The Estate of The Union Season 4|Episode 2 is out now! In this episode of the ESTATE OF THE UNION, Brad Wiewel is going to discuss gifting to grandchildren – is it a blessing or a curse?
As a great general rule, people who have grandchildren are entranced by them! They typically have plenty of photographs to share and stories to tell. These kids are perfect and always will be – right?
In this edition of the Estate of the Union bought to you by Texas Trust Law, Brad Wiewel has some advice for grandparents which may seem to be contrary to the general idea that making substantial gifts to those adorable grandkids is always the right and proper thing to do. Maybe Brad is getting a little bit jaded as he ages, or maybe his advice is worth considering – you get to decide! Is gifting to grandchildren a blessing or a curse?
In each episode of The Estate of The Union podcast, host and lawyer Brad Wiewel will give valuable insights into the confusing world of estate planning, making an often daunting subject easier to understand. It is Estate Planning Made Simple! The Estate of The Union Season 4|Episode 2 is out now! The episode can be found on Spotify, Apple podcasts, or anywhere you get your podcasts. If you would prefer to watch the video version, please visit our YouTube page. Please click on the links to listen to or watch the new installment of The Estate of The Union podcast. We hope you enjoy it.
Texas Trust Law focuses its practice exclusively in the area of wills, probate, estate planning, asset protection, and special needs planning. Brad Wiewel is Board Certified in Estate Planning and Probate Law by the Texas Board of Legal Specialization. We provide estate planning services, asset protection planning, business planning, and retirement exit strategies.
For small business owners, a sudden death or disability can put a company at risk, leaving partners, employees and family members struggling to manage operations. Protecting your business with life insurance is critical. It serves as a financial safety net, helping businesses cover debts, maintain cash flow and ensure a smooth ownership transition in case of an owner’s passing.
Why Life Insurance Is Essential for Business Owners
Unlike traditional employees, business owners do not have employer-provided life insurance benefits. Without a plan in place, unexpected loss can lead to:
Financial strain on surviving family members who may inherit business debt
Difficulties in succession planning, leaving employees and partners uncertain
A forced sale of the business to cover liabilities or taxes
Owners can protect their assets, partners and loved ones by incorporating business-focused life insurance policies.
Types of Life Insurance for Business Owners
1. Key Person Life Insurance
A key person insurance policy covers the loss of an essential employee or owner whose expertise, leadership, or financial contributions are critical to business success.
The business owns and pays for the policy
If the insured person dies, the company receives the payout
Funds can be used to cover lost revenue, hire a replacement, or settle business debts
This policy is essential for small businesses where one person drives most of the revenue.
2. Buy-Sell Agreement with Life Insurance
A buy-sell agreement funded by life insurance ensures a smooth ownership transition if one partner dies or becomes disabled.
Each partner owns a policy on the other’s life
If a partner passes away, the surviving owner(s) receive funds to buy the deceased’s share
Prevents the business from falling into legal or financial limbo
This arrangement provides stability for the company and fair compensation for heirs without forcing them into business operations.
3. Term vs. Permanent Life Insurance for Business Owners
Term Life Insurance: Provides coverage for a set period (e.g., 10, 20, or 30 years) and is affordable. Ideal for covering temporary business loans and obligations.
Permanent Life Insurance: Offers lifetime coverage with a cash value component. It can fund succession plans or provide liquidity for estate taxes.
Business owners should assess their specific needs to determine the right coverage type.
How Life Insurance Helps Business Continuity
1. Covering Business Debts and Loans
Many small business owners take on significant personal debt to grow their companies. If an owner dies, these debts do not disappear. Life insurance can help:
Pay off outstanding business loans and protect assets
Prevent creditors from claiming company property
Ensure that surviving family members are not burdened with financial obligations
2. Providing Financial Stability for Employees and Partners
A business without a contingency plan can quickly lose employees and clients. Life insurance provides:
Cash flow to continue payroll and operations
Stability to retain key employees during the transition
Security to keep the business running smoothly
This protection reassures employees and investors that the company can survive unexpected losses.
3. Estate Planning and Tax Benefits
For business owners with significant assets, life insurance can help cover estate taxes, preventing the need to sell off parts of the business. Benefits include:
Liquidity to pay taxes without affecting operations
Tax advantages when structured correctly under estate planning laws
Smooth transfer of ownership without financial strain on heirs
Proper planning ensures that a business remains an asset for future generations.
Secure Your Business’s Future with Smart Planning
Life insurance is a critical tool for protecting small businesses, ensuring that owners, employees and family members are financially secure in the event of the unexpected. If you would like to learn more about life insurance and estate planning, please visit our previous posts.
Many people add family members or spouses as joint owners of bank accounts, real estate, or investments to simplify estate planning and avoid probate. While joint ownership can offer convenience and asset access, it also presents serious risks that can lead to financial disputes, tax liabilities and legal challenges. Understanding the downsides of joint ownership is essential before making decisions that could impact your estate and beneficiaries.
What Is Joint Ownership?
Joint ownership means that two or more people share legal ownership of an asset. There are different forms of joint ownership, each with unique rights and implications. Some common types of joint ownership include:
Joint Tenancy with Right of Survivorship (JTWROS) – If one owner dies, the other owner(s) automatically inherit the asset. Common among spouses.
Tenancy in Common – Each owner holds a separate, distinct share of the property. Shares can be passed down in a will instead of automatically transferring to co-owners.
Tenancy by the Entirety – A unique form of joint ownership for married couples that offers protection from creditors in some states.
Joint Ownership of Bank Accounts – Gives all owners full access to funds, even if one person contributed all the money.
While these arrangements may seem beneficial, they can create unintended financial and legal consequences.
The Risks of Joint Ownership
1. Loss of Full Control Over the Asset
Adding a co-owner means you no longer have sole decision-making power. If you own property or an account jointly, the other person:
Must approve any sale or significant financial decision
Can legally withdraw funds or take actions you may disagree with
May refuse to cooperate in estate planning decisions
For example, if you add an adult child to your house deed, you cannot sell or refinance the home without their approval. If your relationship changes, legal conflicts may arise.
2. Exposure to the Co-Owner’s Debts and Liabilities
If a joint owner has debt, gets sued, or divorces, creditors can go after jointly owned assets. This means:
A co-owner’s financial troubles can result in liens or judgments against your property
The asset may be subject to seizure by creditors or division in a divorce settlement
You could lose control over the asset due to someone else’s financial mistakes
This is particularly risky when adding children or relatives with unstable finances or creditor issues.
3. Unintended Tax Consequences
Joint ownership can create tax problems, especially when transferring assets. Common tax issues include:
Capital gains taxes – If a property or investment is sold, the IRS may assess capital gains based on the original purchase price, not the market value at death.
Gift tax liability – Adding someone as a joint owner may be considered a taxable gift, requiring IRS reporting if it exceeds the gift tax exemption limit.
Loss of step-up in basis – Heirs who inherit assets outright get a “step-up” in tax basis to current market value, reducing capital gains taxes. With joint ownership, this benefit may be lost.
Without proper estate planning, heirs may owe more in taxes than necessary.
4. Complications in Estate Planning
Many people use joint ownership to avoid probate. However, this strategy can backfire. Risks include:
Disinheriting intended beneficiaries – If one joint owner survives, they get full ownership—even if your will says otherwise.
Unequal distribution of assets – If you own multiple assets jointly with different people, some heirs may receive more than intended.
Legal disputes – Family members may contest asset distribution if joint ownership conflicts with your will.
A well-structured trust or beneficiary designation often provides a more reliable way to pass down assets.
When Joint Ownership Might Be Appropriate
Despite its risks, joint ownership can be helpful in certain situations. For instance, it’s suitable if you trust the co-owner completely and want them to have full rights to the asset. There are also few drawbacks if the asset has minimal value or no tax consequences or if both parties contribute equally to the asset.
In most cases, estate planning tools such as trusts, payable-on-death accounts, or transfer-on-death deeds provide greater protection and control.
Protect Your Assets with Smart Estate Planning
While joint ownership may seem easy, it often creates more problems than it solves. Understanding the downsides of joint ownership is essential before making decisions that could impact your estate and beneficiaries. Before adding someone to your assets, it’s essential to consider the legal, financial and tax consequences. If you would like to learn more about joint ownership, please visit our previous posts.
Building wealth is only half the battle—ensuring that it lasts for future generations requires careful estate planning and strategic wealth management. Many families fail to implement a structured plan, leading to lost assets, unnecessary taxes and family disputes. Without the proper legal and financial strategies, even substantial inheritances can be squandered within a generation. Estate planning can bridge the gap between generational wealth; ensuring that wealth is protected, distributed according to the family’s wishes, and sustained for years to come.
Why Generational Wealth Often Fails to Last
Studies show that 70% of wealthy families lose their wealth by the second generation and 90% by the third. The primary causes include:
Lack of financial literacy – Heirs often receive wealth without a plan for responsible management.
Estate tax burdens – Without proper planning, substantial portions of an estate may be lost to federal and state taxes.
Legal disputes – Poorly structured wills and trusts often lead to costly inheritance battles.
Failure to adapt to changing financial laws – Inheritance laws, tax regulations and trust structures evolve over time.
Estate planning provides legal structures and safeguards to prevent these issues and ensure that family wealth remains intact.
How Estate Planning Protects Generational Wealth
Structuring Trusts for Long-Term Asset Protection:
Trusts are among the most effective tools for protecting wealth and ensuring that assets are passed down responsibly. Unlike a will, which simply distributes assets, trusts provide ongoing management and protection.
Common trust structures include:
Revocable Living Trusts – Allow individuals to control assets during their lifetime, while avoiding probate upon death.
Irrevocable Trusts – Provide stronger asset protection and tax advantages by permanently removing assets from the grantor’s estate.
Generation-Skipping Trusts (GSTs) – Allow assets to bypass one generation, reducing estate tax liability for grandchildren.
Trusts also allow customized inheritance distribution, such as delayed payouts, financial milestones, or incentives for responsible wealth management.
Minimizing Estate Taxes and Legal Fees:
High-net-worth individuals face significant estate tax challenges if wealth is not structured correctly. An estate planning attorney helps reduce tax exposure through:
Charitable giving – Donating assets through charitable remainder trusts or donor-advised funds offers tax deductions while benefiting causes.
Family Limited Partnerships (FLPs) – These allow wealth to be transferred gradually, minimizing tax burdens.
Without tax planning, heirs may be forced to sell assets or businesses to cover tax liabilities.
Preventing Family Disputes Over Inheritance:
Even well-meaning families can experience conflict over wealth distribution. An estate planning attorney helps prevent disputes by:
Creating straightforward wills and trust agreements that specify asset distribution.
Including business succession plans to ensure seamless leadership transitions in family businesses.
Establishing conflict resolution mechanisms like mediation clauses to settle disputes outside of court.
A structured estate plan ensures that inheritance disagreements do not escalate into costly legal battles.
Teaching Financial Responsibility to Heirs:
Wealth transfer is more effective when heirs understand how to manage their inheritance. Estate planning attorneys work with families to:
Educate younger generations on financial management and investment strategies.
Introduce heirs to financial advisors who can help them navigate wealth preservation.
Incorporate inheritance incentives that promote responsible spending and investment.
Without financial education, even a well-structured estate plan can fail to maintain generational wealth.
Estate Planning for Business Owners
Family businesses require careful succession planning to ensure stability after the founder’s passing. An estate planning attorney helps:
Identify and prepare successors for leadership transitions.
Establish buy-sell agreements to ensure smooth ownership transfers.
Structure ownership in trusts or LLCs to provide financial protection.
Companies often struggle to survive past the first generation without a business succession plan.
Secure Your Family’s Financial Legacy
Estate planning can bridge the gap between generational wealth. It will give you the confidence that your assets are preserved, managed wisely and passed down without unnecessary financial losses. if you would like to learn more about managing generational wealth, please visit our previous posts.
High-net-worth individuals and families often hold stocks, real estate, or other assets that have significantly increased in value over time. Selling these assets outright can trigger capital gains taxes, reducing the asset’s net value. However, strategic gifting—whether to family members or charities—can minimize tax liabilities for high net-worth families, while ensuring that wealth is transferred efficiently.
By understanding gift tax rules, charitable giving strategies and estate planning considerations, individuals can preserve more of their wealth while benefiting loved ones and the causes they care about.
Why Gifting Appreciated Assets Makes Sense
Gifting highly appreciated assets offers several financial advantages:
Reduces estate size – Helps minimize estate taxes by transferring wealth while living.
Avoids or reduces capital gains taxes – Capital gains taxes may be eliminated or deferred if an asset is gifted instead of sold.
Supports charitable causes – Donating appreciated assets directly to charities maximizes deductions, while providing financial support to nonprofits.
Leverages lower tax brackets – Gifting to beneficiaries in lower income tax brackets allows them to sell the asset with reduced capital gains exposure.
Careful planning ensures that these benefits are fully realized while complying with tax laws and avoiding unintended financial consequences.
Understanding Gift Tax Rules and Exemptions
The IRS imposes gift tax rules on high-value asset transfers. However, several exemptions allow for tax-free gifting.
Annual Gift Tax Exclusion
In 2025, individuals can gift up to $19,000 per recipient per year without triggering gift tax reporting. Married couples can combine their exclusions, allowing up to $38,000 per couple annually.
Gifting within these limits enables gradual wealth transfer without reducing the federal lifetime estate and gift tax exemption, which currently stands at $13.61 million per individual (subject to legislative changes).
Lifetime Gift and Estate Tax Exemption
Gifts exceeding the annual limit count toward an individual’s lifetime exemption, reducing the amount that can be passed estate-tax-free upon death. However, gifting assets while living can significantly reduce estate tax liabilities for individuals with estates exceeding the exemption amount.
Step-Up in Basis Consideration
Gifting appreciated assets can result in capital gains tax consequences for the recipient. Unlike assets inherited at death, which receive a step-up based on fair market value, gifted assets retain the donor’s original purchase price (basis).
For example:
If a parent purchased stock at $50,000 and it is now worth $250,000, gifting it to an heir would pass on the original cost basis of $50,000.
If the recipient sells the stock, they will owe capital gains tax on the $200,000 gain.
For individuals concerned about minimizing tax burdens for heirs, gifting certain assets while retaining others for inheritance may be the most tax-efficient strategy.
Charitable Giving Strategies for Appreciated Assets
Donating Stock Instead of Cash
One of the most tax-efficient ways to support a nonprofit is by donating appreciated securities directly. Doing so:
Avoids capital gains taxes that would apply if the stock were sold before donating.
Provides a full charitable deduction for the fair market value of the asset.
Maximizes the impact of donations, as the charity receives the full value without tax deductions.
For example, donating $100,000 in appreciated stock instead of selling it and donating cash could save $20,000 or more in capital gains taxes.
Charitable Remainder Trusts (CRTs)
A Charitable Remainder Trust (CRT) allows individuals to donate highly appreciated assets, while retaining an income stream during their lifetime. This strategy:
Defers capital gains taxes, allowing the trust to reinvest the entire asset value.
Provides a charitable tax deduction based on the present value of the donation.
Supports charities, while ensuring a lifetime income stream for the donor or beneficiaries.
CRTs are ideal for those who wish to benefit from their assets while making a long-term charitable impact.
Donor-Advised Funds (DAFs)
A Donor-Advised Fund (DAF) allows individuals to contribute appreciated assets, receive an immediate tax deduction and distribute funds to charities over time. DAFs provide:
Flexibility in choosing which charities to support over multiple years.
Tax-efficient giving by allowing donations to grow tax-free before distribution.
Simplified record-keeping for those making multiple charitable contributions.
DAFs are effective for individuals who want to maximize tax savings, while maintaining control over charitable donations.
Estate Planning Considerations When Gifting Assets
Gifting appreciated assets plays a key role in estate planning, reducing taxable estate size and ensuring smooth wealth transfer. An estate planning attorney can help:
Structure gifts to minimize tax burdens for both the donor and recipient.
Determine whether assets should be gifted outright or placed in a trust for greater protection.
Balance lifetime gifting with posthumous wealth transfer strategies.
For individuals with high-value estates, integrating gifting into a broader estate plan ensures optimal tax efficiency and legacy preservation.
Optimize Your Gifting Strategy with Estate Planning
Gifting highly appreciated assets requires careful planning to balance tax efficiency, wealth preservation and charitable giving. Whether you are donating assets, transferring wealth to family, or incorporating gifting into your estate plan, strategic gifting can minimize tax liabilities for high net-worth families. If you would like to learn more about gifting, please visit our previous posts.
The Estate of The Union Season 4|Episode 1 is out now! In this episode of the ESTATE OF THE UNION, Brad Wiewel is going to share with you how to SUPER STRETCH an IRA!
Here’s some background: Retirement accounts like IRAs, 401ks and 403bs are subject to a myriad of new rules on how fast the money needs to be distributed to a non-spouse beneficiary. While there are exceptions, for the vast majority of beneficiaries, the money must be emptied out in ten years, which means that those funds are going to be subject to taxes more quickly and now they are growing in a “taxable” environment.
Enter the Testamentary Charitable Remainder Trust (weird name, right?). As Brad describes it, this trust which can be part of a revocable living trust or a will, and it allows the ultimate beneficiaries (kids, etc.) to take the retirement account distributions over their LIFETIME (Super Stretch), not just ten years! Brad paints the BIG picture and gives enough details for it to make sense to you.
In each episode of The Estate of The Union podcast, host and lawyer Brad Wiewel will give valuable insights into the confusing world of estate planning, making an often daunting subject easier to understand. It is Estate Planning Made Simple! The Estate of The Union Season 4|Episode 1 is out now! The episode can be found on Spotify, Apple podcasts, or anywhere you get your podcasts. If you would prefer to watch the video version, please visit our YouTube page. Please click on the links to listen to or watch the new installment of The Estate of The Union podcast. We hope you enjoy it.
Texas Trust Law focuses its practice exclusively in the area of wills, probate, estate planning, asset protection, and special needs planning. Brad Wiewel is Board Certified in Estate Planning and Probate Law by the Texas Board of Legal Specialization. We provide estate planning services, asset protection planning, business planning, and retirement exit strategies.
There are many nuances to estate planning for Americans living outside of the U.S. While the current federal estate tax levels are extremely high, there are different rules in other countries, and a clear understanding is needed, as reported in the Tax Management International Journal/Bloomberg Tax article, “Americans Living Overseas Need Cross-Border Estate Planning.”
At the very least, expatriates will want to understand the federal estate tax and how it works with state-level taxes and how European taxes work, which are very different than the American model.
The current 2025 federal estate tax exemption is $13.99 million per individual, and estates below this threshold don’t pay federal taxes. The exemption will likely remain at elevated levels in the foreseeable future. Estates exceeding this level are taxed at rates up to 40%. However, most high-net-worth individuals have strategic estate planning to minimize their tax liability. Lifetime gifting, charitable donations and trusts shelter assets and pass wealth on to future generations.
Several states have their estate taxes, which are typically far lower than the federal level. Oregon, Rhode Island and Massachusetts have the lowest exclusions at $2 million or less. New York State’s estate tax exclusion is $7.16 million. However, there’s a so-called “cliff tax” if the estate value exceeds the exemption even slightly. In most states, the estate tax ranges from 0.8% to 20%. Your estate planning attorney will know what your state’s exemptions are.
Inheritance taxes are levied only by a few states, including Iowa, Nebraska, Kentucky, Maryland, New Jersey and Pennsylvania. Maryland, known as a corporate haven for its low business taxes, imposes both estate and inheritance taxes. These taxes are based on the value of the inheritance and the relationship to the decedent.
In Europe, U.S. citizens are subject to more inheritance taxes, where exemptions tend to be lower, and rates are far higher than in the U.S. If you live overseas, you’ll need to consider the cost of your exposure to two tax systems. U.S. federal estate taxes apply wherever you live, in or outside of the U.S., and European inheritance taxes are based on where the decedent lived.
Estate planning for expats requires a multi-national approach. Find out if your country has a U.S. Estate and Gift Tax Treaty, which may allow credits to offset taxes paid in one country against those owned in another.
American citizens may gift up to $19,000 per person every year tax-free. Some European countries have a similar situation where lifetime gifting is based on the relationship between the grantor and the recipient.
Trusts recognized in the U.S. may not be recognized in other countries, so be sure the structure works in both the U.S. and your country of residence to avoid unexpected taxes.
The will you created in the U.S. may not be in compliance with another country and could lead to problems in estate administration.
Estate planning for Americans living outside of the U.S. can be complicated and difficult. Speak with an experienced estate planning attorney who can help you navigate the estate taxes and estate planning needs for living outside of the U.S. You’ll need to plan strategically to navigate American and your adopted nation’s estate tax structures. If you would like to learn more about planning for those outside the U.S, please visit our previous posts.
Many people give financial gifts to family members, friends, or charities, whether for milestone events, education, or estate planning purposes. While gifting is a generous act, certain gifts may trigger tax obligations. Understanding federal gift tax rules, annual exclusions and lifetime exemptions can help individuals structure their giving in the most tax-efficient manner.
What Is the Gift Tax?
The gift tax is a federal tax imposed on transfers of money or property made without receiving something of equal value in return. The person making the gift, not the recipient, is responsible for paying any applicable gift tax. However, most gifts fall within exemption limits, meaning few individuals owe taxes on their generosity.
How the Gift Tax Exclusion Works
As of 2025, individuals can give up to $19,000 per recipient per year without triggering gift tax reporting requirements. Married couples can combine their exclusions, allowing them to gift $38,000 per recipient tax-free.
For example, if a parent gives their child $19,000 in 2025, the gift is below the annual exclusion and does not need to be reported to the Internal Revenue Service (IRS). However, if the gift is $26,000, the excess $7,000 must be reported, though it may not necessarily result in tax owed.
Lifetime Gift Tax Exemption
In addition to the annual exclusion, individuals have a lifetime gift tax exemption, which allows them to give away a set amount over their lifetime without incurring taxes. In 2025, this exemption is $13.99 million per person (or $27.98 million for married couples).
If a gift exceeds the annual exclusion, the excess amount is deducted from the lifetime exemption. Only gifts that surpass this exemption trigger actual gift tax liability. Most people will never reach this limit, meaning they can give substantial amounts tax-free.
What Types of Gifts are Tax-Exempt?
Certain types of financial gifts are automatically exempt from gift tax rules, including:
Payments for Medical Expenses: Direct payments to medical providers for someone else’s healthcare are not considered taxable gifts.
Educational Tuition Payments: Direct tuition payments to a school or university (not including room and board) are exempt from gift tax.
Gifts to Spouses: Unlimited tax-free transfers can be made to a U.S. citizen spouse. Gifts to a non-citizen spouse have a lower annual exclusion limit ($190,000 in 2025).
Charitable Contributions: Donations to IRS-recognized charities are tax-deductible and do not count toward the gift tax exemption.
Reporting Large Gifts to the IRS
If a financial gift exceeds the annual exclusion, the giver must file IRS Form 709: U.S. Gift (and Generation-Skipping Transfer) Tax Return. Filing does not necessarily mean taxes are owed—it simply records the amount deducted from the lifetime exemption.
For example, if an individual gifts $30,000 to a child in 2025, the excess $11,000 is reported on Form 709. However, it is deducted from their $13.99 million lifetime exemption, leaving them with $13.979 million remaining. Taxes are only due if lifetime gifts surpass the exemption limit.
Tax Planning Strategies for Gifting
To maximize the benefits of financial gifts while minimizing tax exposure, consider these strategies:
Spread gifts over multiple years to take advantage of the annual exclusion each year.
Leverage direct tuition or medical payments to help loved ones without using up gift tax exclusions.
Utilize trusts for structured wealth transfers, such as irrevocable trusts for minor children or special needs beneficiaries.
Coordinate with an estate plan to gradually minimize estate tax liability by gifting assets.
The Role of an Estate Lawyer in Gifting Strategies
An estate planning attorney can help structure financial gifts to align with long-term wealth transfer goals while minimizing potential tax liabilities. Whether incorporating gifting into an estate plan or establishing trusts for heirs, professional guidance ensures compliance with IRS regulations.
Financial gifting allows individuals to share wealth, support loved ones and reduce potential estate taxes. By understanding gift tax rules and planning strategically, you can help structure tax-efficient giving that benefit both the giver and the recipient. If you would like to learn more about the gift tax, please visit our previous posts.
Grandparents often find immense joy in supporting their grandchildren, whether by funding education, contributing to major milestones, or simply providing for day-to-day needs. While these gestures can create lasting memories, an article from the AARP explains that financial missteps can lead to unintended consequences. Grandparents can balance generosity with financial security by understanding potential pitfalls and adopting thoughtful strategies. There are some common financial blunders grandparents should avoid with grandchildren.
Overextending Finances and Other Common Financial Mistakes Grandparents Make
One of the most common errors grandparents make is giving more than they can afford. This often happens out of a desire to help with significant expenses, like college tuition or housing. While the intention is noble, overcommitting financially can jeopardize retirement savings and long-term stability. Grandparents must evaluate their financial capacity before making significant commitments. Consulting with a financial advisor can clarify how much they can comfortably give without endangering their financial health.
Co-Signing Loans
Co-signing a loan for a grandchild, whether for a car, education, or personal use, can have serious implications. If the grandchild is unable to make payments, the financial burden falls on the grandparent, potentially damaging their credit score or creating unexpected debt. It’s essential to understand the risks before co-signing any financial agreement. Alternatives, such as contributing smaller amounts directly toward the loan, can provide support without the same level of risk.
Giving Unequally Among Grandchildren
Favoritism, whether intentional or perceived, can strain family relationships. For instance, funding one grandchild’s college tuition while offering no support to others can lead to resentment or conflict. To avoid these issues, grandparents should strive for fairness, considering equitable ways to help all grandchildren. Transparency about financial decisions and the reasoning behind them can also reduce misunderstandings.
Ignoring Tax Implications
Generous gifts can sometimes lead to unintended tax consequences. In 2025, the IRS allows individuals to gift up to $19,000 annually per recipient without triggering gift tax reporting requirements. Exceeding this threshold may require filing a gift tax return or result in tax liabilities. Grandparents should understand these limits and plan their giving accordingly. Contributions to 529 college savings plans or medical expenses paid directly to providers are additional tax-efficient options.
Failing to Prioritize Estate Planning
Large gifts made without considering overall estate planning goals can disrupt long-term plans or unintentionally disinherit certain heirs. Without proper documentation, disputes can arise among family members. Grandparents should incorporate financial gifts into their broader estate plans. Working with an estate planning attorney ensures that gifts align with their goals and minimize potential conflicts.
To avoid financial missteps, grandparents can adopt these thoughtful strategies:
Set clear boundaries and determine how much you can give without compromising your financial security.
Plan equitable contributions to ensure fairness among grandchildren, while considering individual needs.
Focus on education by contributing to tax-advantaged accounts, like 529 plans.
Pay for specific expenses directly to avoid triggering gift tax complications.
Work with financial and legal professionals to develop a giving strategy that aligns with long-term goals.
The Importance of Communication
Open communication with family members is key to avoiding misunderstandings or conflicts. Discuss your intentions and limitations with both your children and grandchildren, ensuring that everyone understands your approach to financial support. These conversations can strengthen family bonds and provide clarity about your financial role.
Balancing Generosity with Stability
Supporting grandchildren financially can be one of the most fulfilling aspects of grandparenting. Grandparents can avoid financial blunders with grandchildren by implementing thoughtful strategies that can provide meaningful assistance, while safeguarding their financial future. A balanced approach ensures that your generosity strengthens family ties without creating financial or relational strain. If you would like to learn more about estate planning for older couples, please visit our previous posts.
Freelancers and the self-employed must take a proactive approach to estate planning. These types of jobs operate without the safety nets provided by traditional employment. This independence brings freedom. However, it also adds complexity to financial and estate planning. From managing irregular income to protecting business assets, creating an estate plan ensures that your hard work is preserved and distributed according to your wishes.
Unlike salaried employees, freelancers often lack access to employer-sponsored benefits, such as life insurance, retirement plans, or disability coverage. Their business assets and personal finances are frequently intertwined, making careful planning essential to avoid unnecessary complications for heirs.
A well-crafted estate plan for freelancers addresses:
Transfer of business assets or intellectual property.
Continuity of income for dependents.
Minimization of taxes and legal hurdles.
Freelancers and the self-employed must create a plan that considers their unique financial circumstances and provides long-term security for loved ones.
Freelancers often rely on their business as their primary source of income. Without a plan, the value of that business could be lost upon their death. Key steps include:
Appointing a Successor: Identify someone to take over the business or handle its sale.
Creating a Buy-Sell Agreement: Outline how ownership interests will be transferred for partnerships or joint ventures.
Documenting Procedures: Maintain clear records and instructions to help successors understand ongoing operations or intellectual property management.
Freelancers often experience fluctuations in income, which can complicate traditional estate planning strategies. To account for this:
Establish a rainy-day fund to provide a financial buffer for your estate.
Work with an estate planning attorney to identify flexible asset protection strategies.
Consider annuities or investments that provide steady income streams for beneficiaries.
Unlike traditional employees, freelancers must set up their own retirement savings plans. Options include:
SEP IRAs or Solo 401(k)s: Tax-advantaged accounts tailored for self-employed individuals.
Roth IRAs: Flexible savings accounts that grow tax-free, offering greater liquidity for heirs.
Ensuring that retirement savings are properly designated to beneficiaries avoids complications later.
The self-employed often own valuable digital assets like intellectual property, domain names, or online portfolios. These assets must be included in your estate plan to ensure seamless transfer. Create an inventory of:
Login credentials for key accounts.
Ownership documentation for websites or digital products.
Instructions for transferring or licensing intellectual property.
Many self-employed generate income from intellectual property, such as writing, artwork, or designs. An estate plan should specify how copyrights, patents, or trademarks are managed after death. This may include:
Assigning ownership to heirs or beneficiaries.
Creating trusts to manage royalty payments.
Licensing or selling rights to preserve income streams.
The first step to creating an estate plan is drafting a will that distributes assets, business interests and personal property according to your wishes. Without one, state laws determine asset distribution, which can result in unintended consequences. However, there’s much more to an estate plan than just making a will.
Establish Powers of Attorney
Freelancers should designate a trusted person to handle financial and healthcare decisions, if they become incapacitated. Powers of attorney ensure continuity in managing personal and business affairs during emergencies.
Consider a Living Trust
A living trust can help freelancers avoid probate and ensure that assets are distributed efficiently. Trusts are beneficial for managing complex assets, like intellectual property or business income.
Secure Life Insurance
Life insurance provides a safety net for freelancers with dependents by replacing lost income and covering future expenses. Policies should be aligned with your estate plan to ensure that benefits are directed appropriately.
Reach Out to an Estate Planning Attorney
Freelancers should consult estate planning attorneys and financial/tax advisors to create a plan that addresses their unique circumstances. Regular reviews ensure that the plan evolves alongside income, assets, or family structure changes.
Freelancers and the self-employed must take a proactive approach to estate planning. You can ensure your hard-earned legacy benefits your loved ones by addressing business continuity, income fluctuations and digital assets. An estate plan tailored to your needs secures your financial future and provides peace of mind, knowing that your assets and values will be protected. If you would like to learn more about planning for the self-employed, please visit our previous posts.
Information in our blogs is very general in nature and should not be acted upon without first consulting with an attorney. Please feel free to contact Texas Trust Law to schedule a complimentary consultation.
