Whether it’s family meetings, early conversations around philanthropic efforts, or educational programs to teach younger people how to manage future wealth, there’s more happening in the field of estate planning than ever before.
“It’s less likely I’ll see a client in their 70s or 80s who hasn’t started these conversations,” said Anne Paape, managing director at Chicago-based private wealth management firm Cresset.
The rise of family governance has been boosted by President Donald Trump’s One Big Beautiful Bill announced last April and taking effect this January. The bill increased the amount of wealth that can be passed onto future generations tax-free, permanently setting the 2026 federal estate tax exemption at $15 million per person, up from $13 million the previous year. The exemption goes up to $30 million for a married couple.
The bill also included an increase in the amount of annual gifting that can be done tax-free. Up to $19,000 can be gifted to charities yearly without being taxed.
“The One Big Beautiful Bill was a big relief,” said Jerrod Pearce, a partner at the Kansas-based family office Creative Planning, “But now there’s more work to do,” he said.
Ann Marie Etergino, a senior wealth advisor at investment service firm RBC Wealth Management, said these days she is organizing a lot more family meetings, where several generations are encouraged to have conversations about the kinds of assets children will inherit, how to best manage these assets, as well as conversations around values parents want to pass down to their children along with their financial legacies.
One of her high-net-worth clients commissioned her to organize financial education classes for the client’s children to teach them basics about investing and tax mitigation, so that his investment funds are properly handled when he dies.
“The point is to get the kids more engaged,” she said, “We usually see these conversations start when grandkids arrive,” she said.
Mimi Drake, partner at New York-based wealth management firm Cerity Partners, agreed and said there’s increased communication from parents who want to prepare their children to inherit a large amount of wealth.
“The days of the big reveal of the will are over. They’ve given way to road maps and increased transparency,” she said.
Parents are also giving away more and sooner. As their kids start having children, they want to support them to get on the housing ladder or pay for tuition, said Etergino.
“We’ve gone from ‘How do we save money on taxes?’ to ‘How do we plan to utilise our wealth today?’” she said.
Still, parents tend to shy away from sharing actual figures on the amount to be inherited, to avoid seeing their kids changing their behaviors radically.
“Parents don’t want kids to know dollar amounts,” said Pearce, “They don’t want them to think they can coast for the rest of their lives.”
Besides better communication, Jim Ruggiero, founder and owner of Pennsylvania-based Ruggiero Law Offices, said a strategy that has grown in popularity this year is trusts.
These flexible tax wrappers can be passed on tax-free and let parents change provisions or beneficiaries throughout their duration. Assets sitting in trusts can then be meted out to children based on preferences, leading to fewer disputes over who takes ownership of a parent’s house or business.
“It can be very specific so it reduces the risk of conflict in the family,” he said.
Revocable living trusts, for instance, are seeing a surge in interest, he said. These trusts allow for parents to liquidate assets from the trust, actively manage them and amend the terms whenever they want. It’s a “will on steroids,” said Ruggiero.
For those wanting to minimize inheritance taxes and bypass probate court, irrevocable life insurance trusts have also grown in popularity, he said. These trusts ensure funds are distributed according to the granter’s wishes when they pass on, and protect assets from creditors.
Etergino, on the other hand, has found people are increasingly considering directly buying life insurance policies. These ensure that any inheritance bill will be paid when parents pass away, thus avoiding liquidity issues for children. Families are also investing in these policies to fall below the threshold of the federal estate tax exemption, she said.
“For clients with assets above the $15 million threshold, they’re willing to consider some of these older policies they bought when their children were younger and which can be repurposed,” she said.
As for ultra-high-net-worth clients, dynasty trusts are the latest tool to secure multigenerational wealth, she said, locking assets into trusts that can sustain dozens of generations.
Disputes still arise, said Paape, noting a rise in the number of fiduciary litigation cases. Conflicts often come up over the amount of control parents want to retain, she said.
“There can be friction over that control and pent-up resentment,” she said.
Still, what a lot of wealth managers end up dealing with isn’t intergenerational conflict but parents’ unwillingness to spend.
“A lot of people, even if they’ve saved $1 to $10 million in their lifetimes, they still worry about running out of money in their retirement,” said Pearce. “We have to do a bit of coaching to teach them how to spend it. We tell them: ‘If you’re not spending it, your kids or your daughter- or son-in-law will.’ That usually helps.”
Write to editors@barrons.com