owned, all Mike wanted was the tool set they had used together on countless weekend projects.

That simple gesture would have meant the world to him as a lasting reminder of their time together.

Unfortunately, no one knew, and the tool set was given away before Mike could ask for it.

That story stays with me because I believe that if his father had known, it would have been a no-brainer to pass the tools on to Mike while he was still alive.

The takeaway is simple. Don't assume your family knows what matters to each other. Ask. Talk. Label. Share.

How to handle heirlooms without the drama

Too often, people wait until it's too late to have conversations about personal belongings. Those left behind are forced to make dozens, or sometimes hundreds, of small decisions about items they might not want or recognize their meaning.

Here are a few ways to make it easier for your family:

Have the conversation now. Hold a family meeting and ask which items mean something to your loved ones. You might be surprised by the answers. It's not always a diamond ring; often, it's the everyday objects full of memories.

Give items away now. If there is a mixing bowl you never use or a painting your daughter has always admired, consider passing it on now. You'll get the joy of seeing it appreciated, and it's one less decision for your executor.

Label key items. I've had clients use sticky notes behind framed artwork, under dishes or inside furniture drawers to indicate who should receive them. A simple "For Emma" or "Jack loved this" can go a long way toward preventing conflict.

Include a list in your playbook. One page labeled "Heirloom Instructions" in your estate planning playbook can save your family from confusion and distribute items as you intended.

Blended families and step-relatives can add complexity. Being clear and proactive helps reduce tension and shows your family that you've thought of everyone.

Don't forget about the dog (or cat)

An often-neglected piece of the estate planning puzzle is pet care. Dogs, cats and other animals are family members, but they can't speak for themselves when you're gone.

Make sure your estate planning playbook includes a simple pet directive that outlines:

• Who you'd like to care for your pet(s)
• Routines, medical needs or dietary notes
• Contact information for your veterinarian
• Emergency funds or pet insurance policies

This single page can make all the difference in ensuring your pet goes to a loving home and has proper care. It also relieves your family from having to make a rushed or emotionally difficult decision during an already stressful time.

Household bills and subscriptions: A hidden headache

One of the most underrated sources of confusion after someone passes is managing their monthly bills.

Today, many households have dozens of automatic payments from utility bills and insurance to streaming services and club memberships. Without clear direction, family members are left trying to decipher what's owed, what's recurring and which accounts are funding which bills.

Judy, a client of mine, handled this masterfully. In her estate planning playbook, she keeps:

• Copies of every recurring bill
• Notes on which bank account pays which bill
• Account numbers, contact information and customer service details

Her rationale is simple. If something happened to her, she doesn't want her family spending hours on hold with the water company or struggling to identify which charges were still active.

Something many people don't consider: If a recurring bill continues after death, such as AAA, gym memberships, even a car loan, companies will often send a refund check in the deceased person's name. This creates even more paperwork for executors trying to deposit or cancel it.

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Having copies of bills is not just about transparency; it gives your family proof of where money is going and helps them close out accounts quickly and correctly.

It also avoids the headache of trying to persuade companies to issue refunds when you don't have documentation.

I've seen families spend hours trying to recover small amounts simply because they didn't have evidence of what had been paid and from where.

It's not about the money — it's about the meaning

It's rarely the most expensive items that cause the most stress. It's the small stuff — the irreplaceable, sentimental, personal touches that carry family meaning.

This part of estate planning is not about writing a check; it's about writing down what matters.

The best way to do that is to communicate. With a playbook, you don't just leave instructions. You leave clarity, comfort and confidence for your family.

In the final article of this series, we'll explore how to bring an Estate Planning Playbook to life by holding a family meeting, sharing your decisions and making sure everything is up to date and accessible.

Creating a plan is just the first step. Putting it into action is where the real impact happens.

Related Content

• Estate Planning: How to Protect Family Treasures
• Six Ways to Make Talking With Family About Estate Planning Easier
• Where There's a Will, There's a Way Your Assets Will Be Distributed as You Wish
• What Would You Like to Leave Behind? A Financial Planner's Guide to Family Wealth Discussions
• Summer Is Made for Sun, Fun … and Estate Planning Conversations

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

I've been practicing elder law for decades, and I've sat at too many kitchen tables explaining one hard truth: A marriage license isn't just a piece of paper. It unlocks a long list of legal rights and protections that unmarried couples simply don't get despite how long they've been together.

For same-sex couples who aren't married, the gap between what you think happens and what the law actually says can be huge.

When something goes wrong, such as an illness or death, that gap can swallow everything you've built together.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

What marriage automatically provides

When you're legally married, the law automatically gives your spouse important rights. You don't have to fill out a single form for them to:

• Inherit property without going through probate
• Own the home outright through survivorship
• Step into decision-making roles for finances and health care
• Access retirement and survivor benefits
• Be recognized as next of kin without question

But if you're not married, none of this will happen automatically. Even if you've been together for 30 years, the law may treat you like you're strangers.

The legal system can work against you

Some of the toughest cases I've ever handled weren't against hospitals or banks; they were against families.

When a partner gets sick or passes away, the people who've disapproved of the relationship all along suddenly have legal power. They can step in, claim authority and, in some cases, push the surviving partner aside entirely.

I've seen longtime partners barred from hospital rooms, cut out of funeral plans, even forced out of homes they helped build. All because the law didn't recognize their relationship.

Ownership rights are fragile without marriage

If you're married and own a house together, the law gives you strong protections. When one spouse dies, the other automatically owns the home. There's no probate and, hopefully, no fights.

But if you're unmarried and the deed doesn't spell things out clearly, the default is what's called "tenants in common." That means each person owns a share. If one partner dies, their family inherits their share.

And yes, they can force a sale. I've seen partners who've spent decades in the same home suddenly facing eviction because their name wasn't on the title.

Inheritance gets even messier without kids

Some same-sex couples don't have children together, which can make inheritance more complicated. When there are no kids, state law will start looking at other family members such as parents, siblings, nieces or nephews.

If they didn't approve or support the relationship, things can get ugly for the surviving partner.

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Even for couples who marry later in life, this creates tension. Once the survivor dies, the assets usually flow to their family, not both families. That can turn already complicated family dynamics into full-blown legal battles.

Medical decisions: Who speaks for you when you can't

One of the most painful scenarios I've seen is when someone lands in the hospital, unconscious or unable to speak, and their partner has no legal right to make decisions.

Hospitals don't turn to partners. They turn to next of kin: parents, siblings, adult children. And if that family never accepted the relationship, they could shut the partner out completely.

Financial decisions in a crisis

The same is true with money. If you don't have a financial power of attorney, your partner has no legal right to access your accounts or pay your bills. Your family can go to court to get control, and your partner can be left on the sidelines.

This happens more often than people think. It's not just theoretical. I see it every year.

Funeral and burial rights

Michigan law gives next of kin the right to make funeral decisions. If your partner isn't legally recognized, their voice may not matter.

A simple funeral representative designation can fix this. But without it, families can, and sometimes do, push partners out.

The answer: Real planning

Here's the good news: You don't need a marriage license to protect your partner. Instead, you need a plan. By making a plan, you can:

• Sign a will or create a trust
• Put both names on the house the right way and identify how its owned, jointly or in common
• Name your partner in your medical and financial powers of attorney
• Choose your funeral representative
• Set up clear beneficiary designations

These aren't just legal documents. They're love letters that say, "I trust you, and I want you protected."

How family disputes can be prevented

Clear, written estate plans stop a lot of fights before they even start. When your intentions are in black and white, there's less room for families to step in and take control.

I've seen fights that tore families apart. I've also seen the relief on a client's face when everything was planned properly and no one could override their wishes.

A special word to older couples

Many same-sex couples in their 50s, 60s and beyond built their lives together long before marriage equality was law. They've saved, built homes and cared for each other.

But without legal planning, everything they've built can unravel the moment one partner becomes ill or passes away.

A strong call to action: Protect what you've built

If you're in a same-sex relationship, it's imperative to review your deed and titles as soon as possible.

You should also put a will or trust in place, assign powers of attorney for health care and finances.

Choose who makes funeral decisions and talk openly about your wishes.

Estate planning isn't just about paperwork. It's about making sure the person you love isn't left powerless at the worst possible time. You've built a life together. Now make sure the law respects it.

Pat Simasko is an investment advisory representative of and provides advisory services through CoreCap Advisors, LLC. Simasko Law and CoreCap Advisors are separate and unaffiliated entities.

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• How Getting Married Affects Your Social Security Benefits
• Leaving Property to Multiple Heirs? What to Consider

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

Editor's note: This is the fifth article in a step-by-step guide for getting your financial house in order. We've already brought you information on compiling your net worth statement, reviewing asset titling and beneficiary designations, the importance of powers of attorney and wills, trusts and related documents.

Getting your estate plan and financial house in order is a major accomplishment, but it doesn't end when the documents are signed.

One of the most important — and often overlooked — steps is making sure the right people know how to carry out your plan and your wishes.

Here are steps to ensure all relevant parties have the information to implement the plan you've created.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

1. Share key details with trusted agents

Start by letting your financial power of attorney, executor or trustee know that they've been named in your documents — and what their role entails.

If these include a spouse or close relative, consider sharing your personal net worth statement or at the very least, let them know where it's stored and how to access it.

Because of today's security protocols, it's also smart to provide them with the basics: your phone password and the answers to security questions, or how to access them in the future.

Without this, even simple financial tasks can become roadblocks.

2. Make your health care wishes clear

It's important to have a thorough conversation about your personal wishes. Make sure your health care power of attorney (HCPOA) agent understands your preferences for medical treatment and end-of-life care so they can feel confident acting on your behalf.

That includes directives about life-sustaining measures — or the refusal of them.

If you anticipate family conflict, communicate your wishes broadly so there's no room for confusion or disputes later.

In addition, provide your HCPOA agent and close family with a current list of medications and dosages (a photo of your prescription bottles can work, too). Having this on hand can be invaluable in an emergency.

3. Write a letter of wishes

Legal documents cover the essentials, but they don't capture everything. We highly recommend writing and passing along a letter of wishes to your loved ones.

This letter might include information about how you'd like to be remembered and directions for your funeral or memorial services — the type of service you would like and any preferences related to donations, special readings or music selection.

It's also helpful to reiterate the instructions about cremation or burial you listed in your HCPOA. This guidance spares your family from uncertainty during an already difficult time and provides a roadmap for decision-making that helps ease the burden.

4. Decide what to share with beneficiaries and when

How much you tell beneficiaries depends on their age and circumstances. For younger children or grandchildren, you might not want to share information related to your estate plan, but you can start by teaching them about financial literacy, educating them on the values of saving and, perhaps, explaining the basics of investing.

For adult beneficiaries, it can be useful to let them know whether they'll receive an inheritance outright or in trust so that they can plan their own financial futures with more confidence. If you are leaving assets to charity, sharing that information can also be helpful.

5. Communicate with professionals

While family conversations are crucial, it's just as important to communicate with your professional team. Make sure your estate planning attorney, financial adviser and CPA all know about updates to your plan so that taxes, investments and legal documents stay aligned.

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You'll also want to make sure they know who you've appointed as agents, safekeepers of documents, etc., along with their contact information. Keeping these professionals on the same page reduces the chance of oversights and confusion later.

Final thoughts on reviewing your estate plan

Taking the time to organize and review your finances and critical estate planning documents can create peace of mind for both you and your loved ones.

By breaking down the process into manageable steps and addressing key areas such as documenting your personal net worth, confirming asset titling, updating power of attorney instruments and revising will/trust documents, you can ensure that your plans reflect your current life circumstances and goals.

While you don't have to follow the exact plan outlined in our step-by-step series, you won't regret reviewing your documents and sharing information with trusted family members and agents, and they'll appreciate it.

The effort you put into this process now will create a lasting impact, offering both financial security and emotional reassurance for your family in the years ahead.

One last note — we often tell clients that estate planning is not called "Estate Done" for a reason; you should plan to repeat this same process every three to five years or after a significant life event.

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• I'm a Financial Adviser: You've Built Your Wealth, Now Make Sure Your Family Keeps It
• What Would You Like to Leave Behind? A Financial Planner's Guide to Family Wealth Discussions
• Resist the Taboo: Talk to Your Kids About Family Wealth
• Prepare Your Family for the Financial and Legal Aftermath of Your Death

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.

By 2048, a record-breaking $124 trillion could pass from an older to a younger generations in what has been dubbed the Great Wealth Transfer — with significant implications for the U.S. economy.

But the mechanics of this transfer within individual families are equally important, especially if heirs aren't logistically or mentally prepared to inherit a large sum.

Despite its significance, only 31% of Americans have a will, even though 83% recognize the importance of estate planning, according to Trust & Will's 2025 Estate Planning Report. This disconnect leaves many families vulnerable to confusion, conflict and financial missteps.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Preparedness is key. Here's what older generations should do now to best position their heirs for success.

Make a plan

Making a clear estate plan with the help of a professional is the first step. For instance, at this stage it could be smart to consider a living trust to manage and protect your assets while you're alive and distribute them to your chosen beneficiaries after you're gone.

Also ensure that your estate plan designates power of attorney and includes an advance health care directive so that your family knows what medical interventions (if any) you want.

If you have preferences about your funeral arrangements or burial, make sure to include those, too. It can lessen the burden on your family during a stressful time if there's already a clear plan in place.

Finally, don't forget the basic logistics. Make sure your estate plan includes:

• Log-ins for bank, retirement and investment accounts
• Keys to safe-deposit boxes and/or safes (along with a list of contents)
• A list of real estate properties and information about where to find the deeds
• Copies of insurance policies, including the name and phone number of the person to call when cashing them in
• Tax returns
• Recurring bills or services to be canceled
• Outstanding debts or loans

Communicate your wishes early

One of the biggest hurdles to a seamless transition? Family bickering about assets and sentimental objects. No one wants their heirs to end up like the Jarndyce family in Charles Dickens' Bleak House, throwing away a fortune on years of drawn-out probate cases.

The best way to nip this in the bud is to discuss your estate plan in detail with your entire family so that everyone understands who's getting what (and why, if needed). With the family's blessing, the process of divvying up your estate should become an easier process when the time comes.

Many families avoid these conversations because they're an emotional minefield, but they're essential. Talking about your plan now can help identify gaps or issues that need to be addressed or conflicts that will require further discussion.

On the other hand, waiting until the situation is dire could cause expensive and time-consuming complications— not to mention emotional distress — for your family.

Leave an ethical will

A younger generation should inherit more than just wealth. They also need the wisdom of earlier generations who earned and stewarded those assets so that heirs can eventually pass wealth onto their children.

An ethical will can help you do that. Contrary to a legal document, an ethical will is a statement of values, a compendium of stories and lessons learned that can help steer your family in the right direction long after you're gone.

The content can vary from "here's what's really important in life" to "smart strategies for spending" — whatever will serve your family best. There are plenty of prompts available online to help you get started.

The medium can be flexible, too. Some people prefer to write letters, while others might want to leave a video or audio file. I've seen a grandfather record conversations with his granddaughter, eventually collecting and compiling them to serve as his ethical will.

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Remember, this is a chance to speak not just to your children or grandchildren, but future generations you'll never meet. Think about what advice you wish you'd received, the traditions that are important to you or lessons you learned the hard way, then share this wisdom with your descendants.

Prepare your heirs

When the Great Wealth Transfer hits an individual family, it's a deeply emotional and messy process. The more that older generations prepare their successors — practically and emotionally — the better equipped they'll be to address the logistical and ethical responsibilities that come with their newfound wealth.

With clear instructions and all assets accounted for, the transfer itself can be smooth, allowing loved ones to focus on grieving and honoring your memory. The key is to start preparing today.

This article, which has been written by an outside source and is provided as a courtesy by Stephen B. Dunbar III, JD, CLU (AR Insurance Lic. #15714673), Executive Vice President of the Georgia Alabama Gulf Coast Branch of Equitable Advisors LLC, does not offer or constitute, and should not be relied upon, as financial, tax, accounting, or legal advice. Equitable Advisors LLC and its affiliates do not make any representations as to the accuracy, completeness or appropriateness of any part of any content hyperlinked to from this article. Your unique needs, goals and circumstances require the individualized attention of your own tax, legal, and financial professionals whose advice and services will prevail over any information provided in this article. Stephen B. Dunbar III offers securities through Equitable Advisors LLC (NY, NY 212-314-4600), member FINRA, SIPC (Equitable Financial Advisors in MI & TN), offers investment advisory products and services through Equitable Advisors LLC, an SEC-registered investment adviser, and offers annuity and insurance products through Equitable Network LLC (Equitable Network Insurance Agency of California LLC). Financial professionals may transact business and/or respond to inquiries only in state(s) in which they are properly qualified. AGE-8395942.1(09/25)(exp.09/29)

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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 wealth management landscape for ultra-high-net-worth families has rarely been more complex. Geopolitical volatility, shifting tax policies, stricter governance standards and the changing investment priorities of younger generations are reshaping how family offices operate.

Families are diversifying into unfamiliar sectors, reassessing jurisdictional choices and professionalizing their operations at a faster pace than ever before, according to TMF Group's recent report on private wealth and family offices.

For family offices, building in resilience to rising global risk is no longer just about wealth preservation; it is about ensuring that operations, governance and structures can withstand turbulence while being able to take advantage of new opportunities.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Here are 10 practical steps family offices are considering to strengthen their resilience.

Step No. 1: Diversify beyond the familiar

Traditionally, wealthy families have tended to concentrate on sectors they know well, such as real estate, infrastructure and energy.

Today, they are diversifying into areas like AI, digital assets, renewables and sustainable agriculture. These industries present unfamiliar risks, but also potential for growth and relevance to next-generation priorities.

The challenge is to avoid "blind diversification" driven by headlines rather than due diligence. Families that succeed with diversification have often started by co-investing with partners who have sector expertise, or by hiring managers with direct operational knowledge.

The goal is to reduce concentration risk while also learning how to operate effectively in emerging or unfamiliar sectors.

Step No. 2: Choose jurisdictions for stability, not just tax advantages

Tax planning remains important, of course, but family offices increasingly weigh institutional stability, rule of law, transparent rules and enforceable cross-border agreements when deciding where to invest.

Family offices that prioritize these attributes gain predictability and reduce exposure to sudden regulatory shifts.

For example, for non-U.S. citizens looking to set up in the U.S., potential changes to income and estate tax thresholds create uncertainty on whether the cost of a U.S. residency (in pure tax terms) could rise.

As part of a broader assessment, however, jurisdictions that offer clarity and enforceability often prove more valuable in the long term than those offering only short-term fiscal advantages.

Step No. 3: Build governance frameworks that go beyond tradition

Traditionally, many family offices have historically relied on a patchwork of advisers — lawyers, investment managers and accountants — without integrated oversight.

The move toward an enterprise-level governance framework helps families coordinate decision-making, ensure compliance across borders and safeguard their reputation.

Family offices are building up resilience by establishing independent boards, defining formal reporting lines and conducting regular audits.

Some also create family constitutions or charters to clarify decision-making authority across generations.

Such measures reduce the risk of disputes and ensure continuity even when leadership changes unexpectedly.

Step No. 4: Professionalize talent

A key driver of resilience is the calibre of the professionals managing family office operations. Family offices are increasingly appointing chief executives, financial officers and compliance specialists with international experience.

The challenge, however, is retention: Competition for senior talent is intense, especially in hubs such as Dubai, London and Singapore.

For family offices still building scale, employing a full-time, in-house executive team may be premature. In this case, drawing on external expertise for specific functions can provide institutional-grade professionalism without the cost or commitment of hiring in-house.

Family offices can test new markets or sectors — with proper governance in place — while retaining the flexibility to expand later.

Once the scale of investments justifies it, responsibilities can be transitioned to permanent staff.

In practice, many family offices combine in-house leadership with targeted outsourcing for specialist support to ensure resilience.

Step No. 5: Incorporate next-generation values into long-term strategy

Successors to family wealth are often more focused on ethical and sustainable investment priorities, and their interest in impact investing, green business and philanthropy is not a passing trend.

Integrating these values into the family's long-term investment strategy ensures smoother generational transitions and helps protect against future reputational risk.

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One practical approach that some family offices apply is to create parallel investment portfolios that allocate a defined share of capital to ethical, socially focused and responsibly governed businesses.

This enables younger family members to take a hands-on role, without disrupting the overall wealth strategy, while giving the family office a structured way to evaluate the performance of responsible investments.

Step No. 6: Take philanthropy seriously as an operational activity

Often, family members — especially younger ones — want to be actively involved in philanthropy, rather than simply making passive donations. Establishing charitable trusts, setting clear governance rules and measuring social outcomes can make philanthropic ventures more effective.

The growth of family-run charitable trusts reflects a shift from one-off giving to structured, multigenerational impact.

Offices that treat philanthropy with the same rigor as other investments — by tracking outcomes and appointing skilled managers — find that this strengthens family cohesion while also enhancing public reputation.

Step No. 7: Keep ahead of compliance complexity

Compliance requirements, from anti-money-laundering rules to inheritance tax policies, vary widely and can evolve quickly. Building resilience into family offices means treating compliance not as an administrative burden, but as a core function.

This involves setting up internal compliance capabilities or engaging independent external providers who understand local regulatory environments.

A proactive approach that includes monitoring legislative pipelines and running regular compliance audits can prevent costly remediation later. It also reassures regulators and counterparties that the family office is operating transparently and responsibly.

Step No. 8: Embrace technology for oversight and transparency

As family offices expand across jurisdictions, digital tools that provide centralized oversight of entities, reporting obligations and operational risks are becoming essential. Cloud-based platforms can consolidate data, track compliance deadlines and provide real-time insight into global operations.

Technology also enables families to maintain transparency with multiple generations. Secure portals can enable family members in different regions to access up-to-date financial reports, philanthropic updates and governance documents.

This reduces misunderstandings and keeps all stakeholders aligned, even when they are geographically dispersed.

Step No. 9: Foster collaboration with peers and partners

Family offices are increasingly pursuing joint ventures with other family offices when entering unfamiliar industries or regions. This builds resilience by spreading risk, pooling expertise and accelerating learning.

Collaboration also extends to professional advisers — such as administrators, trustees and compliance specialists — who provide vital infrastructure for offices that cannot build every function in-house.

Step No. 10: Stress-test structures with scenario planning

Political disruption, regulatory changes and new trade policies can happen overnight. Uncertainty around tariffs, for example, has already disrupted private equity funds that depend on international supply chains.

Increasingly, family offices are using scenario planning and risk-weighted models to test the impact of multiple outcomes, such as new tax policies, capital flow restrictions or market shocks.

This kind of what-if analysis not only highlights vulnerabilities, but also enables family offices to build playbooks for rapid response.

For instance, knowing in advance which jurisdictions offer fast-track relocation options, or which structures provide the best protection in the event of sudden regulatory changes, can make all the difference.

Resilience in family offices is no longer just about weathering storms: It is about building operational strength, professional talent and governance models that adapt to shifting compliance needs and changing expectations of next-generation investors.

Family offices that take a structured approach — choosing stable jurisdictions, investing in governance, embracing professionalism and aligning with ethical priorities — will be better placed to thrive in an unpredictable world.

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• Average Net Worth by Age: How Do You Measure Up?
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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.

"Arthur" asked one of the most frequent questions I hear from readers about one of the biggest frustrations in estate planning:

"Is there some way to prevent a financially irresponsible child from squandering his inheritance and winding up on the street or from others trying to take those funds to satisfy debts?"

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Arthur, who is 85, described his oldest son, "Abel," as "a lifelong, irresponsible deadbeat who owes over $200,000 in past-due child and spousal support. His wages are being garnished, and anytime he puts money in a bank account, it is seized.

"All my assets would total close to a million dollars, and I want to leave everything to my four children equally. Abel wants me to have a family trust written with a 'spendthrift' clause that would completely protect his portion from all of his debts and judgments, including child and spousal support.

"I want to be sure he always has a roof over his head, but if this is true — as to support obligations — his total lack of morality makes me sick. His children did without because of their father being a flake, and my other kids hate him for his selfishness.

"A free family trust planning seminar is being put on next month by what I assume are lawyers who can create a trust for much less than a local estate planning attorney. What are your thoughts, Mr. Beaver? May we talk?"

Don't fall for this scam

When we talked, it was clear Arthur was tempted to attend this "free lunch seminar" that was in reality a traveling "trust mill" scam not conducted by attorneys.

Usually, these seminars are held in hotels and use high-pressure, fear-based tactics on older people to sell them life insurance and other financial products that aren't tailored to their individual needs. They also push completely useless, one-size-fits-no-one living trusts.

"Arthur," I said, "we all want to save money, but a seminar like this isn't the way to develop an estate plan that meets your specific goals. A lawyer whose practice is focused on estate planning is so valuable."

He agreed, and then I asked, "What memory do you want your other children and family to have of you — as being fair to everyone or favoring an irresponsible deadbeat?"

Fair does not mean equal

I noted that it's not written in stone that a parent must give their estate to the children equally. When an inheritance goes to a child whose siblings justifiably consider irresponsible, dishonest and manipulative or simply undeserving, that parent — from the grave — has uncorked a bottle of bitterness that's been aging for years.

"Do you want to be seen as a co-conspirator with someone you clearly have disdain for? I I suspect you've dug into your own pockets to help out his former wife and children. Arthur, tell me I am wrong."

"No, you're so right, Dennis," he haltingly replied, his voice choking with emotion.

What is a spendthrift clause, and how does it work?

My reader is correct that a spendthrift provision in a trust prevents the voluntary and involuntary transfer of a beneficiary's interest — making them unable to give their inheritance to anyone. Most creditors cannot take any of the trust funds.

So, this powerful clause in an estate plan is highly effective in protecting the beneficiary from themselves and others, helping:

• To avoid the inheritance being lost to addiction, gambling and risk of squandering due to impaired cognitive abilities
• To protect beneficiaries who are financially irresponsible, vulnerable to manipulation or facing legal claims
• To preserve family wealth for future generations

Until the assets are distributed, Abel would not own them, and they would remain untouchable by his creditors. It would just take a paragraph in Arthur's estate plan directing that his share of the inheritance go into a trust managed by a trustee.

A trustee, as described by the courts, is a trusted individual or a professional fiduciary.

A trustee could be a family member, but that would be dangerous when we have a con, flake or manipulative sibling who could easily threaten violence unless they're given what they want.

Other uses for a spendthrift clause

Arthur has other options, too. For example, a parent could tack on to a trust certain requirements to meet before a beneficiary can receive a portion of the inheritance, such as:

• Completing high school, college or vocational school
• Remaining employed or actively looking for work
• Verifiably keeping free of drug or alcohol abuse
• Avoiding being convicted of crimes that call for actual time in custody

Particular to beneficiaries like Abel, the beneficiary can be required to:

• Submit and follow a budget approved by the trustee
• Pay down debts and not take on obligations he cannot meet given his income
• Stay current on all support orders

A spendthrift clause is not bulletproof

While a spendthrift clause prevents most creditors from taking trust assets, certain government entities can bypass the protections, and some legal obligations can lead to assets being seized. Some examples:

• Claims for unpaid taxes or fines imposed by government entities
• Criminal fines and restitution in most states
• Unpaid child and spousal support in most states

Also, it's worth noting that once the assets are distributed to the beneficiary, the protection of the spendthrift clause is lost.

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Most parents work hard for their families to put food on the table. I do not know any older adults who would knowingly help "an Abel" benefit from an inheritance when he stiffed their grandchildren's mother and the kids.

I am glad that Arthur reached out. It is time for him to retain an estate attorney.

Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.

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

In the past week, they've written about the misconceptions many people have about annuities, how Baby Boomers are facing a very different retirement reality than their parents did and the OBBB's impact on federal student loan programs. One also wrote about how families can prepare heirs for their financial legacy to avoid the "third-generation curse."

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

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These are the Kiplinger stories featured in this quiz:

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It's a sobering statistic: Roughly 90% of family wealth disappears by the third generation. For many families, that means the grandchildren of today's wealth builders may inherit only stories, not financial security.

The problem usually isn't poor investment returns or bad estate planning. More often, wealth erodes because of human nature: lack of communication, lack of purpose and lack of preparation.

The first generation works hard to create wealth. The second generation often helps manage it. By the third generation, children who never saw the sacrifices made to build that wealth may begin to see it as a right instead of a responsibility.

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To prevent that outcome, families must think beyond spreadsheets and estate documents.

The most successful families invest in three kinds of capital: financial, human and social. Together, these provide a framework for protecting both the money and the meaning behind it.

1. Financial capital: Building a durable structure

Financial capital is the foundation of family wealth: investment portfolios, real estate, business interests and other assets.

But growth alone isn't enough to preserve wealth across generations. Structure matters even more.

As assets are divided among more family members, differing personalities, needs and priorities can create conflict and poor decisions that slowly deplete the financial base.

Practical steps to strengthen financial capital:

Create a long-term financial strategy. A written plan that aligns assets to goals, such as retirement, education and philanthropy, provides direction and prevents money from being spent haphazardly.

Use trusts and other estate planning tools. These structures create guardrails, clarifying how and when wealth will be transferred to future generations. They also reduce uncertainty and conflict.

Communicate the "why." Numbers alone don't motivate. Share with your family how the wealth was built, what you hope it will provide and the values you want carried forward.

One family I worked with used a letter from their grandfather that described the origins of the family business and the hardships of that time. That personal context can help keep the next generation grounded.

Keep the plan alive. Review strategies together periodically. As families expand and circumstances change, the plan should evolve as well.

A strong financial structure is the starting point. Without it, even the best intentions can't prevent wealth from unraveling.

2. Human capital: Preparing the next generation

Money alone does not preserve wealth; people do. Human capital refers to the knowledge, skills and judgment that family members bring to managing both the assets and the responsibilities that come with them. Education and preparation turn passive heirs into active stewards.

Practical steps to build human capital:

Invest in education. Support younger family members in gaining not only classroom knowledge but also leadership, communication and problem-solving skills. A well-rounded education equips them to make sound decisions.

Provide real-world exposure. To give younger generations practical insight into how wealth is managed, offer internships in the family business or opportunities to shadow advisers and participate in investment reviews.

Offer mentorship and guidance. Encourage relationships across generations, pairing younger members with older relatives or trusted advisers who can provide perspective and advice.

Promote cooperation. Not every family member needs to be an expert in every area. Some will gravitate toward business or investing, while others may align more with philanthropy or family governance.

Encourage each person to lean into their strengths and contribute where they add the most value.

When families nurture human capital, they create confident, capable heirs who see themselves as part of a larger legacy rather than passive recipients.

3. Social capital: Strengthening the family fabric

Even with strong finances and capable heirs, wealth can still erode if the family fabric weakens. Social capital is the trust, shared values and sense of connection that binds families together.

When disagreements or rivalries take center stage, the numbers on the balance sheet matter less than the fractures in the relationships.

Practical steps to reinforce social capital:

Lead with purpose. Make it clear that wealth exists to support the family, not divide it. Celebrate achievements together and be intentional about showing support during difficult times.

Stay engaged as a group. Hold regular family meetings that cover not only money but also shared goals, charitable initiatives and values. Invite input from multiple generations so everyone feels included and accountable.

Document the family story. Preserve history through written accounts, letters or recordings. Personal stories about how wealth was built often carry more weight than numbers. They remind younger generations that financial success is tied to resilience and sacrifice.

Encourage shared experiences. Activities like volunteering together, funding a joint philanthropic project or even gathering for annual retreats help strengthen bonds beyond money.

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Social capital is often overlooked, but it is what allows financial and human capital to function. Without a sense of connection and trust, even the best-prepared family can drift apart.

Putting it all together

Families that succeed across generations treat wealth as more than numbers on a balance sheet.

They see it as a living legacy that requires constant investment in people, purpose and planning. A few small but consistent practices make the difference:

Start early. Bring younger generations into the conversation as soon as possible. The earlier they learn, the stronger the foundation.

Be intentional. Connect every financial decision to broader family values so money is always serving a purpose.

Measure progress. Track more than investment performance. Measure engagement, education and impact to hold everyone accountable.

Whether it is hosting an annual family meeting, letting children help direct charitable giving, or inviting a finance-majoring grandchild to sit in on an investment review, every step builds connection.

In the end, preserving wealth beyond the third generation is not about money alone. It is about preparing people to carry forward both the financial and personal legacy of the family.

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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.