Legacy Planning: What Are You Really Leaving Behind?

By Tim Croak, CLU®, ChFC® and Eric Croak, CFP®

Croak Capital | Legacy & Wealth Planning

There's an old saying in our business: When you retire, either fly first class or your children will.

We've always liked that line. But we've also come to think it misses something important.

What if your children could use some of that money today? What if you could help a grandchild start a business, give a young family a head start, or support something in your community that will matter long after you're gone? And what if you could be around to enjoy seeing it happen?

That's the idea behind legacy planning. It goes beyond deciding who inherits your assets. It considers when wealth should be transferred, how it can be put to good use, and how to prepare the people who will eventually receive it.

We believe that conversation deserves a much bigger place in financial planning.

The World Is Changing. Your Plan Should, Too.

We're a father and son working in the same business, which gives us two generational perspectives on a question families have wrestled with forever: How do you leave the next generation better off?

There's no shortage of uncertainty in the world. Government debt, political division, rising living costs, and economic change are all legitimate concerns. We don't pretend to know exactly what the next 30 years will look like.

We do know that the financial circumstances our children and grandchildren face will be different from those we encountered. For someone starting with little financial support, buying a home, getting an education, raising children, and building a business can require years of saving and borrowing before meaningful financial security is established.

For families fortunate enough to have accumulated substantial wealth, that presents an opportunity. Your money can do more than support your retirement and eventually become someone else's inheritance. It can create opportunities, solve problems, and give people you care about a better start.

But only if you plan for it.

Give Some of It Away. Before You Have To.

We regularly encounter an interesting financial planning problem: people who have accumulated more money than they're ever likely to spend but still approach every financial decision as though they might run out.

Some of that caution is healthy. It's probably part of what made them financially successful in the first place. But at some point, the question deserves to change from How much more do I need? to What should I do with what I already have?

Consider someone who plans to leave a meaningful inheritance to their children. If those children receive it at age 60, they may already own their homes, have raised their families, and established their careers.

What could a portion of that inheritance have accomplished 30 years earlier? Perhaps it could have eliminated student debt, helped purchase a first home, or provided the financial flexibility to pursue an opportunity that otherwise seemed out of reach.

We aren't advocating that parents hand over their fortunes or compromise their financial independence. Quite the opposite. The first responsibility is making sure their own financial security is established.

But once that's accomplished, an intentional lifetime gifting strategy can be one of the most rewarding parts of wealth planning.

In 2026, an individual can generally give up to $19,000 per recipient under the federal annual gift tax exclusion. Married couples can generally give a combined $38,000 per recipient when the applicable requirements are met. Larger gifts may also be possible without an immediate gift tax payment, although they can require reporting and use part of the donor's lifetime exemption, which is $15 million per person in 2026.[1]

Those rules create opportunities, but we wouldn't start with the exemptions. We'd start with the people.

The most valuable time to receive an inheritance may not be the most convenient time to leave one.

The Asset You Give Matters as Much as the Amount

Here's where good intentions need to meet good financial planning.

Suppose a parent owns $500,000 of stock originally purchased for $100,000, and they want to give that investment to their child.

If the parent gifts the shares during life, the child generally takes over the parent's original $100,000 cost basis. If the child immediately sells the stock for $500,000, the sale may create a $400,000 taxable capital gain.

Now consider a different approach. If the parent keeps the shares until death, and the shares are worth $500,000 at that time, the child generally receives a new cost basis of $500,000 under the rules for inherited property. An immediate sale at that value generally would not realize the $400,000 gain accumulated during the parent's lifetime.[2]

That's a meaningful difference. But it doesn't necessarily mean waiting is the better decision.

What if the child could use the money to purchase a business today? What if the parent wants future appreciation to occur outside their estate? What if another asset could be transferred with fewer tax consequences?

There are often several good options, but they don't all produce the same result. The decision becomes even more complicated when a family's wealth includes traditional retirement accounts, real estate, private investments, or ownership in a business. Each asset has its own tax characteristics, liquidity considerations, and responsibilities.

Leaving someone a million dollars and leaving someone the right million dollars are two different things.

What Legacy Planning Looks Like for an $8 Million Family

Consider a hypothetical married couple in their late 60s with two adult children and an $8 million net worth.

Their wealth includes $2 million in traditional retirement accounts, $2 million in taxable investments, a $1.5 million family vacation property, $1 million in private business interests, and another $1.5 million in cash, bonds, and other liquid assets.

They've saved responsibly and have enough to support their anticipated retirement needs. Their estate documents divide everything equally between their two children. On paper, their planning looks relatively straightforward.

But now consider four decisions they might face.

First, their daughter wants to purchase a home. The parents could give her $200,000 today rather than wait for an eventual inheritance. But should that gift come from cash, appreciated investments, or another source? How does it affect their own liquidity, gift tax reporting, and the eventual balance between their children?

Second, they have a substantial traditional IRA. Many adult, non-spouse beneficiaries must fully distribute inherited retirement accounts within ten years. If the owner had already begun required minimum distributions, beneficiaries generally must also take annual distributions during those ten years. Those taxable withdrawals could arrive during the children's highest-earning years.[3] Should the parents consider partial Roth conversions during retirement, or would the additional taxes outweigh the potential benefit?

Third, there's the vacation property. Their son wants to keep it in the family. Their daughter has little interest in owning it. Should the property go to one child, with other assets used to balance the inheritance? Could a purchase arrangement work? Who pays the expenses in the meantime?

Finally, the parents want to support a local organization that has been important to their family for decades. Should that commitment be funded during life, through a charitable bequest, or with a particular type of asset?

None of these questions can be answered by looking at the estate documents alone. The family needs to understand how much it can comfortably give away, which assets should be transferred, the tax consequences of each decision, and what the parents actually want to accomplish.

In this example, there may be no federal estate tax problem at all. With a 2026 federal exemption of $15 million per person, this couple is well below the threshold.[1] That doesn't mean there aren't important planning opportunities.

The wrong asset, the wrong timing, or an unclear expectation could still create significant costs and unnecessary family conflict. And the best answer may not be the one that leaves the largest dollar amount in the estate.

That's the difference between transferring wealth and planning a legacy.

Stop Treating Tax Deferral Like the Finish Line

One of the more interesting challenges in managing significant family wealth is that a good tax decision for one generation isn't necessarily a good tax decision for the next.

We've spent decades teaching people to defer income, maximize retirement contributions, and postpone taxes whenever possible. That advice has merit. But it isn't universally correct.

A large traditional IRA, for example, may eventually create substantial taxable distributions for its owner. If inherited by children during their peak earning years, it may also create a significant income tax burden.

Would the family be better off converting some of those assets to a Roth IRA, paying taxes during the parents' lifetime, or holding more wealth in taxable accounts? Sometimes. Sometimes not.

It depends on current and projected tax brackets, retirement income, the size of the estate, charitable intentions, and the beneficiaries' circumstances.

The objective isn't to avoid taxes at all costs. Nor is it to pay them sooner simply because future tax rates are uncertain. It's to understand how today's decisions affect the family's combined financial outcome.

We explore that broader coordination in our article on tax planning for high-net-worth individuals. The important point is that retirement planning, tax planning, and legacy planning shouldn't operate independently.

Tell Your Family What the Money Means

This may be the most overlooked part of legacy planning.

Most people spend a lifetime developing the judgment, discipline, relationships, and instincts that help them accumulate wealth. Then they spend considerable time and money preparing legal documents that explain where the assets should go, without ever explaining the thinking behind them.

That's a missed opportunity.

Have a family meeting. Talk about what you hope the money will make possible. Explain why you've supported certain causes, why you value education, or what building your business taught you.

And listen. Your children and grandchildren may have different priorities than you do.

Some families find value in developing a family mission statement: a simple understanding of what the family's resources are intended to support. It doesn't need to become a corporate retreat or a 30-page document. Frankly, a thoughtful conversation over dinner may accomplish more.

What matters is that your family understands your intentions while you're still around to explain them.

You don't have to tell your children how to live their lives. But you can give them the benefit of what you've learned living yours.

Legacy Doesn't Stop at Your Last Name

Think about the people and organizations that contributed to your life.

The employee who helped build your business. The teacher who saw something in you. The community organization that was there when someone needed it. The young person who could accomplish something remarkable with a little encouragement and opportunity.

There are countless ways to make an impact beyond your immediate family. Sometimes that means money. Sometimes it's mentorship, opening a door, serving on a board, or helping someone make a decision that changes the direction of their life.

And while charitable bequests are a wonderful way to leave a lasting impact, there's something to be said for participating in that work yourself.

Why wait until you're gone to support something you believe in? Why not see what your resources can accomplish today, and involve the next generation in the process?

That experience may be worth more than the eventual financial gift.

Five Questions Every Legacy Plan Should Answer

There isn't one legacy planning strategy that works for every family. But there are five questions we believe are worth answering before deciding what to give, when to give it, or how to structure an inheritance.

1. What can I comfortably give away? Begin with a realistic understanding of retirement spending, healthcare, liquidity, and the financial resources you need to maintain your independence.
2. When would the gift make the greatest difference? Consider whether helping someone today would accomplish more than providing the same wealth decades from now.
3. Which assets should be transferred? Cash, appreciated investments, retirement accounts, real estate, and business interests have different tax and ownership consequences.
4. Does my family understand my intentions? Clear communication can be just as important as properly drafted legal documents.
5. Who will make sure everything happens? A good strategy still requires execution. Beneficiary designations, trust funding, account ownership, tax planning, and business succession arrangements all need to work together.

That last question is particularly important.

A family can have an excellent estate attorney, a capable accountant, and a thoughtful financial advisor, and still have important work left unfinished. Perhaps a trust was established but never funded. A beneficiary designation wasn't updated after a divorce. A business succession agreement hasn't been revisited since the company doubled in value.

Each professional may have done their job. The overall plan may still fall short.

At Croak Capital, we believe someone needs to maintain the complete financial picture, coordinate the professionals involved, and follow through on the decisions that have been made. That's an important part of the work we describe in Our Approach.

The paperwork matters because the people matter.

The Responsibility Is Yours

Let's return to that old saying about flying first class. The joke, of course, is that if you don't enjoy your money, your children eventually will.

Maybe. But we think that gives the next generation too little credit, and the current generation too little responsibility.

If you're concerned about how your children will handle money, have you given them opportunities to learn while you're around to offer guidance? If you want your wealth to benefit your community, have you shown your family why that community matters to you?

An inheritance isn't automatically a legacy. It's a transfer of assets. The legacy comes from the thought, care, and purpose behind that transfer.

So enjoy your money. Take the trip. Fly first class if you want to.

But spend some time thinking about what else your wealth can accomplish, and don't assume the most important work it will ever do has to wait until you're gone.

The best part of leaving something behind might be getting to see what it becomes.

About the Authors

Tim Croak, CLU®, ChFC®, is CEO and Founder of Croak Capital. Eric Croak, CFP®, is President. Together, they lead an independent, fee-only wealth management firm based in Toledo, Ohio, helping families coordinate investment management, financial planning, and complex decisions involving their wealth.

Meet Tim, Eric, and the Croak Capital team.

Source Notes

[1] Federal gift and estate tax. The IRS confirms a $19,000 per-recipient annual gift tax exclusion and a $15 million basic exclusion amount for 2026. Gift-splitting and lifetime exemption rules may apply to larger transfers. IRS — Frequently Asked Questions on Gift Taxes; IRS — Estate Tax.

[2] Cost basis of gifted and inherited property. IRS Publication 551 explains the general carryover-basis rules for gifts and the fair-market-value basis rules for inherited property, including exceptions. IRS — Publication 551: Basis of Assets.

[3] Inherited retirement accounts. Most designated beneficiaries who are not eligible designated beneficiaries must follow the ten-year distribution rule, with annual distributions generally required if the owner died on or after their required beginning date. IRS — Retirement Topics: Beneficiary.

This article is for informational purposes only and does not constitute individualized investment, tax, or legal advice. The examples are hypothetical and do not represent actual client circumstances. Tax treatment depends on applicable law and individual facts. Consult qualified tax and legal professionals before implementing a strategy.