Have You Talked To The Family About Your Estate Plan?
Recently, Ray Ferrara, CFP®, Founder and Executive Chair of ProVise, participated in a panel at the Belleair Country Club sponsored by Hope Villages and its Korosy Legacy Society. He was asked: “What are some of the biggest mistakes you see people make when it comes to passing wealth to the next generation?” The first thing he mentioned was to update or create their legal documents – “just do it.”
He then discussed not taking advantage of the annual gifting amount of $19,000 ($38,000 per couple in 2026) that can be given to as many people as you want without having to file a gift tax return. Say you have two children and three grandchildren. You could give away $38,000 to the two children, their respective spouses, and each of the three grandchildren for a total of $266,000. If you have not done any gifting this year, there is still time.
Ray stated that the single biggest mistake people make is a failing to discuss their personal values about money and why they have set up their estate the way they did with their children. He suggested that people have a family meeting where you can have the conversation at a high level to answer questions like “Why did you choose one child to be the trustee, power of attorney, and healthcare surrogate? Why are you leaving so much money to charity? Why are you leaving it in a trust instead of an outright gift? Why you selected advanced directives regarding your health/life.”
A few days later, his comments were validated by Trust and Will’s 2026 Death and Inheritance Report, which surveyed 5,000 adults and learned that 33% had never had this discussion or at least couldn’t remember doing so. When the children come to visit during the holidays, consider starting this conversation. If you would like us to help facilitate the conversation, which we have done many times, please let us know.
Year-End Tax Planning – Tax Tip #3
It has been a long time since consumers were able to deduct any personal interest expense from their federal income tax return. But that changes this year for some consumers. Unfortunately, this is only available for four years and ends after the 2028 tax year (started in 2025).
For those that itemize deductions, they can write off up to $10,000 in interest for the purchase of a brand-new car, pickup truck, SUV or motorcycle when used for personal purposes and with a gross weight of less than 14,000 pounds. Its final assembly also needs to be in the U.S. As is the case with many of the new provisions of the One Big Beautiful Bill Act, there are income limitations. For those filing jointly, a phase out begins at a Modified Adjusted Gross Income (MAGI) of $200,000 and ends entirely at $250,000. Single taxpayers begin phasing out at $100,000 and totally gone with more than $150,000 of MAGI.
529 to Roth Coversion Coming?
In 2022, Congress passed SECURE 2.0 allowing up to $35,000 in unused money in a 529 plan to be converted into a Roth IRA. It would take up to five years to complete the rollover as the conversion is limited to $7,500 per year. The 529 plan must be opened for 15 years and the last five years of contributions and earnings could not be rolled over. What a great way to kick start a retirement plan. Recently, bi-partisan legislation was introduced in the Senate by Senator Ted Cruz of Texas and Lisa Blunt Rochester of Delaware to eliminate the $35,000 lifetime cap. Most of the other rules and guardrails remain in place. We will have to see how this all plays out.
Beyond the Unicorn
2026 has brought a wave of massive valuations as private companies go public. When SpaceX went public in June, it did so at a staggering valuation of roughly $2 trillion. Morningstar, which is a stock and fund ratings service, estimated the company’s fair value was closer to one-third of the stock’s price on its first day of trading, which shows how much excitement surrounded the offering. The company runs Starlink, a widely used satellite network that supports both proprietary capabilities and a range of partnership opportunities. Beyond space exploration and data centers, SpaceX announced in early October that it plans to become a major mobile carrier. The news lifted investor sentiment and raised concern among traditional carriers like Verizon and T-Mobile.
Next on the horizon is Anthropic’s IPO, with OpenAI not far behind. Anthropic is one of the leaders in artificial intelligence, and projected valuations put it around the same level as SpaceX, about $2 trillion. Until the public filing is released, it’s hard to know whether that valuation is justified. There are already some warning signs, though: OpenAI recently told investors it expects revenue to come in about $20 billion below earlier projections. If Anthropic is in a similar position, that could raise serious concerns for the major AI labs. One thing is clear: with companies now coming to market at mega-cap valuations, both the IPO landscape and investor demand for insight into private companies have shifted.
Don’t Let the Political Winds Capsize Your Financial Plan
We have been getting many calls regarding the upcoming mid-term elections in a few weeks and the effect on your financial plan and investments. Let us state up front…your investment portfolio and financial plan have been well thought out and the upcoming election is unlikely to change any of the work we have done together. We are not being pollyannish; we have been through every election since 1972 and look where we are today…much better off. Despite the doomsday soothsayers, both years following a mid-term have been positive for the markets. We do not want the short-term tail to wag the long-term dog.
The expectation now is that the Democrats will win the House and the Republicans will barely keep the Senate. We call that “gridlock.” What if the Democrats win both the House and Senate? Gridlock once again, as any legislation would need the President’s signature and the veto pen is going to be used. There will likely not be enough votes to override his veto. Having said that, some Republican leaders may begin to focus more on the party’s future direction as the next election cycle approaches. The real action will only happen on non-partisan issues where both sides can find some compromise. Tune out the noise! If and when Congress acts over the next two years, we should have the flexibility to make the necessary adjustments.
Retirement Planning Benefits of an HSA
Contributing to a 401(k), an IRA, or a brokerage account are a few ways individuals save for retirement, but a Health Savings Account (HSA) provides another way to save for retirement while setting aside money to help cover future healthcare expenses.
An HSA is a savings account designed to cover out-of-pocket medical expenses for individuals and families enrolled in a high-deductible health plan (HDHP). For 2026, a HDHP must have a deductible of at least $1,700 for self-only coverage or $3,400 for family coverage. Contribution limits for 2026 are $4,400 for individuals and $8,750 for families.
HSAs offer a triple tax benefit, contributions are tax-deductible (or pretax if made through payroll deductions), assets grow tax-deferred, and withdrawals for qualified medical expenses are tax-free. Qualified medical expenses can include deductibles, copays, prescriptions, dental costs, and over-the-counter medical products such as bandages and cough drops.
Some HSA providers allow you to invest the funds you contribute to the account. HSAs also allow you to reimburse yourself for qualified medical expenses incurred in prior years, provided the HSA was opened before the expense occurred, the expense was not reimbursed in another way, and the expense was not claimed as an itemized deduction in a previous tax year. Delaying reimbursement can allow the HSA assets to remain invested, creating the potential for tax-free growth to pay for future healthcare costs (just remember to maintain receipts for your records).
With healthcare costs often being an overlooked retirement expense, HSAs provide a way to begin funding these costs in advance, potentially reducing the need to tap into other savings or investment accounts when healthcare expenses arise.
Sources:
- “10 Things You Need to Know About Health Savings Accounts,” Kiplinger, February 17, 2026
- Publication 502 (2025), Medical and Dental Expenses, Internal Revenue Service
- Fidelity Investments. HSA Reimbursement Guide and Rules. Fidelity Learning Center
Key Considerations for Roth Conversions
With the U.S. deficit continuing to grow and the future of tax policy becoming increasingly uncertain, Roth conversions have become a popular planning strategy for individuals with significant pre-tax retirement savings. A Roth conversion allows assets held in a pre-tax account, such as a Traditional IRA, to be moved into a Roth IRA by paying the applicable income taxes today. In return, future qualified withdrawals from the Roth IRA can be completely tax-free, provided the account owner is over age 59½ and the account has satisfied the five-year holding requirement.
The ability to generate tax-free income in retirement can be especially valuable if tax rates rise in the future. With today’s tax rates still relatively low by historical standards, many investors are considering Roth conversions to create greater tax flexibility down the road. That said, a Roth conversion is not the right fit for everyone, and it’s important to evaluate several key factors before determining whether it makes sense for your situation.
Current vs. Future Tax Rates:
While no one can predict future tax rates, it is important to project future income as accurately as possible. Required Minimum Distributions, Social Security benefits, pensions, annuities, rental income, and other income sources can all impact your future tax bracket. If you expect to be in a higher tax bracket than you are today, converting pre-tax assets to a Roth IRA may be beneficial.
Medicare Premiums (IRMAA):
Roth conversion amounts are treated as ordinary income in the year of the conversion and increase your adjusted gross income (AGI). Because Medicare’s Income-Related Monthly Adjustment Amount (IRMAA) is based on income from two years prior, it is important to estimate future income carefully. A large conversion could potentially push you into a higher IRMAA bracket, resulting in increased Medicare premiums.
Income Opportunities:
Years with lower-than-normal income before RMD age can create valuable opportunities for Roth conversions.
Social Security Taxation:
If you are receiving Social Security benefits, a portion of those benefits may be subject to income tax. Depending on your income level, up to 85% of your Social Security benefits may be taxable. It is important to understand how a Roth conversion could affect the taxation of your benefits and whether the additional income may cause a larger portion of those benefits to become taxable.
Time Horizon:
The longer the converted assets remain invested in the Roth IRA, the greater the potential benefit. A longer time horizon allows more opportunity for tax-free growth, increasing the value of the conversion over time.
While these are some of the most important factors to consider, they are not the only ones. The potential benefits of a Roth conversion vary from person to person, making it important to evaluate whether the strategy is appropriate for your specific financial and tax situation before taking action.
Aging Alone
Most everyone knows that women tend to outlive men. While that is still the case, the difference in life span is shrinking as is the length of time a woman finds herself in widowhood with both women and men living longer. Another factor which comes into play is that more people are living alone for most of their life and thus never having a spouse. Others are co-habituating but not married. We have spoken many times about “gray” divorce thus forcing both to live alone at least for some period. While there are certainly financial complications, there are also many emotional issues involved at the same time as women and men living alone search for their new reality and perhaps even a new identity.
Jonny Richmond Nominated for NAPA “ACES” Under 40
We’re proud to share that Jonny Richmond has been nominated for NAPA’s 2027 Top Young Retirement Plan Advisors award, also known as
the “Aces” Under 40. This recognition highlights emerging leaders in the retirement plan industry who demonstrate exceptional service, leadership, and innovation. Jonny’s dedication to helping plan sponsors and participants achieve their retirement goals reflects the values we strive to deliver every day, and we’re pleased to see his contributions recognized by the industry.
The NAPA 2027 Top Young Retirement Plan Advisors (“ACES”) award is sponsored by the National Association of Plan Advisors (NAPA), a third-party industry organization. Nominees must be under age 40, be nominated by a NAPA member firm, complete an application, and are evaluated by an independent panel based on quantitative and qualitative criteria, including leadership, industry contributions, practice characteristics, and BrokerCheck review. Industry voting is one factor considered during the nomination process: however, the final award recipients are determined by NAPA’s independent review panel and not solely by votes received. No compensation was paid by the nominee or affiliated firm to obtain this nomination, however, they do pay a NAPA membership fee. This nomination is not indicative of future investment performance and should not be construed as an endorsement.
Savers Find It Hard To Spend
For over 30 years, you have heard us say, “One of our hardest jobs is giving people permission to enjoy their money.” Prudential’s 2026 Retirement Pulse survey suggests 86% of those age 50 and above don’t want to spend money on things they want and enjoy a better life. Interestingly, even those with more than $500,000 were hesitant with 61% cautious of overspending. The research indicates that most do not spend more than 2% of their savings each year. Depending on age and health they might be able to spend as much a 4-6% of a well-diversified portfolio. Needless to say, the current environment of high inflation, soaring healthcare costs, Social Security on shaky grounds, potential long-term care expenses, government debt, etc., doesn’t help the matter from a psychological standpoint.
Up Your Assets™ Podcast
Episode 41: Congrats, You Sold Your House! Now Comes the Medicare Surprise.
During this brief podcast, Ray Ferrara, CFP® provides his perspective on something that could be often overlooked. His word to the wise, be on the lookout for a “Lookback”… This is a potential unwanted surprise can rear its head when selling your home in retirement. No secrets here, watch today and learn what you can do! If you’re on Medicare, a large taxable gain from your home sale may raise your income for the year and could impact premiums. As always, consult with your financial and tax professionals on how a home sale may affect your full plan.
Acknowledgements and Important Disclosures
From the Up Your Assets website
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