AUGUST NEWSLETTER
Clients and Friends,
As we approach the tail end of summer, it’s a natural time to think a little further down the road; about what we’re building, who we’re building it for, and how to keep it protected. Whether you’re planning for a child’s future education or considering what your own legacy might look like, thoughtful preparation today can provide clarity, security, and flexibility tomorrow.
This month, we’re focusing on two long-view topics. On the individual side, in the spirit of college move-in season, we’re exploring how recent legislative updates and long-standing tools can work together to help families fund education goals. On the business side, we’re looking at succession planning, and how when taken early, the right steps can preserve value and create smoother transitions.
Looking Ahead: Education, Legacy, and Long-Term Planning
The decisions we make now shape the options that our families will have tomorrow.
INDIVIDUAL FEATURE
College Planning for Affluent Families in a Changing Landscape
How legislation, tax law, and financial strategy come together
College costs continue to rise, and for higher-income families who may not qualify for financial aid, planning early and strategically is essential. While many of our clients are already using 529 plans, the passage of the Big Beautiful Bill introduces new elements that may influence long-term education planning.
Here’s a broader view of options, along with how new legislation may come into play:
529 Plans remain the go-to tool for tax-advantaged college savings. Contributions grow tax-free, and withdrawals are tax-exempt when used for qualified education expenses. Many states, including Virginia and Maryland, also offer deductions or credits for contributions.
Recent expansions have increased their flexibility:
• Up to $10,000 per year can be used for K–12 private school tuition.
• Up to $10,000 total can be used to repay student loans.
• Rollovers into Roth IRAs are permitted for unused funds, subject to limits.
For families with multi-generational goals or early starters, front-loading contributions (up to 5 years’ worth in one lump sum per beneficiary) can accelerate growth while leveraging gift tax exclusions.
Trump Savings Accounts (2025–2028 births only)
Included in the Big Beautiful Bill, Trump Accounts allow parents of children born between 2025 and 2028 to contribute up to $25,000 total per child with tax-deferred growth. These accounts are designed to be more flexible, though they are currently limited by the eligibility window and contribution cap. These could complement, not replace, existing 529 strategies, especially for clients seeking dual-purpose savings.
Funds in these accounts can be used for:
• Qualified education expenses
• First-time home purchases
• Potential future uses (pending further guidance)
Other Planning Tools Worth Considering
Custodial Accounts (UGMA/UTMA): These offer broad investment flexibility, but income is taxable annually, and assets count against financial aid. Once the child reaches age of majority, typically 18 or 21 (varies by state), control shifts to them. These accounts are best for families comfortable with early asset transfer and less concern for aid eligibility.
Taxable Brokerage Accounts (In Parent’s Name): Ideal for flexibility and liquidity. While not tax-advantaged, these allow parents to retain full control and manage gains strategically, especially when pairing with capital loss harvesting or gifting strategies.
Irrevocable Trusts: Used for advanced planning, particularly when estate tax or asset protection is a concern. Trusts can fund education without affecting the parents’ gift exclusion in certain structures. However, they are complex and should be drafted with care to avoid unintended tax consequences.
Cash Value Life Insurance (Sometimes): In rare cases, life insurance policies are used as college funding tools for their borrowing potential. We generally advise careful scrutiny before pursuing this route due to fees and long-term commitment requirements.
The Bottom Line
Planning for education isn’t just about where to save—it’s about when, how, and in whose name. With new legislative tools like Trump Accounts and existing options like 529s, affluent families have more strategic flexibility than ever before. The key is aligning your savings vehicles with your overall tax and estate strategy.
If you’re welcoming a new child or grandchild in the next few years, or helping fund education for someone already in school, now is a good time to coordinate with our tax and financial team.
Further Reading Articles:
• Saving for College: 529 Plan Basics
• IRS: 529 Plans and Qualified Education Expenses
• White House Summary of Trump Savings Accounts (Section in Big Beautiful Bill)
• Kiplinger: How An Irrevocable Trust Could Pay For Education
• Schwab: 529-to-Roth IRA Rollovers: What to Know
BUSINESS FEATURE
Succession Planning and Exit Strategies
Why thinking 10 years ahead can save your business and your legacy
For many successful business owners, the business itself is the largest asset in their estate. Yet, far too many exit the company without a plan or leave planning so late in the game that options become limited or tax burdens unnecessarily high.
Whether your ideal exit is a sale, a transition to the next generation, or a handoff to a trusted partner or employee, good succession planning takes time, structure, and forethought. Here are a few questions to start asking now:
• Have you had your business professionally valued in the past 3 years? Knowing the current value and how that value is derived is the first step in any credible transition plan.
• Are you building the right team? Whether it’s a buyer, a family successor, or key employees, developing leadership ahead of time makes any transition smoother.
• Are your legal structures optimized? In many cases, a simple LLC or S Corp may not be ideal for gifting, selling, or minimizing estate exposure. Consider Trusts, Family Limited Partnerships, or other planning entities that allow you to move shares while maintaining control.
• Do you have a buyer, or are you building a business that someone would want to buy? Think in terms of systems, not personalities. Clean financials, consistent earnings, and documented processes all increase value and reduce friction in a sale.
Even if your exit is 5, 10, or 15 years away, the most tax-efficient and emotionally smooth transitions come from early, proactive planning. A conversation now could save years of complexity later.
Additional Reading Links:
• Kiplinger: Three Estate Planning Documents a Business Owner Can’t Afford to Skip
• ADP: Small Business Succession Planning: The Tax Implications You Need to Know
• Frascona: Connelly v. IRS: Tax Implications for Life Insurance in Business Succession Planning
• BDO: Cash Flow Strategies for Estate Tax Liabilities During Succession
Planning Tip of the Month
Use summer downtime to organize your digital financial life.
We recommend reviewing logins, consolidating orphaned accounts, backing up key documents, and making sure your beneficiaries and POAs are up to date. A clean digital financial footprint makes every part of planning easier, for you and your heirs.
Thank you for taking the time to stay informed! As always, if you have questions about anything we’ve covered or if you’re ready to take a deeper look at your long-term strategy, we’re here to help.
The Aiken Warner Team
