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  • Every Parent Should Know the Consequences of Living Without an Estate Plan

    Every Parent Should Know the Consequences of Living Without an Estate Plan

    Written by: Sean Hummel, CFP®

    Did you know that 55% of Americans have ZERO estate plan! Maybe that’s not so shocking. What if I told you only 36% of parents with young children have a Will! This means if you’re one of the 64% without a plan, when tragedy strikes, the courts would decide who cares for your children!  The #1 reason for not having a plan…

    “I haven’t gotten around to it.” 

    As a financial advisor specializing in high-net-worth individuals and families, I’ve seen firsthand how estate planning can preserve wealth, protect loved ones, and ensure your legacy aligns with your values. Many clients assume that if their net worth falls below the federal estate tax exemption ($15 million per individual starting in 2026) they don’t need a formal plan. After all, no federal taxes means no problems, right? Unfortunately, that’s a dangerous misconception. Dying without an estate plan can lead to unnecessary stress, financial losses, and family conflicts, even for estates that are well under that $15 million threshold. In this post, I’ll outline the key risks and why proactive planning is essential, regardless of your net worth.

    Understanding the Federal Estate Tax Exemption

    First, a quick clarification: Starting January 1st, 2026 The federal estate tax applies only to estates exceeding $15 million ($30 million for married couples). For families below this limit, there’s no federal estate tax liability. However, this doesn’t eliminate other challenges. State-level estate or inheritance taxes may still apply, with some states exemptions as low as $1 million. More importantly, the absence of a plan exposes your assets to probate court oversight and default state laws, which often don’t reflect your personal wishes.

    The Probate Pitfall: Delays, Costs, and Public Scrutiny

    Without a will or trust, your estate goes through probate, a court-supervised process to validate your assets, pay debts, and distribute what’s left. For families below the exemption, this can be particularly burdensome because smaller estates often lack the liquid cash to cover fees without selling assets.

    • Time Delays: Probate can take 9 to 18 months or longer, tying up assets when your family needs them most. Imagine your spouse unable to access joint accounts or sell a home during this period.
    • Financial Costs: Expect fees for attorneys, executors, and court filings to eat up 3 to 7% of your estate’s value. For a $5 million estate, that’s potentially $150,000 to $350,000 gone; funds that could have supported your heirs.
    • Loss of Privacy: Probate is public record, meaning anyone can access details about your assets, debts, and beneficiaries. This invites unwanted attention, from scammers to distant relatives.

    In contrast, a common option is a revocable living trust, which allows assets to pass directly to heirs, bypassing probate entirely. It’s a straightforward tool that saves time and money while maintaining confidentiality.

    Intestacy Laws: When the State Decides for You

    If you die intestate (without a will), state laws dictate asset distribution. These rules are rigid and may not align with your intentions:

    • Spousal and Child Shares: In most states, your spouse gets a portion (e.g., one-third to one-half), with the rest divided among children. If you have no children, assets might go to parents or siblings.
    • Blended Families: Stepchildren or unmarried partners often receive nothing under intestacy, leading to disputes. I’ve advised clients in second marriages where this oversight disinherited beloved step kids.
    • Minor Children: Without named guardians, courts decide who raises your kids (potentially a relative you wouldn’t choose). Plus, minors’ inheritances are managed by court-appointed conservators until age 18, with restrictions on use.

    These defaults can fracture families. A simple will lets you specify guardians, create trusts for minors (e.g., to delay distributions until age 25 or 30), and include non-traditional heirs like charities or friends.

    Family Conflicts and Emotional Toll

    The absence of clear instructions often sparks arguments among heirs. Who gets the family home? How are sentimental items divided? Without a plan, emotions run high, and legal battles can ensue. Court records show that intestate estates are more likely to result in contested probates, costing thousands in legal fees and eroding relationships.

    For families (even those under $15 million), assets like real estate, investments, or businesses add complexity. Without powers of attorney or healthcare directives, incapacity (e.g., from illness) can lead to court-appointed guardians, further complicating matters.

    Overlooked Tax and Financial Implications

    While federal estate taxes aren’t a concern below the exemption, other taxes can bite:

    • State Estate/Inheritance Taxes: 17 states and the District of Columbia impose these, with exemptions ranging from $1 million to $13.99 million. Families in high-tax states could face unexpected bills.
    • Income Taxes on Inherited Assets: Heirs may owe capital gains taxes on appreciated assets. Proper planning, like stepped-up basis rules, can minimize this, but without it, the IRS takes a larger share.
    • Retirement Accounts and Life Insurance: These pass via beneficiary designations, not wills. Outdated or missing designations can send funds to ex-spouses or trigger probate.

    Additionally, without a plan, your estate might miss opportunities for charitable deductions or spousal portability, which allows surviving spouses to use unused exemptions.

    Why Plan Now? It’s Simpler Than You Think

    Estate planning isn’t just for the ultra-wealthy, it’s for anyone who cares about their family’s future. Start with basics:

    1. A Will: Outlines asset distribution and names executors/guardians.
    2. Trusts: For privacy, probate avoidance, and control over distributions.
    3. Powers of Attorney: For financial and healthcare decisions if you’re incapacitated.
    4. Advanced Care Directive: also know as a living will aides in healthcare decisions (e.g. during incapacitation.)
    5. Beneficiary Reviews: Update IRAs, 401(k)s, and insurance annually.

    Where Do I Even Begin?

    Stand alone attorneys and online legal services can cost thousands to produce generic documents. As a client with Ten Ring Wealth you have unlimited access to the most comprehensive digital estate planning solution on the market, provided at no cost to you through Ten Ring Wealth Advisors partnership with Wealth.com. 

    If any of this resonates with you. Contact me today to discuss tailoring an estate plan for your needs. Your family will thank you.

    Sean Hummel, is a CETRIFIED FINANCIAL PLANNERTM specializing in high-net-worth families. With over 10 years of experience, he partners with CPAs and estate-planning attorneys to help clients preserve wealth, minimize taxes, and transfer legacies exactly as intended.

    XY Investment Solutions DBA Ten Ring Wealth Advisors does not provide tax or legal advice. The tax and estate planning information offered is general in nature. It is provided for informational purposes only and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation

    The opinions expressed in any commentary posted on this site are solely those of the individual author and do not necessarily reflect the views or opinions of XYIS. These opinions are based on information available at the time of posting and are subject to change without notice. XYIS does not commit to updating any posted positions or commentary to reflect subsequent developments. While the information and reasoning used to form these opinions are believed to be from reliable sources, XYIS does not verify this information, and no guarantee is provided regarding its accuracy, completeness, or validity. XYIS disclaims any and all liability for actions taken or not taken based on the content of this site. No warranty, express or implied, is given in connection with the content provided.

  • Is Filling up the 0% Capital Gains Bucket a Smart Move for Low-Income Years?

    Is Filling up the 0% Capital Gains Bucket a Smart Move for Low-Income Years?

    By Sean Hummel, CFP®

    November 18, 2025

    “The wealthiest families don’t react; they strategically position themselves for multiple possible futures.”

    As a Financial Planner with years of experience guiding clients through the twists of tax planning, I’ve often emphasized one underappreciated gem in the U.S. tax code: the 0% long-term capital gains rate. For those navigating low-income periods (think early retirement, sabbaticals, or career transitions) this “bucket” can be a powerful tool to harvest gains tax-free, resetting cost bases and boosting long-term wealth without a federal tax bite. With the recent passage of the One Big Beautiful Bill Act (OBBBA) in July 2025, which locks in many Tax Cuts and Jobs Act (TCJA) provisions permanently, this strategy remains as viable as ever for 2025 and beyond. But timing is key, low-income windows don’t last forever, so let’s dive into how to approach filling that 0% bucket under current law.

    Note: This post is for educational purposes only, based on tax rules as of November 13, 2025. It doesn’t constitute personalized advice. Tax situations vary widely, always consult your CPA or financial advisor to model your specifics.

    The Basics: What Is the 0% Capital Gains Bucket?

    Long-term capital gains (LTCG) arise when you sell appreciated assets like stocks, bonds, or real estate held for more than one year. Unlike short-term gains, which are taxed at ordinary income rates (up to 37% in 2025), LTCG enjoy preferential rates: 0%, 15%, or 20%, depending on your taxable income.

    The 0% rate applies if your total taxable income falls below certain thresholds. Taxable income is your adjusted gross income (AGI) minus deductions (standard or itemized). For 2025, those limits are:

    Filing Status0% LTCG Threshold (Taxable Income)
    SingleUp to $48,350
    Married Filing JointlyUp to $96,700
    Head of HouseholdUp to $64,750

    These thresholds are inflation-adjusted annually (up about 2.8% from 2024) and the OBBBA ensures the underlying TCJA structure persists without reversion to pre-2018 hikes. Exceed them, and gains spill into the 15% bracket (up to $600,050 for joint filers), but the 0% space is yours to fill strategically.

    Why “fill the bucket”? By realizing just enough gains to hit the threshold without crossing it, you pay zero federal tax on those profits. State taxes may apply (check your locale), and watch the 3.8% Net Investment Income Tax if modified AGI tops $200,000 single/$250,000 joint.

    Why Low-Income Years Are Prime Time for This Strategy

    Life’s low-income phases (perhaps you’re between jobs, drawing down retirement savings judiciously, or caring for family) often drop your taxable income into the 0% LTCG zone. Under current law, the standard deduction for 2025 is $15,750 single/$31,500 joint, plus an extra $6,000/$12,000 if 65+ thanks to OBBBA enhancements. This amplifies the bucket’s size.

    For example, a married couple with $80,000 AGI might have $36,500 taxable income after the standard deduction, leaving ~$60,200 of room for tax-free gains. You can sell $60,000 in appreciated stock and have ZERO federal LTCG tax. The OBBBA’s permanence means no sunset cliff like the original TCJA; brackets stay wide and rates low for the foreseeable future.

    These years are fleeting. Once Social Security, pensions, or required minimum distributions ramp up income, that 0% space shrinks. Acting now can lock in savings: A $50,000 gain at 0% today avoids 15% tax later. This could add up to $7,500, or more if the gains continue to grow further.

    How to Fill the Bucket: Step-by-Step Considerations

    Filling the 0% bucket isn’t set-it-and-forget-it, it’s a deliberate harvest. Here’s a general roadmap aligned with 2025 rules:

    1. Project Your Taxable Income: Tally AGI from wages, interest, dividends, etc., then subtract deductions. Use IRS Form 1040 worksheets or planning software to forecast. Factor in OBBBA’s tweaks, like the expanded Qualified Business Income deduction (now permanent at 20%).
    2. Identify Assets to Sell: Target holdings with gains held longer than one year. Prioritize those with modest appreciation or where you’d rebalance anyway. Avoid “collectibles” (art, coins)—they cap at 28% even in the bucket.
    3. Harvest Precisely: Sell up to the threshold. If you’re $10,000 shy, realize $10,000 in gains. Reinvest proceeds to maintain portfolio allocation. Tools like tax-loss harvesting (selling losers to offset gains) can create more room.
    4. Account for Broader Effects: Gains boost AGI, potentially phasing out credits (e.g., child tax credit, Student loan interest deduction,Traditional IRA contribution deduction, American oportunity credit, lifetime learning credit, Earned income tax credit) or triggering Net Investment Income Tax.
    5. Multi-Year Approach: Spread sales over low-income years to avoid bunching. For 2026, thresholds rise slightly so always check the most current tax bracket thresholds. Remember, this resets your cost basis upward, reducing future taxes on the same assets.

    OBBBA’s Role: Stability and New Twists

    Signed July 4, 2025, the OBBBA averts TCJA’s 2025 sunset, keeping LTCG rates at 0%/15%/20% and brackets inflation-adjusted. It boosts the standard deduction modestly for 2025, enlarging the 0% bucket, and makes pass-through deductions permanent (ideal if your income includes business gains.)

    On capital gains specifics, OBBBA enhances Qualified Small Business Stock exclusions (up to $15M lifetime) and extends Opportunity Zones for deferral, but the core 0% mechanics stay intact.

    Potential Pitfalls and Pro Tips

    Watch phase-ins: Gains count toward taxable income, so overfill and pay 15% on excess. Market volatility? Harvest in dips for lower per-share taxes. Estates benefit too, step-up at death erases gains for the inheritor(s), but proactive harvesting preserves liquidity.

    For low-income filers, this strategy shines brightest when paired with Roth conversions or charitable bunching, but integration requires precision and care.

    Final Thoughts: Harvest Now, Thrive Later

    Low-income years are like rare tax holidays, don’t let the 0% bucket go unfilled. Under 2025’s stable tax structure, courtesy of OBBBA and IRS adjustments, you could shield tens of thousands in gains federally tax-free, supercharging your compounding growth.

    Curious if this fits your 2025 picture? Review projections with pros before year-end.

  • Should High Earners use Roth Conversions to Fill the 24% Bracket Before 2026?

    Should High Earners use Roth Conversions to Fill the 24% Bracket Before 2026?

    By Sean Hummel, CFP®

    November 17, 2025

    “The wealthiest families don’t react; they strategically position themselves for multiple possible futures.”

    As a professional specializing in high-net-worth individuals, I’ve seen firsthand how proactive tax strategies can preserve and grow wealth over decades. With the calendar turning to late 2025, one opportunity stands out for those with substantial traditional IRA or 401(k) balances: strategically converting portions to Roth IRAs while leveraging the current federal income tax environment. This post explores the concept of “filling the 24% bracket” through Roth conversions (a general approach that involves converting just enough pre-tax retirement funds to reach the top of the 24% federal tax bracket without spilling into higher rates). While tax laws can evolve, the framework under current rules offers a window that’s worth examining closely before the end of the year.

    Please note: This is educational content based on publicly available tax information as of November 2025. It is not personalized financial, tax, or legal advice. Every situation is unique, influenced by factors like income sources, state taxes, and estate goals. Consult your own CFP, CPA, or tax advisor to evaluate how these ideas might apply to you.

    Understanding Roth Conversions: A Quick Primer

    A Roth conversion involves transferring funds from a traditional IRA, 401(k), or similar pre-tax account into a Roth IRA. The converted amount is treated as taxable income in the year of the transfer, but once in the Roth, future qualified withdrawals (including earnings) grow and come out tax-free. Unlike direct Roth IRA contributions, which face income limits (e.g., full contributions phase out for married filing jointly above $246,000 in modified adjusted gross income for 2025), conversions have no such restrictions, making them accessible regardless of earnings.

    The upfront tax bill can feel steep, but the long-term payoff often lies in shifting from taxable distributions to tax-free ones (potentially reducing required minimum distributions (RMDs) and minimizing taxes for heirs). For high earners, timing is everything: Convert when your effective rate is lower than projected future rates, and aim to stay within favorable brackets.

    The 24% Bracket: Why It’s a Sweet Spot for High Earners

    Under the Tax Cuts and Jobs Act (TCJA) of 2017, which remains in effect through 2025, federal income tax brackets are structured progressively: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. For married couples filing jointly in 2025, the 24% bracket applies to taxable income from $206,701 to $394,600. (Taxable income is your adjusted gross income minus deductions, like the $31,500 standard deduction for joint filers this year.)

    This bracket strikes a balance for many high-net-worth individuals. It’s accessible if you’re in early retirement or have controlled income streams, yet converting up to its ceiling can move significant assets (potentially $100,000 or more, depending on your baseline taxable income) into tax-free territory at a moderate rate. The jump to 32% (starting at $394,601) adds a steeper cost, so the strategy often focuses on “filling” the 24% space without crossing that line.

    To illustrate the bracket’s reach, here’s a simplified table for 2025 married filing jointly (taxable income thresholds):

    Tax RateTaxable Income Range (Married Filing Jointly)
    10%$0 – $23,850
    12%$23,851 – $96,950
    22%$96,951 – $206,700
    24%$206,701 – $394,600
    32%$394,601 – $501,050
    35%$501,051 – $751,600
    37%Over $751,600

    High earners might already hover near the 24% edge due to salaries, investments, or bonuses. By converting precisely to the top (say, if your projected taxable income is $250,000, you could add up to $133,900 without hitting 32%) you maximize the “bang for your tax buck.”

    General Strategies for Bracket-Filling Conversions

    While specifics vary, here are broad considerations drawn from established planning principles:

    1. Project Your Taxable Income First: Tally expected wages, interest, dividends, and other income, then subtract deductions. The gap to the 24% ceiling reveals your conversion “room.” Tools like IRS worksheets or financial software can help model this.
    2. Go Partial, Not All-In: Rather than a lump sum, convert in tranches to stay bracket-bound. For instance, if you have the room for $150,000, split it across months or quarters to manage cash flow for the tax obligations.
    3. Factor in Broader Impacts: Conversions boost modified adjusted gross income, potentially affecting Medicare premiums (IRMAA surcharges, based on income two years prior) or net investment income taxes (3.8% for high earners). State taxes and charitable strategies (e.g., qualified charitable contributions) can offset federal bites.
    4. Leverage Low-Income Windows: Early retirement years often mean lower baseline income, ideal for filling brackets before Social Security or RMDs kick in.
    5. Pay Taxes from Outside Funds: Use non-retirement cash to cover the conversion tax, preserving more in the Roth for growth.

    These steps align with the goal of paying taxes “on sale” today for tax-free benefits tomorrow.

    Beyond the Bracket: Long-Term Wealth Implications

    For high-net-worth families, Roth conversions extend beyond immediate savings. They can shrink future Required minimum distributions (RMDs), which might otherwise force sales in down markets or inflate taxable estates. Heirs inherit Roths tax-free, a boon amid potential estate tax changes. Over 20–30 years, tax-free compounding can amplify returns significantly.

    Market dips, like those seen earlier in 2025, also sweeten the deal: Convert at depressed values for less tax per dollar recovered.

    Wrapping Up: Time to Review Your Playbook

    As 2025 draws to a close, the 24% bracket represents a tangible, low-cost avenue to fortify your retirement against future tax hikes. With the end of the year approaching, high earners have a narrow timeframe to act strategically to potentially lock-in decades of savings.

    This isn’t about rushing into decisions; it’s about informed exploration. Schedule a review with your advisory team to run projections tailored to your portfolio, goals, and risk tolerance. In wealth management, the real edge comes from aligning tax moves with your broader legacy vision.

    As reviewed against current law (November 2025).

  • The UHNW 2025 Year-End Playbook: Which 7 Strategic Moves Should I Make Before December 31, 2025?

    The UHNW 2025 Year-End Playbook: Which 7 Strategic Moves Should I Make Before December 31, 2025?

    By Sean Hummel, CFP®

    November 16, 2025

    “The wealthiest families don’t chase tax breaks — they anticipate the terrain.”

    The One Big Beautiful Bill Act (OBBBA) has reshaped the 2025 landscape in ways that quietly favor proactive households. Below are seven moves worth noting.

    Move #1: The $77,500 After-Tax Window Remains Open

    A rarely discussed 401(k) provision (IRS Notice 2024-2) continues to permit significant after-tax contributions followed by in-plan conversions.

    For households with robust cash flow, this channel offers a way to shift capital into tax-free growth — provided employer plan documents allow it.

    Move #2: State & Local Tax Dynamics Have Shifted

    The new $40,000 federal ceiling on itemized state and local tax deductions often referred to as SALT pairs with pass-through entity tax elections in 36 states. An additional nine states have no income tax. The residents of the following states without this option. Delaware, Maine, North Dakota, Pennsylvania, Vermont)

    High-property-tax jurisdictions (NY, CA, CT) now present a different arithmetic for operating companies and real estate holdings.

    Move #3: Appreciated Securities Carry Hidden Leverage

    When public equities with low cost basis are transferred to a donor-advised fund, the interplay of Section 170(b)(1)(A) and Section 170(e) can neutralize capital-gains exposure while preserving deduction capacity.

    Timing matters: the benefit compounds when multiple years of giving are accelerated into a single tax year.

    Move #4: Required Minimum Distributions Can Vanish Silently

    For those 70.5 years of age or older, direct charitable transfers up to $108,000 satisfy RMD obligations without inflating adjusted gross income.

    This tactic can influence not only income tax, but also Medicare premium thresholds and Social Security benefit taxation. 

    Move #5: Qualified Small Business Stock Rules Reward Patience

    Section 1202 continues to exclude up to $10 million in gains per spouse, per qualifying C-corporation, provided the five-year holding clock is met.

    Founders and early investors often discover multiple “stacks” across entities — a detail easily overlooked in concentrated portfolios.

    Move #6: Bonus Depreciation Retains Front-Loaded Power

    The 100% immediate expensing election  applies to certain real estate improvements and syndicated investments placed in service after July, 19 2025. (Section 168(k)(8))

    Material participation requirements remain the gating factor for offsetting ordinary income.

    The OBBBA also introduces new Section 168(n), which allows a 100% deduction for “qualified production property”. This includes domestic real property used in manufacturing, refining, or agricultural production.

    Move #7: Annual Exclusion Climbs to $19,000

    Indexed inflation adjustments now permit $19,000 per donee without touching lifetime estate/gift exemption.

    When combined with five-year 529 acceleration or direct payment of tuition/medical expenses, the leverage multiplies across generations.(Rev. Proc. 2024-40)

    Closing Note

    The most effective UHNW strategies rarely involve heroic moves.

    They emerge from quiet alignment between legislative intent, family objectives, and mathematical reality.

    If any of these moves resonates with you, we can see if you are in a position to take action.

    Disclosure

    The opinions expressed in any commentary posted on this site are solely those of the individual author and do not necessarily reflect the views or opinions of XYIS. These opinions are based on information available at the time of posting and are subject to change without notice. XYIS does not commit to updating any posted positions or commentary to reflect subsequent developments. While the information and reasoning used to form these opinions are believed to be from reliable sources, XYIS does not verify this information, and no guarantee is provided regarding its accuracy, completeness, or validity. XYIS disclaims any and all liability for actions taken or not taken based on the content of this site. No warranty, express or implied, is given in connection with the content provided.