It’s time to contemplate our deterioration and death.
How’s that for a happy opener?
Welcome to my second essay in 2026.
My goal here is to introduce the next--and what I expect will be--the final intellectual focus of my career: managing, preserving, and transferring your wealth.
I chronicled the first focus--the importance of financial planning--in my book,Keep It Simple, Make it Big (2020). My second book and video course, It’s All About the Income (2022), detailed my approach to asset management and income generation in retirement. This is the powertrain of our financial vehicle.
After a focused book on nurses, Taking Care of Your Future (2025), I turned to the next two generations and how we can help our children and grandchildren build financial security in Start Simple, Grow Big (2025).
It’s now time to turn to managing, preserving, and transferring our wealth. After all, it’d be stupid to blow it at the end.
I have no plans to retire any time soon, but we’re all getting older and issues of managing, conserving, and passing along what we own are emerging almost every week in our practice. Now is the time to start formalizing some systems and thinking in this area.
This essay first took form as a letter to a client. My hope is that you engage with it, apply some concepts to your personal situation, and start a conversation with us on how it applies to you.
We can then work together to develop a personalized approach. And we help you make the changes to get the job done.
What Is Estate Planning Anyway?
Estate planning is a blanket term that can mean many different things depending on the circumstance. At its most general level, it’s about the tools and legal techniques that allow people to manage, preserve, and transfer their assets in a tax- and fee-efficient manner.
The tools include insurance policies, real assets, and investments.
The techniques include legal documents that affect ownership and control. As you likely know, these include wills, trusts (both irrevocable and revocable), deeds, durable powers of attorney, health care directives, and (very importantly) beneficiary and transfer on death forms.
It’s Not About Taxes
A generation back, the focus on estate planning was typically to avoid estate or death tax. (We used to say that dying was bad enough without having it cost a fortune.) Estates valued at more than $600,000 faced 55 percent transfer taxes as recently as 1997. This limit has steadily increased over the years and in 2026, a person can transfer $15 million without any federal income tax.
People can transfer these funds while alive or at death. The $15 million is doubled for couples. Thirteen states and the District of Columbia have additional estate, inheritance, or gift taxes. If you happen to live in one, like Connecticut, Massachusetts, or New York, you may have to take this into account. Some states match the high federal limits. This is not true for Massachusetts, which starts taking a cut at $2 million in 2026.
The bottom line is that death taxes no longer drive the planning for most of us. Still, we should be mindful of the limits, as they can change drastically in the future.
What’s the Problem?
If not taxes, what is the main enemy of middle-class millionaires? For many, it’s paying rent in the wrong kind of hotel—that is a nursing home. (Expensive in-home care is an enemy as well.) The $200,000 annual bill for a private nursing home room can quickly deplete a lifetime of careful saving and investing. Many of you have experienced this with parents or other family members.
This risk can be addressed in a variety of ways, from asset ownership to giving, trusts, and insurance. There is no silver bullet. Insurance used to be an excellent option. Today, at best, it’s a partial solution for those who have not already secured a policy.
I’ll return to this topic later in the essay.
The Tools of the Trade
Let’s now turn to the basic tools of estate planning.
- Will
This is a legally binding document that specifies how your assets will be distributed after your death. It also designates guardianship for minor children, appoints an executor to manage your estate, and ensures that your wishes are carried out. A good will should be clear, detailed, and up to date to avoid disputes and complications. It will be administered in probate court, an open and often long process that many wish to avoid or at least minimize.
- Trust
Trusts are arrangements where a trustee holds and manages assets on behalf of beneficiaries. There are various types of trusts, such as revocable living trusts, which allow you to retain control over your assets while you're alive, and irrevocable trusts, which transfer control to a trustee. Trusts can help avoid probate (the court process for validating a will), reduce estate taxes, and provide greater privacy.
- Power of Attorney (POA)
This legal document grants someone the authority to make financial and legal decisions on your behalf. A durable power of attorney is especially important, as it remains effective even if you become mentally or physically disabled. It’s essential to choose a trusted person who will act in your best interest and can deal with financial matters.
- Health Care Directives (Living Will and Medical Power of Attorney)
Health care directives outline your preferences for medical care if you're unable to communicate your wishes. A living will specifies the types of medical treatment you would or would not want, particularly in end-of-life situations. A medical power of attorney designates a trusted person to make health care decisions on your behalf, ensuring that your medical needs are met according to your values.
- Beneficiary Designations
Many assets--such as life insurance policies, retirement accounts (401(k), IRA), and certain bank accounts and investment accounts--allow you to designate beneficiaries directly. It's crucial to regularly review and update these designations to ensure they align with your overall estate plan. Beneficiaries can bypass the probate process, allowing assets to pass directly to the named individuals.
I consider beneficiary forms to be the most important estate planning tool among those of use to the middle class. As a bonus, they are free and easy to use.
Some More Basics
Those are the basic tools. Here are some basic concepts.
The first point of distinction is the character of property and investment ownership. The first type is capital assets. They can be owned by one person, jointly, or by a trust or entity. When you purchase them, you create a cost basis in them and if you sell them, the gain is typically taxed as a capital gain.
Capital assets are malleable. They can be transferred, given, and retitled, often without any immediate income tax consequences. These include non-qualified investment accounts, bank accounts, cars and lawnmowers, and of course real estate. Trusts can be an appropriate way to manage, preserve, and transfer capital assets.
Retirement plans are typically income assets. Portions of the accounts that have never been taxed will be taxed as income prior to any transfer. These include traditional IRAs and related 401(k)s as well as non-qualified annuities and even Roth IRAs.
The significance of this is that people cannot move them out of their estate and protect them from estate taxes (or, in many states, from having to be spent down for nursing home care) without triggering income tax or losing the long-term tax deferral for Roth accounts.
This can be very frustrating, as most middle-class wealth is accumulated in these accounts.
Forever Taxed to Never Taxed
Although estate taxes are no longer wealth enemy number one, income tax will be paid on what is likely your largest financial asset—pre-tax retirement plans.
Income tax is progressive, meaning the higher one’s income, the greater the percent of the marginal amount that must be paid. You may not pay these taxes yourself, but this should not put too large a smile on your face, because it just means you died without using the money.
In this case, your heirs will pay the tax when they withdraw the funds. And unless they fall into a few categories--a spouse, a minor child or disabled adult, or a person who is not younger than you by ten years--the money must be taken out (and taxed) within ten years.
Never (Again) Taxed Assets
Roth IRAs and permanent life insurance are never taxed assets, or perhaps more accurately never again taxed assets, as they are usually purchased with dollars that have already been taxed once.
Most of you are familiar with Roth IRAs and retirement plans. It’s always a tough call when contributing whether to take the tax break now or later. Once people retire, our team devotes a lot of time and effort to shifting forever taxed IRAs to never-taxed Roths. I demonstrate our approach in this video and this video.
For heirs, Roths are absolutely the best liquid asset to inherit. They can be turned into tax-free cash immediately, if desired. Withdrawals can also be deferred for up to ten years, which means these accounts will double again if they earn a seven percent return.
The next best asset is probably life insurance. It pays a specific amount of money income tax-free. If owned by a trust, it can be protected from long-term care expense and any estate tax that may exist today or in the future.
Putting It Together
Now if you consider these two areas, you can understand an effective strategy for turning forever taxed to never taxed while protecting the value of IRAs from being spent down to pay for long-term custodial care.
You create irrevocable trusts that, by definition, live outside of your estate. These trusts purchase permanent life insurance on your, and, if applicable, your spouse’s life. You then fund the premiums with distributions from your IRA that you do not need to pay your bills.
How is the value of these trusts protected, you may ask?
Here too we need to explain some basics. Assets can be owned either by us as individuals or by entities and trusts.
Total Control, Zero Protection
These entities and trusts may be owned or controlled by us, in which case they are revocable trusts. In these cases, you retain control and part of that control means that the money is available for paying for long-term care and likely creditors.
Revocable trusts have many uses but protecting your assets from creditors and predators and the tax collector are not among them.
Limited Control, Lots of Protection
The second type of trusts is considered stand-alone entities, with their own Tax ID numbers, outside our control and estate. These are typically referred to as irrevocable trusts.
These trusts are complicated and can accomplish many goals. The key for this conversation is that they technically live outside your controlled estate. If you are sued, they are not yours. If you need to pay for long-term care, they are not yours. If a person gets divorced, they are not his or hers. I mention this last one because protecting wealth in families often means protecting it from potential divorce of future generations. This is the most dreaded category of people—Future Former Spouses.
As I said, these trusts can be complex, and they can own just about any capital assets. People use them to protect and transfer houses, other real estate, businesses, and of course investments.
People use them to create wealth out of thin air with life insurance policies.
You Have Enough, Now What?
Now let’s turn to another concept, and that’s the concept of what I call the planning of plentitude.
For most of our lives, we practice the planning of scarcity. This is the logical and dominant planning discipline of asking will I have enough in the future to allocate scarce resources across several goals, such as paying off a residence, funding education for children, and amassing enough money to enjoy a leisurely retirement?
Once you are successful at this—and our clients are successful—you transition to the planning of plentitude.
You know you have enough so what’s next?
You can’t take it with you, so the logical place to look is down the road to enjoying it with loved ones prior to securely transferring it to them.
Protecting Those Assets
If protecting your assets is a priority, you should consider irrevocable trusts to move forever taxed and exposed assets into never taxed and protected assets. Properly drafted trusts can allow you to use the assets in a spouse’s trust, so these funds might not actually be out of reach to you.
As I said, it’s complex. This is what skilled attorneys are for.
Some people own only life insurance in these trusts. This simplifies fees and income tax reporting, as there is none. You can also transfer cash from your now substantial Required Minimum Distributions (RMDs) to purchase investments in your trusts. This will allow you to protect assets from the expenses of nursing home care.
This does not protect these assets from income taxes. And in fact, it may expose trust-owned assets to higher taxes, as trusts are taxed at the same rates of individuals but at a much tighter schedule. In 2026, the top 37 percent tax bracket doesn’t kick in for single individuals until income tops $640,600 and $768.700 for married couples. Trusts pay the top 37 percent income tax once income tops a measly $16,000.
We have ways to address this as well, sometimes with the way the trust is drafted and at other times with investment selection or the use of life insurance and tax-deferred annuities.
Each person is unique; each solution is unique.
Protect Your Home
One large asset that Americans want to protect is the personal residence. There are multiple ways to accomplish this, including changing the deed to a life use, giving the house to children outright, and, most securely, creating an irrevocable trust and transferring the house thereto. If the trust is properly drafted, you will be able to live in the house and the cost basis will step up when the last surviving spouse dies and it transfers to your children. This eliminates any capital gains taxes if the house is quickly sold and should substantially reduce them if the children decide to hold it—which they likely won’t, unless it’s a ski chalet or a beach cottage.
What About the Kids and Grandkids?
Trusts can be incredibly useful in ensuring that your legacy is protected through future generations. Inherited wealth often presents a host of issues, both good and bad, for those on the receiving end. If money transfers outright, it is the beneficiary’s to spend however he or she prefers. It also potentially becomes available for lawsuits and future former spouses.
For individuals you know—current children and grandchildren—you can create very customized trusts. I have three for my beneficiaries and each is very different. For unknown beneficiaries, these trusts could use general rules and guidelines. These trusts will have to be irrevocable. They can be created, however, in a revocable living trust.
A Word on Charity
People with substantial wealth often include some gifts to non-profits in their estate plan. The assets a couple gives can have substantial tax consequences. The key concept is that public charities, churches, and non-profits do not pay income taxes or capital gains taxes, but people do.
Therefore, if you are earmarking assets for charities, traditional IRAs and other tax-infested assets are the best choice. Also, during your life you should consider minimizing your adjusted gross income (AGI) with qualified charitable contributions (QCDs) from IRAs. You can execute these from IRAs when you reach age 70.5.
Individuals do benefit from step up in cost basis on capital assets. This means that your date of death value becomes the value on which taxes are based when these assets are ultimately sold. I purchased 100 shares of XYZ at a cost of $1,000, for example, and twenty years later it was worth $20,000, there’s a big difference if I sell it while alive or pass it though my estate. If I sell it when I’m alive, my cost basis is $1,000 so I will have a capital gain of $19,000. The federal rate I pay on this gain ranges from zero to 23.8 percent, depending on my total income.
If I die owning it, the basis “steps up” to $20,000, and my executor or whomever I send it to, can sell it immediately at a zero gain. Therefore, non-qualified assets are more valuable to people. Trust-owned assets may or may not step up in basis. It depends on how they are designed and drafted.
You should never, ever use Roth assets to give to charity if you have any other assets.
Here’s a handy cheat sheet on the preferred order of giving:
- IRAs and pretax assets (QCD for those over age 70.5)
- Low-tax basis securities (stock, exchange traded funds, or mutual funds)
- Cash
- Roth IRAs
A Final Wrap
If you’re reading this essay, it’s highly likely that you care about your finances and your financial legacy. You’ve amassed a nice pile of money, most of it in tax-infested retirement plans, and you have people in your life who love you and whom you love, and perhaps a few you could do without.
You are well on your way to the planning of plentitude.
The primary risks to your nest eggs are the nursing home while you’re alive and lawsuits, spendthrift ways, and ex-spouses once you’re gone.
Now may be a good time to revisit your estate plan, consider creating trusts or other structures to protect your assets or minimize income taxes, and consider some trusts for the next generation.
Let’s have a conversation.