Long form How to Leave Wealth to Your Kids Without Creating a Mess or Destroying What You Built
LEGACY INVESTMENT SERVICES
YouTube Long Form Script | June 2025 | Week 2 - Long Form B
VIDEO TITLE: How to Leave Wealth to Your Kids Without Creating a Mess or Destroying What You Built
ADVISOR: Jordan Cassiani
TARGET RUNTIME: 14-16 minutes
FORMAT: On-camera advisor, screen share for calculations/visuals
CTA: Link in bio for complimentary retirement income analysis
Securities and advisory services offered through Osaic Wealth, Inc., member FINRA/SIPC. Legacy Investment Services and Osaic Wealth are separate entities. Content is for educational purposes only. Not investment, tax, or legal advice. All scenarios are hypothetical illustrations. Investing involves risk including possible loss of principal.
Most parents spend their entire working lives building wealth with the intention of leaving something meaningful for their children. And then somewhere between the intention and the reality, things go wrong. Not because of market crashes or bad investments, but because of the structures, or the complete lack of them, that determine what the kids actually receive, when they receive it, at what tax cost, and whether it causes conflict or creates unity in the family.
I'm Jordan Cassiani with Legacy Investment Services. This video is specifically about the financial side of leaving wealth to the next generation. We are going to cover how inherited retirement accounts work under current law, how to leave assets in a way that minimizes the tax burden on your heirs, what a trust can and cannot do for your kids, and how to have the conversation with your family before it becomes a crisis.
The SECURE Act Changed Everything for Inherited IRAs
If you have a large traditional IRA or 401(k) and you plan to leave it to your adult children, there is a rule change from 2020 that you need to understand, because it fundamentally changed how inherited retirement accounts work.
Before the SECURE Act, a non-spouse beneficiary who inherited an IRA could stretch distributions over their own lifetime. This was called the stretch IRA, and it was a powerful tool for transferring wealth across generations with minimal tax drag. A 40-year-old inheriting a $500,000 IRA could take small distributions each year for 40 years, keeping most of the money growing tax-deferred.
The SECURE Act eliminated that. Now, most non-spouse beneficiaries must fully withdraw the inherited IRA within 10 years of the account holder's death. They can take it in any pattern they want over those 10 years, but the account must be empty by year 10. And every dollar they withdraw is ordinary income taxable to them in the year they take it.
Here is what that means in practice. If your 45-year-old daughter inherits your $800,000 traditional IRA and she is already earning $120,000 per year from her job, adding $80,000 per year of IRA withdrawals for 10 years could push her into the 32% or even 35% federal bracket for every single one of those dollars. She may end up paying more in taxes on that inheritance than you ever paid on the underlying money as you earned it.
The best solution to this problem is one you execute before you die. Converting traditional IRA money to a Roth IRA during your lifetime, even at a current tax cost, changes what your kids inherit. A Roth IRA still has the 10-year withdrawal requirement for non-spouse beneficiaries, but the distributions are tax-free. Your daughter takes $80,000 per year for 10 years and owes nothing to the IRS on any of it. That is a fundamentally different inheritance.
Using a Trust to Control When and How Kids Inherit
Leaving assets directly to adult children has advantages. It is simple and direct and they have full access. It also has risks. A child going through a divorce at the time they inherit could have that money considered marital property depending on the circumstances. A child with creditor problems could have inherited assets pursued. A child who is not financially responsible could spend a significant inheritance quickly.
A trust gives you control over these scenarios from beyond the grave. You define the terms. You can say distributions happen for health, education, maintenance, and support, which is a common standard. You can say no distributions before age 30. You can say the principal stays in trust and only income is distributed. You can name a professional trustee to manage the assets and make distribution decisions based on your written criteria.
This is not about distrust of your children. It is about protecting the money you worked for from circumstances neither you nor they can predict. A properly structured trust can provide that protection while still giving your heirs meaningful access to the wealth you created.
The Estate Tax Landscape in 2025
For most families, the federal estate tax is not a concern right now. The current federal estate tax exemption is over $13 million per individual, which means a married couple can pass over $27 million to heirs free of federal estate tax. For the vast majority of people watching this video, that threshold is not reached.
However, that exemption is scheduled to revert to approximately half its current level in 2026 when the provisions of the 2017 Tax Cuts and Jobs Act expire. If Congress does not act to extend them, the exemption could drop to approximately $7 million per individual in 2026. For families with significant real estate, business interests, retirement accounts, and investment portfolios, that change is worth planning around now while the higher exemption is still in place.
State estate taxes are a separate issue. Several states have their own estate taxes with much lower exemptions, sometimes as low as $1 million. If you live in a state with an estate tax, your estate plan needs to account for that separately from the federal calculation.
Equalizing Inheritance Among Multiple Children
If you have more than one child, how you divide assets is a conversation worth having explicitly, because assumptions often lead to conflict. A parent who leaves the family vacation home to all three children equally has solved the legal question and created a practical problem. One child wants to sell. One child wants to keep it. One child cannot afford the carrying costs. Without instructions or a buyout mechanism built into the plan, this becomes a family dispute that plays out in your absence.
One approach is to equalize in value but differentiate in type. The child who is active in the family business gets the business interest. The child who is not active gets an equal value in liquid assets. The vacation home goes to the one child who expressed genuine interest in using and maintaining it, and the others are bought out from other assets. This requires knowing what each child actually wants, which requires a conversation most families postpone indefinitely.
Having the Conversation With Your Family
One of the most valuable things you can do for your children is tell them what your plan is while you are alive to explain it. Not necessarily every dollar amount, but the structure and the reasoning. If you have named one child as the executor of your estate, that child needs to know now so they are not blindsided in a moment of grief. If one child is receiving less because they received significant financial gifts during your lifetime, explaining that reasoning now prevents confusion and resentment later.
Families that have these conversations in advance consistently handle wealth transitions more smoothly than families that do not. The money matters less than the communication around the money.
The Call to Action
Legacy planning is one of the most meaningful things you can do, and most of the financial decisions involved in it, the account structures, the beneficiary designations, the Roth conversion strategy, the asset allocation across account types, all of that is something we work through directly with clients.
Book a complimentary retirement income and legacy review through the link in my bio. We will look at your current account structures in the context of what you want to pass on, and we will identify any gaps. Subscribe for more content on this every week. I'm Jordan Cassiani with Legacy Investment Services.
PRODUCTION NOTES
On camera with clean background. A simple graphic showing the before/after of the SECURE Act, meaning the old stretch IRA vs the new 10-year rule, would be highly effective and shareable as a clip. Thumbnail concept: Bold text 'THE INHERITANCE TAX TRAP' with a concerned Jordan on camera. This has strong SEO potential on 'inherited IRA rules' and 'SECURE Act explained'. Mid-video CTA between the inherited IRA section and the trust section. Consider clipping the SECURE Act section as a standalone Short.
Legacy Investment Services | Jordan Cassiani | Week 2 Long Form B - Leaving Wealth to Kids