Estate Planning With Purpose
Estate planning is more than legal documents or tax strategies for the wealthy—it is the intentional management and transfer of wealth to support our lives, our families, and the causes we care about, in alignment with our values and purpose.
Thoughtful estate planning allows us to serve as good stewards of our resources during our life and at death, ensuring our wealth fulfills its intended purpose while minimizing unnecessary taxes, risks, and burdens on those we love.
The Importance of Estate Planning
Estate planning is often delayed with 60% of Americans having no basic will or living trust, exposing their families to unnecessary costs, delays, and taxes. With a projected $124 trillion of wealth expected to transfer to future generations through 2048, the consequences of inadequate planning are significant. With the U.S. government being $38 trillion in debt, future tax policy remains uncertain. This makes proactive, forward- thinking tax planning more important than ever.
Purposeful wealth and legacy planning begin with identifying what matters most and how we want to be remembered. Without intentional planning, wealth transfers by default rather than by design—often with greater taxes, risks, and family stress.
Benefits of Purposeful Estate Planning
A well-designed estate plan can provide meaningful benefits, including:
Peace of Mind & Control – Confidence that our affairs, assets, and values are protected and managed according to our wishes, during our lives and at death.
Efficiency & Cost Reduction – Proper documents and planning can reduce probate delays, legal costs, taxes, and administrative burdens on heirs.
Protection & Risk Management – Trusts, legal structures, and insurance strategies can help protect assets from lawsuits, creditors, and unexpected life events.
Tax Efficiency – Thoughtful income, gifting, and estate planning helps preserve more wealth for family and charitable causes while reducing taxes.
Legacy & Family Harmony – Thoughtful planning can allow for effective gifts during our lives and at death to support the causes we care about and provide for future generations where we can share our values while working to prevent family conflicts.
Considerations for Purposeful Estate Planning
Estate planning Is not one-size-fits-all. It should reflect our purpose, family dynamics, financial complexity, tax considerations, and legacy goals.
The Basics
Everyone should consider having the following documents in place:
Will – Directs the distribution of our assets, names a guardian for minor children, and avoids dying intestate (without a will) and being subject to state laws.
Durable Power of Attorney – Appoints someone to manage financial and legal matters in the event of incapacity.
Health Care Directives (Needed to make medical decisions while living)
Medical Power of Attorney – Appoints someone to make medical decisions if unable due to incapacity.
Living Will – Communicates wishes regarding life support and quality of life considerations.
Beneficiary Designations
Beneficiary forms on retirement accounts, annuities, life insurance, and TOD (Transfer on Death) / POD (Payable on Death) accounts supersede a will and avoid probate. These should be reviewed regularly, especially after major life events.
Account Titles
How assets are titled affects ownership, taxation, and probate outcomes. Retirement accounts can only have one owner, but non-retirement accounts have several account title options as well as property ownership. Common account titles include:
Joint Tenancy with Right of Survivorship (JTWROS) – Is where two or more owners (spouses or non-spouses) own an equal percentage. Each owner may sever their interest without the consent of the other owner(s), which would destroy survivorship rights for that portion only. Property held as JTWROS will pass to the other owner(s) at death avoiding probate, and if between two spouses in a community property state, such as Texas, will receive a full stepped-up cost basis for income tax purposes. For estate tax purposes, one-half of community property is included in the estate of the fist-to-die spouse.
Tenants in Common – Is where two or more owners may hold unequal interests. When an owner dies, their portion does not transfer to the other owner(s) and is included in their estate.
Trusts
There are numerous types of trusts that can be used for estate planning. A trust is where a grantor transfers assets to be managed by a trustee according to the trust document for the benefit of beneficiaries or a charity. It is important to note that the three parties of a trust could be the same or different individuals depending on the type of trust. The taxation of trusts will also differ depending on if the trust is revocable or irrevocable, if the grantor retains rights to income, or is the ultimate beneficiary of trust assets. Below are some of the common types of trusts:
Living Trust (Revocable) – Living trust are where a grantor transfers their assets into a trust while they are alive to manage their assets and to avoid probate for those assets. A living trust provides no tax savings or creditor protection. Property remains in grantor’s gross estate.
Special Needs Trust – A special needs trust is where a grantor transfers assets to the trust for the benefit of someone with special needs to preserve the trust assets from needing to be spent down before qualifying for other federal or state benefits, such as Medicaid. Property transferred remains in the grantor’s gross estate.
Testamentary Trust – This type of trust is typically designated within a will to be created upon death usually used to managed assets for children. The challenge with this trust is that many financial firms have very strict beneficiary language requirements to use this type of trust without the trust established.
Irrevocable Life Insurance Trust (ILIT) – Life insurance death benefits are income tax free to the beneficiaries but are included in the owner’s gross taxable estate at death for estate tax purposes, unless they are held in an ILIT. If an existing life policy is transferred to an ILIT, it must meet a 3-year waiting period to be excluded from the gross estate of the owner.
Other Trusts – Within the scope of estate planning, there are many other types of trusts to discuss later.
Risk Management & Insurance Planning
Legal Structures such as corporations, limited liability companies (LLC), family limited partnerships, and irrevocable trusts are commonly used to provide a legal separation and protection of personal assets.
Life insurance is usually thought of as protection for families who depend on a bread winner. Life insurance offers many benefits including protecting dollars with pennies, potentially offering income tax-free death benefits, avoiding estate tax by removing the death proceeds from the deceased’s estate when utilizing an irrevocable life insurance trust (ILIT). Because of the tax-efficiency of life insurance, there are many situations where life insurance can play critical roles in planning including:
Provide Family Protection
Equalize Inheritances
Fund a Business Buy/Sell Agreement
Offer Corporate Key Man Protection
Implement “Golden Handcuffs” strategy to Retain Key Talent
Provide Liquidity to an Estate or Business
Pay Estate Taxes
Disability insurance is also critical to replace our lost income due to a disability and can be provided through a group policy at work or an individual policy. Without this critical coverage, a long-term disability could be devastating financially.
Long-term care is the type of care we would need if we were unable to care for ourselves and can be provided in our home, a community setting, or ultimately a nursing home. According to U.S. Department of Health and Human Services, 70% of adults who survive to age 65 will need long-term support and services in their lifetime, making it a significant risk to our wealth and a surviving spouse.
Umbrella liability insurance provides additional coverage beyond what our home and auto policy may cover. This is especially important for those who have wealth to protect against future legal litigation due to an accident or other incidents.
Risk management is a critical component of estate planning because risks can impact our wealth. Proactive risk planning includes buying insurance for pennies on the dollar of protection.
Tax Planning
There are two key areas of tax planning to consider for tax-efficient estate planning. First, is income tax planning that is applicable to almost everyone. Income tax planning is looking at the different account types and investments owned and considering options for minimizing taxes within estate planning while alive and at death. The second area of tax planning relates to the estate tax which affects high-net worth individuals.
Income Tax – There are seven income tax brackets ranging from 10% up to 37%, plus an additional Medicare tax of 0.9% for modified adjusted gross income (MAGI) of $250,000 for joint filers and $200,000 for single filers.
Additionally, there is the Net Investment Income Tax (NIIT) which is 3.8% applied to certain investment income above the modified adjusted gross income (MAGI) of $250,000 for joint filers and $200,000 for single filers. Knowing our current and estimating our future income tax backets, as well as potential heir’s tax brackets, is the first step in planning. The foundation of income tax planning is understanding what marginal income tax backet we are in today and where we expect to be in the future. It also looks are what types of accounts and investments we are accumulating our wealth in. Although it is wise to integrate our investment, retirement income and estate planning together for efficiency, the purpose of this article will only focus on income tax planning as it relates to gifting and estate planning. Gifts and donations are effective ways to reduce current, as well as future, income and estate taxes.
Gift and Estate Tax – Individuals have a lifetime credit exemption of $15,000,000 indexed for inflation in 2026 to be used during their lifetime, or at their death. This means someone can give away up this amount of assets during their lifetime with incurring any gift tax or remove this amount from their taxable gross estate at death. After this exemption amount, estate taxes quickly reach the highest 40% bracket at just over $1,000,000 of taxable estate. The credit exemption amount of $15,000,000 is portable which means that if the first spouse to die does not use their full amount, their remaining credit will transfer to the second to die, provided that an estate tax return was filed at the first death and the election was made. Married couples have an unlimited marital deduction where they can leave any amount of wealth of wealth to the surviving spouse, but that wealth, plus the growth will be taxed in the estate of the second-to-die, usually creating more estate tax in larger estates.
Key Planning Strategies
Below are some of the many strategies to consider when planning to reduce income and estate taxes, as well as supporting our family and charities in a tax-efficient manner:
Annual Gifts – Anyone can gift up to $19,000 ($38,000 per couple) in 2026 to any number of individuals without filing a gift tax return. Not only is the asset being removed from the estate, but the income/growth created by that asset is also being removed. A gifting program can be an effective way to teach children to make wise financial decisions while we are around to guide them. However, a gift cannot have conditions attached, but future gifts are not required if bad decisions are made. Payments made directly to qualified educational institutions and medical care providers for someone else are exempt from gift tax rules.
Cash Donations – With the higher standard deduction limits, it is harder for many taxpayers to be able to itemize charitable deductions. The lack of a tax deduction should not be a reason not to give, but there can be more tax-efficient ways to do so as discussed later.
For non-itemizers, there is some good news for 2026 is that non-taxpayers will now be able to deduct $1,000 ($2,000 joint filers) in cash donations.
For itemizers, cash donations to a public charity are tax-deductible dollar-for-dollar for those who itemize up to a percentage of adjusted gross income (AGI). The limit for public charities is 60% of AGI with a 5-year carryover and 30% for private foundations with a 5-year carryover. Beginning in 2026, there will now be a new 0.5% of AGI floor to exceed before the deduction starts. So now we have a floor to meet in addition to the ceiling limit for deductions.
Qualified Charitable Distribution (QCD) – is a great way for IRA owners age 70 1⁄2 to transfer up to $111,000 per year, directly from an IRA to a charity of their choice. This distribution will also count toward any required minimum distributions (RMD) required for that year and is not taxable for income tax purposes. This will also remove assets from one’s gross estate.
Asset Gifting – Gifting appreciated assets including property, stocks, mutual funds, etc. directly to a charity allows for a tax-deduction for the full value of the property, while avoiding any potential capital gains that would otherwise be incurred if they sold the asset themselves, creating a double-tax win. Asset donations to a public charity are tax-deductible dollar-for-dollar for those who itemize up to a percentage of adjusted gross income (AGI). The deduction limit for public charities is 30% of AGI with a 5-year carryover and 20% for private foundations with a 5-year carryover. The new 0.5% floor discussed under cash and asset contributions must be met before deductions kick in.
Donor Advised Funds (DAF) – An attractive way to maximize tax deductions in a particular year and be able to disperse charitable donations into the future is with a DAF. There is no limit of cash and assets that can be transferred to the DAF for an immediate deduction in that year, other than the previously discussed AGI deduction limits for cash and assets. The funds within the DAF can be invested for growth awaiting the future date to be dispersed to charity. At that time, a request for a check can be made to the DAF, typically with a $250 minimum amount. The minimum amount needed to open a DAF varies but is usually $25,000.
Charitable Gift Annuity (CGA) – A gift annuity is when someone enters a contract with a charity, and gifts cash or securities to the charity in return for a guaranteed income stream over 1 or more lives. There are tax deductions or a portion of tax-free income provided and can be made with small amounts as little as $5,000.
Charitable Remainder Trust (CRT) – A irrevocable trust where a grantor transfers a large, appreciated asset (property, business, or stock) to a CRT in return for tax deductions and a lifetime income over 1 or more lives. A CRT may be especially attractive when someone owns a highly concentrated asset and needs to diversify the risk, but doing so outside of a CRT would not be tax efficient. Once the asset is transferred to CRT, the non-profit charity can diversify without tax consequences.
Wealth Replacement Trust (WRT) – When using a CRT, a grantor may want to replace the wealth that will transfer to the charity in a tax-efficient way for their heirs. One attractive way to do so is to create a trust, usually an ILIT, that will hold a life insurance policy on the insured with life insurance premiums being paid for from the income generated from the CRT and gifted to the trust on behalf of the beneficiaries of the WRT. At death of the insured, the death benefit can be 100% income tax-free to the WRT and beneficiaries, and be outside of the taxable estate. This strategy can be a win-win by transferring assets tax-efficiently to a CRT while retaining tax deductions, and at death of the grantor, the trust and beneficiaries will receive a tax-free death benefit to replace the assets transferred to the CRT.
By-Pass Trust (B Trust) – The By-Pass trust is used when a first-to-die spouse transfers an amount equal to their estate tax credit exemption amount (up to $15,000,000 for 2026) to this trust to bypass the taxable estate of the second-to-die spouse, while the surviving spouse can retain access to income if needed. At the second death, assets will transfer to children outside of the gross estate. With the new portability of the credit exemption amount, this trust may not be as critical as it once was but may still provide flexibility for future law changes.
Other Trusts – There are numerous other trusts to consider depending on one’s goals and objectives.
How To Start
Estate planning is one of key pieces of holistic planning as shown in Figure 1. When we can align our purpose across all key areas of planning, we are better able to achieve our goals efficiently. Holistic planning allows us to identify our purpose, values, and how we want to be remembered while reducing unnecessary costs, taxes, and risks.
The START framework provides a simple guide:
S – Seek wisdom and guidance from trusted professionals.
T – Think about what matters most.
A – Act by developing a written, integrated plan.
R – Review your plan regularly.
T – Tune the plan as life and tax laws change.
This simple START rhythm helps us stay intentional and our wealth aligned with purpose and legacy.
Every dollar we earn is a seed of wealth. When planted intentionally and managed wisely with purpose, those seeds can grow into a bountiful harvest that provides provision, impact, and an enduring legacy.
Plan with confidence. Live with purpose. Harvest wisely.
About the Author
Tim Hudson, CFP®, APMA®, CEPA, CLU, ChFC, CRPS®, is a Certified Financial Planner® and Certified Exit Planning Advisor® and has over 25 years of experience specializing in advanced investment, retirement, business, and estate planning strategies designed to help high net worth individuals and business owners grow, preserve, and distribute wealth tax-efficiently.
Tim founded Wealthtrition.com to provide advanced wealth education, resources, and planning services for individuals and business owners.
You can reach Tim at (281) 477-3847 or tim@SilverStarWealth.com.
SilverStar Wealth Management, Inc.
17844 Mound Rd., Suite E, Cypress, TX 77433
(281) 477-3847 | www.SilverStarWealth.com
Important Disclosure
This material is intended for informational purposes only and is not intended to be a substitute for specific individualized tax or legal advice, as individual situations may vary. Securities offered through Kestra Investment Services, LLC, member FINRA/SIPC (Kestra IS). Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS). SilverStar Wealth Management, Inc., Bluespring Wealth Partners, LLC, Kestra IS, and Kestra AS are affiliated through common ownership by Kestra Holdings.
Investor Disclosures: www.kestrafinancial.com/disclosures
You should consult with appropriate financial, tax, or legal professionals before implementing any considerations discussed.