Estate Planning That Actually Works

If you have worked hard to build savings, a home, a business, or investment accounts, there is one uncomfortable question that decides what happens next: will your money move the way you want, or the way your state’s default rules allow? Greg gets specific about why estate planning is not a one-time task or a “later” problem. It is the system that protects your family from confusion, delays, and tax surprises when life changes fast.

We start with the basics many people still skip: a last will and testament, a medical power of attorney, and a living will. From there, we lay out the three questions that shape every strong plan: what assets are being transferred, to whom, and when. That framework makes it easier to spot where complexity hides, especially with real estate, closely held business interests, and alternative investments that are hard to value or split.

Then we get into strategy. We talk lifetime gifting and how annual exclusions can help move value over time, including the 2026 annual gift tax exclusion numbers. For higher net worth families, we discuss advanced estate planning tools like irrevocable trusts and grantor retained annuity trusts (GRATs). If charitable giving is part of your legacy, we cover charitable remainder trusts (CRTs) and donor-advised funds (DAFs), including how they can fit into capital gains and philanthropy goals.

Business owners get a dedicated segment on continuity and liquidity: buy-sell agreements, key person life insurance, and family limited partnerships (FLPs) that can help transfer ownership while retaining control. We close with the big takeaway: estate planning is a living, breathing process that must adjust as your family grows and tax laws change. Subscribe, share the show with someone who needs a nudge to get their plan in place, and leave us a review with the one estate planning question you want answered next.

Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.

The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may suit you, consult the appropriate qualified professional before deciding.  

Transcript

Welcome, July 4, Where To Listen

SPEAKER_00 0:01

Welcome to Money Matters with Greg, where we dive into the money conversations shaping your life. From investments to estate planning, insurance to taxes, we cover it all with a fresh perspective. Join Greg and his guests each week to get inspired and take control of your financial future. Let's get started. Securities and investment advisory services offered to LPL Financial, a registered investment advisor, member PinRES IPC.

SPEAKER_01 0:53

It's a wealth management firm here locally in Valparaiso, Indiana, and also helping clients in over 25 states on their wealth management uh needs and wants and wills. Uh the show's Money Matters for Greg. We talked money on this show. Thanks for joining us today here as we go to celebrate our nation's uh birthday, uh, July 4th coming up. The 250th is here, and it looks like all things considered, it looks like it's going to be pretty magnificent. So hopefully everyone's able to celebrate with their families. Thanks to all those that have served and given us the freedoms that we have and hold dear here and are have the ability to be able to uh have a cookout and enjoy family and do our things that uh we do here on July 4th and celebrate uh our great nation uh that we are very, very proud of and to be a part of. We're broadcasting today on WVLP FM, 103.1 FM, on Thursdays at one o'clock, and then also on Saturdays as a replay at one o'clock. And then we also have uh podcasts anywhere you pod, Apple, Spotify, you name it, our YouTube channels at Farowealth. You can check us out there, as well as our website, farewell.com. Many of the things that I talk about are on uh things I blog about as well, and you can find them out on a blog and see any charts that we are not able to obviously disclose here, but you can easily do uh you can see on the blogs. But just excited to be a part of it. If you want to check out the WVLP family to go to WVLP.org and see uh many of the different uh shows that are uh just fantastic here. There's a great lineup. I'm the money guy, I guess, but there's multiple different uh things as far as arts uh to music, and a number of great DJs as well. But uh spin some classics as well, some number of other other uh shows that are here. So very thankful and proud to be part of the WVLP family. And then also, like I said, podcasting everywhere. Last year,

Fed Shockwaves And Market Headlines

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last week we went over the Fed, the Federal Reserve, and how things have changed. It uh definitely threw some shockwaves into the market. Uh markets didn't necessarily appreciate the changes so much just because of a lot of sell-off in regards to the AI world and uh MB seen has this June, this week in June historically in the markets, uh, is never a good week. So kind of used to it. Uh but uh there's a reason why to pay attention and just is it more of an opportunity than anything else as far as any sort of sell-off. We've had uh all the run-up going into SpaceX uh IPO and all the noise about that for sure. Uh we obviously have the the winding down of the Iran, Iran war, at least tentatively. You know, so we're trying to muddle through that. Oil's come back immensely from uh hundred over a hundred dollars, $110 a barrel down all the way down to uh below 75 now. So hopefully that'll help you on your July 4th travels where you were not having to spend so much on gasoline because it's certainly coming down. We think it's going to 60 as I think progress here this summer. And ultimately trying this show to talk to you about money and how it can help you, uh, where it can guide you, where you can grow it and protect your money and add some wealth. And I wanted

Why Wealth Transfer Plans Fail

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to go into some advanced, some estate planning conversation here today. Obviously, not a lawyer, don't play one on TV, so there's a much disclaimer. And I highly recommend you consult with all your tax professionals and estate planning professionals and financial advisors in regards to some of the things we're going to talk about today. Um, but I do want to talk about we we run in, we work with a number of clients that uh have used mechanisms that not necessarily everybody's so familiar with. They're nothing new, but as far as just not knowing, um, there's some things that I thought I might want to bring up about the transfer of family wealth and what your options are in regards to coming up with a plan to discuss transferring your wealth out of your estate to the second generation, third generation, and where it might go, what your wishes are, whether they be philanthropic, uh charitable inclinations, or, you know, just basically just trying to come up with a plan that will minimize taxes to the next generation as much as possible. And I did a blog on this just recently. Uh you can check it on our website, farewell.com, also on all my socials. I blogged it out uh as well. And I hope you enjoy sort of, you know, that blog and then many of the other couple charts on this on the blog that you can mention or you can check out. Uh, you won't have necessarily the ability to see here, but I hope this helps you in some of the things that we see in our high net worth individuals and families that we work with as we're trying to work with, okay, here's a problem that we'd like to solve, at least to minimize. Not necessarily saying that all taxes are uh not paid or unpaid or avoided in any way. That's not to say, but there are ways to be able to plan that could help relieve that tax burden to the next generation so they don't necessarily get hit with a big tax bill. And you, having passed away, uh come back from the grave, you're so mad that you so much money went to to Washington, which is typically the case in most people's wants, they don't want they'd rather have their money go to their family than go to the government. So, you know, for many people, the wealth they have accumulated over a lifetime is more than just about money. It represents years of hard work, discipline, and overall sacrifice really to ensure that you have a comfortable retirement. Uh, you want to take care of your families, and even more. There's many more things that everyone has their dreams and wants and wills that they think about. So one of the one of the most important and often overlooked questions in financial planning is not necessarily how to grow wealth or even how to spend it, because certainly our clients don't have a problem with that or using it on things. I've seen, I've seen some crazy things. I always say I'm I'm if I was in the business of judging, I'd be out of business because I see some crazy things and what people spend their money on. But how to pass it on efficiently and intentionally is really the conversation we want to have today. So this requires thoughtful estate planning that really covers a broad range of financial topics that include it's gonna include taxes, it's gonna include goals, and it's gonna include legacy. So let's go over those things as we move forward here and as we talk about this today on the podcast. And really, despite the importance of this and this planning, 2025 survey found that fewer than one in three Americans report even having a will. And more than half say they have no estate plan at all. Now, we've had estate plan attorneys on this show, and many of them have said or they readily agree. I mean, they run into a lot of people, don't even have a will. I do too. And the advisors here at Faro Wealth run into it all the time where there's no estate on the estate plan at all. There's eroded on a napkin, and my sister knows, or oh yeah, then we want to get around to that. And again, if we were business of judging, we'd be out of business. But this gap really between this intention and action is significant. And without the thoughtful structure in place, wealth that took decades to build can be eroded by taxes, legal complications, and unintended distributions that were a mistake. Just because you didn't have a plan. So uh I'm here to tell you, like, you know, let me be that person on your shoulder that reminds you or whispers in your ear here that you might want a plant. In the state of Indiana, everyone has a will. In your state, if you're listening from elsewhere, which I hope you are from other states, as we represent clients in over 25, every one of those clients has a will in that state. Every one of those states is happy to make you a, you know, basically uh help helpful, happy to help you with your distributions of your wealth because you didn't plan accordingly and have just a basic last will and testament. So advanced estate planning addresses the challenge that might be by creating really a coordinated approach designed to maximize the efficient transfer of assets to people and causes that matter most to them. Now, for many people that don't have a lot of wealth or don't have a lot of money or don't have whatever, they still have things they want to be able to disperse. So it's still important that you have a last will and testament. I say this all the time on the show, too. So, but uh I really want to remind everybody, last will in testament, medical prior attorney and living will. So let last will and testaments, where's where does my stuff go? Who do I want to have, that jewelry or whatever it might be, their heirloom or that grandfather clock or whatever it might be. Medical power of attorney is who pays for all the bills why I'm not doing well and I'm incapacitated in the in the or my wife and I are both incapacitated in the hospital, is who pays the you know, any the the electrical bill, the mortgage, you name it, basic stuff. Medical power of attorney to be able to make sure you stay afloat while you're healing. And then living will, which is what are my wishes if I'm on machines and what do I want done? What do I want, what are my directives? So three simple basic things that most people don't even get done. And what we're talking about today is estate planning that's even a how they're a whole nother level, much a number of different levels, actually. So

The Three Questions That Define

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at its core, estate planning serves two broad purposes. First, it supports the non-financial goals, such as meeting the needs of the dependents, which we see quite often. Many people are in line waiting. They know there's money there, they know that there's wealth. There's also the protection of assets from creditors if there's an issue in regards to what money is owed, and ensuring that the assets pass to the right people the right way at the right time, in the right titling, uh, which is really, really important too. And secondly, it optimizes financial goals such as managing tax obligations that maintain liquidity, which is super important, uh, so you don't have to sell your business or your farm for 25 cents on the dollar, and preserving the value of your business interest entirely uh is really, really important. These are all risk, de-risking your business as a business owner, lowering the risk in regards to your business if it is purchased. You think any buyer would like to come in to see that the business owner and owners don't have financial plans, uh, they don't have estate plan documents, they don't have buy-sell agreements, they don't have all these other things that they need. We're gonna have to come in here and put these all in place. Like that's not right. You need to be able to do that as a business owner. So these are all things that de-risk the business. And one of those things of financial plans. So the most effective plans that integrate both types of groups and goals that treat wealth transfer as a long-term continued process is the correct way to do it. So it's not a happenstance and it's not shock and awe. It's a continuous long-term process that considers all things involved in the right ways to be able to set it up. There are going to be options that come to you that you might be presented with that really don't fit your situation, but they might fit the family next door or the business owner down the street. So establishing the right framework for wealth transfers is very, very important. And before exploring specific strategies, it's really worth understanding the foundational decisions that make every estate plan. Now, these begin with three simple but important questions. So I'll leave you with this. All right. So what assets are being transferred, to whom, and when will that transfer occur? So three simple questions. What assets are being transferred, to whom, and when will that transfer occur? Now, the types of assets being transferred matters because it influences which transfer strategies are most appropriate. Again, choices. Some choices might work for you, some choices might not, but assets such as cash and publicly traded securities, including typical stocks and bonds, are the most straightforward way to transfer things to transfer because they are liquid. They can be sold. There's a secondary market that is going to be a market that's not just going to, unless it's some sort of stock that's nobody's ever heard of, you're going to get a fair price. Real estate, closely held business interests and alternative investments that would be, let's say, I've seen everything from an oil rig all the way to multiple different apartment buildings that need to be sold. And the alternative investments that introduce complex tit complexity because they're harder to value and maybe difficult to divide among multiple beneficiaries takes time. What is the valuation of that oil rig? What if they have 10? What if they have 20? What if they have 100? And is are they located in different geographies? Are they in different states? Uh, are more valuable than others? Whatever this might be. Like these are things that have to be decided well before someone passes away and the estate plan kicks in. So every estate plan begins with creating a picture of who will benefit from the assets being transferred. Beneficiaries can include a spouse, children, grandchildren, other relatives, close friends, charitable organization, your best friend of the bar, whatever. I've seen it all. Each beneficiary type may call for different planning strategies. And this goes in particular is very important when balancing the needs of the surviving spouse against the long-term interests of the children and future generations. So if you've got a Brady Budge situation where there's three on one side and three on the others, and they're from a separate other marriages, and now they've come together. Like, how does that all get done as far as future generations? How do we make sure that my kids get what they deserve and my wishes, if I pass away and my wife remarries, what happens to their rights? Because that's really, really important. And you the same. Like you need to be thinking of these things. So identifying beneficiaries early in the planning process really helps ensure that the right assets reach the right people in the most effective way. Now, the timing of asset transfers is another key consideration. So some assets pass directly to beneficiaries upon death. Many of those have beneficiary designations on the paperwork that they everyone signs. And while others may be strategically distributed over time, that might be the best case. Now, typically, anyone taking over for your estate as your executor might not necessarily have the expertise on when and how these might be distributed and not creating huge taxable implications. Hopefully they have guidance. Most executors are part of the family or a family member to minimize on cost. If you are needed to get a trustee, trustees do swoop in and do take care of your interest. Now there's a fee involved, but you're gone. So is it really, you know, necessary to think about that when you're trying to pass on everything the right way? Uh that a family member might mess up. So it's something to consider. Uh some there's no, again, it's up to you. It's your choice. But do mention it because uh we've seen it before, where uh family members don't have the expertise to be able to distribute things the right way. And the tax taxable implication showed up because they were not titled the right way, or transfers were given, or checks were written, or whatever it might be. I've seen it all.

Lifetime Gifting And Annual Exclusions

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So, for example, by making completed gifts over one's lifetime, a donor can really take advantage of annual gift exclusions that really increase the amount of tax-free transfers in your lifetime. So that's one of the ways to minimize it. In 2026, the annual gift exclusion is $19,000 per recipient. So that means you and your wife, you and your husband get to have that one combined. So, so so times two, right? Basically, meaning a donor can transfer property, can transfer property up to that amount to any one individual for $38,000 a year if you're splitting the gifts with your spouse without paying any taxes and no disclosure as well. So this is all once you go over that for threshold, then it's got to be on your, you know, on your taxes. So now if you execute this over time, this approach can really remove a significant portion of taxable estate value and allows for greater intention over how and when beneficiars receive their inheritance. I've seen it all as far as you know, cute my kids get 25, 30, and 35, and that's how they structure their trust. I've seen it all the way up to 65, which is insane, in my opinion. You know, the thing I want the one thing I want to say about this generation and having a little bit of money in this in your 20s, in your 30s, is look, you might want to buy a house. Your lifestyle might change because you own a house and you have the ability to be able to have a down payment. There might be gifts that grandmother and and mother and father could do to strategize pushing some of that money out to the kids throughout their lifetime that does help them get an advantage that some people might not necessarily have in this lifetime. So not having to wait until you pass away until they get that advantage. And maybe they don't have a place to use it. They could buy a business, they could franchise a business, they could do lots of different things if they are given a gift throughout time and could depend on that gift maybe over the next number of years, which you can do over a five-year planning process per the IRS rules as well. So obviously want to make sure everyone's consulting their tax attorney, tax accountants, uh, and attorneys, tax attorneys in regards to all this. Many of these things are on IRS.gov. You can find and learn more about on your own if you're a do-it-yourselfer. But uh highly recommend you get advisors in your life that are going to help you transfer strategies for these different goals and put this sort of together to help you with an understanding that foundational elements, that really that those foundational elements are the next step is to identify the goals that can be achieved through estate planning, map them to available options. And

Trust Strategies For Taxes And Giving

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I want to give you some examples. So reducing the taxable value of a gross estate for individuals seeking to minimize estate taxes due to taxes due while transferring future appreciation to the next generation, they really can reduce the value of the gross estate and ensure their beneficiaries receive distributions through irrevocable trust. Now, these are trusts that don't change. A common example is a grantor-retained annuity trust or a grant. Now, we use these quite often with many high net worth families, and grants are where the grantor transfers assets into the trust and receives annuity payments over a set term. And then if the grantor survives the trust term, the remaining assets pass to the beneficiaries outside of the taxable estate, though care needs to be taken as a gift taxation can apply. So you need to make sure that that is obviously tracked. But it's a nice way to be able to set up assets getting moved out of the estate well ahead of time. And we see this in a lot of different uh real estate uh conversations with families that own multiple different homes uh throughout the nation. Now, achieving full philanthropic goals is another choice. So for families with philanthropic goals, another option is reducing state value through a charitable remainder trust or CRT. This option allows the grantor to designate beneficiaries to receive the income interest for a set term and have the remainder go to a designated charity wherever it might be. So you can set up a trust to have the beneficiaries get the interest that the trust dictates, and then ultimately the remainder goes to designated charities. In addition to removing the assets from the gross estate, this method provides a gift tax and an income tax deduction for charitable remainder interest. Now, this might be a great option if you have a business that you're about to sell, you're gonna have a long-term capital gain that's huge. And in this lot in this year, you could set up a charitable remainder trust, donate the charitable money to donate uh to the charitable remainder trust, and then have options in the future with beneficiaries getting income and then also charities getting that money down the line, but you get the deduction initially. This would also be with donor advice funds, DAFs. It's sort of the same premise without necessarily as much work. Any we have donor advice funds. Any advisor can set up a DAF and help you uh with a DF. Now, with but but with the CRT, they work well with highly appreciated assets that can generate cap gains tax if you were to sell them, such as real estate or concentrated stock. And within the trust, the proceeds are reinvested in a diversified portfolio, and the beneficiaries use the income a stream for life for for us for a specific term. And this approach can be vo converts really low-yield, high gain assets into a tax-advantaged income stream while achieving these philanthropic aims. So that's an idea as well. Um and then again, with the donor advice fund that helps with the cap gain. You get the benefit of the cap gain, and you don't necessarily have the expenses of uh setting up the trust. And your your family can then disperse the proceeds however you want. You can have family meetings over it, which I highly recommend. And there's solid effort as a DAF.

Business Planning For Liquidity And Control

SPEAKER_01 21:40

So last thing, managing business interest. Now, for families with business interest or illiquid assets, additional planning around liquidity, governance, and these all like and all this continuity is essential. So buy sell agreements, specifically how ownership transfers uh if an owner passes away or becomes incapacitated. This prevents dispersion. Disputes and ensures that the business can continue operating. Key person life insurance can provide liquidity to cover ongoing business operations or fund to buy out without requiring a forced sale of the business, which is important because if a spouse dies, you don't want to necessarily go in. You're a partner with a business owner, and you don't want to go into business with their spouses and their family. So a key person life insurance allows you to have a liquid event where you pay them off, you gather the ownership of the entire business, and then you ultimately uh can move on with your life while the family obviously is in mourning and goes through a process. You also have family limited partnerships or FLPs that allow senior family members to create a class of ownership and transfer ownership interest to the next generation while retaining control as a general partner. Limited liability interests lack control and marketability. So they may be eligible for valuation discounts that allow families to transfer more value within the gift and estate tax exemption limits. And also asset protection is an additional benefit, shielding family members from claims of potential creditors is always at risk. You don't know what's underneath the onion sometimes with business. Or so when you inherit it, it could be quite a mess. So this structure is really valuable in the context of a family business where continuity of management is really, really important as a tax efficiency manner.

Keep Your Plan Updated As Laws Change

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But I know we're running up against the hour here, and planning for wealth transfers really is I just want to mention it's a it's a continuous process. It's like all financial activities, there it's a living, breathing plan that's moving. Estate planning is a lifelong process that really requires monitoring and it and adjustments as personal circumstances and fiscal policies change too. I mean, the tax code might change. So a common example of changing personal circumstances is family growth. You know, an estate in a an estate plan that is optimized for a young family will naturally need to be re-revisited as that family ages and grows. Now, when multiple future generations are involved, the complex the complexity of wealth transfers to those beneficiaries increases as well. So one of the things that is another option is a generational skipping transfer trust, which is GST, is relevant in these sort of situations because it was implemented to ensure that transfers are taxed at each generation and thus applies to transfers to recipients who are two or more generations younger than the donor. So with careful planning, a donor can reduce or avoid this additional transfer tax through various transfer techniques. I won't get into those today, but that's another option to be able to have. And then finally, policy changes really can reshape outcomes over time. The federal estate and gift tax exemptions have shifted significantly across many administrations, from as low as $675,000 overall as an exemption in 2001 to as high as $15 a million per individual today. And this was all put in place by the 2017 Tax Cuts and Jobs Act, which doubled the extension exemption, and the one big beautiful bill, which made really even higher a threshold permanent. State level rules add another layer of compel complexity for sure, since some states impose their uh their own estate on inheritance taxes with exemption thresholds that are different from the federal level. But residency, domicile decisions can all be thought about and talked about, and they can therefore have meaningful financial consequences for some families. It's really important to stay current on the policy changes that ultimately affect the estate tax calculations. And all these strategies work best when they're integrated with one another and with a broader lifetime gifting and philanthropic goal plan involved. Again, as with all areas of financial planning, the key to success is to start as early as possible and continuously refine your plan so it aligns with your goals.

Bottom Line Takeaways And Closing

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Ultimately, the bottom line is estate planning requires a coordinated approach designed to preserve wealth, reduce taxes, minimize taxes, and ensure that assets reach the right people in the right way at the right time. So I hope this was helpful. Time for WVLP103.1 FM, which is where we broadcast on Thursdays at one o'clock, and then Saturdays replayed at one o'clock at well. Here's Central Time, here locally Balpo. You can also get on WBDLP.org and streams worldwide. And then any of our podcasts are on Spotify, Apple, as well, anywhere you pod plus YouTube, on our YouTube channel at FaroWealth. Looking forward to a wonderful celebration of our nation's birthday here going in July 4th. I hope you have a very healthy and happy and profitable week. See ya.

SPEAKER_00 26:50

Thanks for tuning in to Money Matters with Greg. We hope you gained some valuable insights today. Remember, your financial journey is personal, but you don't have to go it alone. If you enjoyed the show, be sure to subscribe and share. Until next time, here's the making your money work for you. Securities and investment advisory services offered through LPL Financial, a registered investment advisor, member FINRA SIPC.