The growing number of Americans with eight and nine-figure net worths is not just a story about wealth. It is a story about complexity, and at the center of that complexity is taxes. As more households accumulate significant assets across stock portfolios, private businesses, retirement accounts, and real estate, the decisions they face carry tax consequences that compound quickly and often permanently. For advisors, tax and estate planning has moved from a value-added service to the core of what it means to do this work well for these newly wealthy clients. Below are four planning areas that demand attention in this environment.
With permanent estate tax rules, new income-based phaseouts, and inherited IRA deadlines now in play, modeling the “what ifs” is more critical than ever. What happens if one spouse dies first? What if the client converts to Roth this year instead of next? What if an heir takes inherited IRA distributions evenly instead of all at once? Holistiplan lets advisors answer those questions with real numbers before the decisions are made.
1. The Estate Planning Window Is Open. Use It.
Under the One Big Beautiful Bill Act (OBBBA), the federal estate and gift tax exemption is $15 million per individual in 2026, up from $13.99 million in 2025, and will be indexed for inflation annually beginning in 2027. For married couples, that means up to $30 million can be transferred free of federal estate and gift tax. The 40% rate on amounts above the exemption remains in place, and the generation-skipping transfer tax exemption is $15 million as well.
This is a significant planning opportunity, particularly for clients who previously structured their estates around the sunset provisions of the 2017 Tax Cuts and Jobs Act. Those provisions are gone. The exemption is now “permanent,” and families with estates approaching or exceeding these thresholds have a genuine window to act.
The most effective strategies combine lifetime gifting with trust structures designed to remove future appreciation from the taxable estate. Spousal Lifetime Access Trusts, GRATs, ILITs, and Dynasty Trusts each serve different objectives but share a common purpose: transferring wealth and the appreciation efficiently out of the estate while retaining some flexibility. Gifting high-growth assets now locks in today’s values, while retaining low-basis assets allows heirs to benefit from a step-up in basis at death.
Sixteen states and the District of Columbia impose estate or inheritance taxes, most at thresholds well below the federal level. New York’s estate tax exclusion is $7.35 million for 2026, but the tax applies to the full estate value for estates exceeding 105% of that threshold. State-level planning deserves its own analysis alongside federal strategy.
🥇 Pro Tip: The OBBBA also introduced new limits on charitable deductions that took effect January 1, 2026, including a 0.5% AGI floor for itemizers and a 35% cap on the tax benefit of itemized deductions for clients in the 37% bracket. Clients with significant charitable giving programs should model the impact in Holistiplan and review their strategies before year end.
2. The Widow’s Penalty Is a Planning Event, Not an Afterthought
When one spouse dies, the surviving partner faces an immediate and often dramatic increase in their tax burden. The widow’s penalty is one of the most underappreciated risks in retirement planning, and it hits at the worst possible time. And remember, nearly every couple will face the widow’s penalty as deaths are staggered and one spouse, often the woman, will outlive the other.
A surviving spouse loses married filing jointly status and shifts to single filer the next tax year, typically without any meaningful reduction in income or assets. Under 2026 brackets, a couple with $85,000 in taxable income sitting in the 12% bracket can see the survivor jump to the 22% bracket, raising the federal tax bill by nearly 40%, from about $9,700 to about $13,400. At higher income levels the damage is greater. A surviving spouse with $330,000 in taxable income who previously filed jointly in the 24% bracket now files single in the 35% bracket. Medicare surcharges compound the problem further. In 2026, IRMAA surcharges begin at $109,000 of MAGI for single filers, half the $218,000 threshold for joint filers. The new $6,000 senior deduction works the same way, phasing out at $75,000 of MAGI for single filers versus $150,000 for joint filers.
Planning for the widow’s penalty needs to happen while both spouses are alive. Roth conversions during the married filing jointly years reduce the future tax burden on the surviving spouse and shrink the taxable estate. The year of a spouse’s death is usually the last year to file jointly, and that final joint return should be treated as a dedicated planning event, reviewed for accelerated income recognition, use of any capital loss carryforwards belonging to the deceased spouse, which do not pass to the survivor, and any remaining Roth conversion opportunities before the higher single rates take hold permanently.
🥇 Pro Tip: Use Holistiplan to run a single-filer projection for every married client, side by side with their current joint return. Seeing the numbers years before they become relevant turns an abstract risk into a planning conversation, and it is one of the most valuable things an advisor can do.
3. Distribution Planning Is the Next Frontier
For most of its history, the wealth management industry organized itself around accumulation. Distribution was treated as a later-stage problem, almost an afterthought. That assumption no longer holds. These newly wealthy clients are not in accumulation mode. They are spending, gifting, distributing, and looking for help doing all of it efficiently.
Tax liabilities accelerate in retirement in ways clients rarely anticipate. Social Security income becomes taxable, RMDs begin at age 73 (75 for clients born in 1960 or later), and a $2.5 million traditional IRA growing at 7% annually reaches nearly $7 million in 15 years. Without planning, RMDs in a client’s 80s can exceed $200,000 annually, pushing the client into a higher tax bracket. After the death of the first spouse, that tax burden shifts entirely to the surviving partner, now taxed at single filer rates. For many clients, taxes become the largest single expense in retirement.
The solution is thoughtful tax diversification built over time, with the most important window falling between retirement and the start of RMDs, when income is lower and planning flexibility is greatest. The goal is a portfolio spread across three account types: taxable accounts subject to capital gains rates, tax-deferred accounts such as IRAs and 401(k)s, and tax-free accounts including Roth IRAs and HSAs. Roth conversions are central to this strategy. How much to convert each year is a modeling question, not a rule of thumb. Holistiplan can project brackets, RMDs, and IRMAA exposure across multiple years, so advisors can size conversions to fill lower brackets without triggering surcharges. Converting traditional IRA assets during lower-income years prepays taxes at favorable rates, reduces future RMDs, shrinks the taxable estate, and creates income tax-free assets for heirs.
🥇 Pro Tip: Start distribution planning before RMDs begin, while lower-income years still leave room for Roth conversions. Use Holistiplan to show clients what waiting will cost them.
4. The SECURE Act Clock Is Ticking for Inherited IRAs
The SECURE Act of 2019 eliminated the stretch provision for most inherited IRAs, requiring non-spouse beneficiaries to fully distribute inherited assets within ten years of the original owner’s death. Beginning in 2025, annual RMDs are required in years one through nine when the original owner had already begun taking distributions, with the account fully emptied by the end of year ten.
Beneficiaries who inherited IRAs in 2020 are now well past the halfway point of their ten-year window and must empty those accounts by the end of 2030. Without a deliberate distribution strategy, they risk significant tax exposure in the final years as large distributions pile onto ordinary income during peak earning years.
The best planning approach depends on the size of the inherited balance. For balances under $500,000, a streamlined equal distribution schedule spread across the ten-year window typically avoids year-10 tax shock. For balances above that threshold, more sophisticated modeling is warranted, filling lower-bracket years with larger withdrawals and deferring in higher-income years. Holistiplan can project the beneficiary’s bracket year by year and compare withdrawal schedules side by side, which makes the tradeoffs clear to the client. This approach can save a client inheriting a $1.8 million IRA close to $300,000 in taxes compared to an unplanned strategy. Inherited Roth IRAs carry different considerations. Distributions are tax-free, but beneficiaries may still benefit from spreading them across the ten-year window to reduce market timing risk.
🥇 Pro Tip: Every January, pull a list of all clients subject to the SECURE Act ten-year rule. Segment by balance, with $500,000 as a practical threshold between basic and advanced analysis, although even smaller balances can have an outsized impact on a beneficiary’s tax situation, so review these case by case. For larger balances, model the full distribution window in Holistiplan before the client reaches years eight or nine, when options narrow significantly.
The wealth boom and the wealth transfer are not separate trends requiring separate responses. They are two phases of the same story, and tax and estate planning runs through both of them. So does modeling. Holistiplan lets advisors test Roth conversions, survivor scenarios, and inherited IRA distribution schedules before decisions are made, when there is still time to change the outcome.
The clients accumulating wealth today face the same fundamental questions as the clients preparing to transfer it: how do I keep more of what I have built, pass it efficiently to the people and causes I care about, and avoid leaving money on the table through poor planning or poor timing?
About Debra Taylor, CPA/PFS, JD, CDFA.
Managing Partner and Chief Tax Strategist of Carson Wealth.
She is a frequent national lecturer, has authored hundreds of articles, and is the author of My Journey to $1 Million: The Systems and Processes to Get You There.
She can be reached at 201.891.1130 or through dtaylor@carsonwealth.com
