The Two Generation Tax-Free Legacy Plan: Estate Planning 6 of 6

In this final installment of our estate and legacy planning series, we dive deep into the two-generation tax-free legacy plan—a strategy Bruce designed to help families with $2 million or more in investable assets leave behind a financially secure, tax-efficient inheritance. Bruce and Jason Hosler explore how this plan offers both control and protection, allowing parents to benefit from tax-free income during retirement while also providing long-term support for their children.

We begin with the foundational question: what do we believe about the future of taxes in the U.S.? Bruce argues, supported by projections around expiring tax cuts and entitlement program shortfalls, that taxes are likely to rise. This belief is central to the value of preemptively planning a tax-free legacy, especially given looming tax consequences associated with the SECURE Act and SECURE Act 2.0, which force IRA and Roth distributions within ten years after death—potentially hitting heirs during their highest earning years.

The heart of the two-generation plan is to carve off a portion—say 25% to 40%—of an estate and structure it to produce a tax-free income stream for life. This stream benefits parents during retirement and then shifts to their children, who receive an asset-protected, steady income instead of a lump sum. This structure helps prevent heirs from losing inherited wealth to taxes, divorces, bankruptcies, or lawsuits. It also ensures that a safety net is in place, one that could potentially keep children from ever being financially desperate.

Importantly, this strategy is flexible and isn't an all-or-nothing approach. The legacy plan is dialed up or down depending on a family's goals, financial position, and desired impact. It isn't suitable for everyone—especially those without substantial assets or those indifferent to the future financial burden on their heirs. But for families who care about asset protection, legacy continuity, and tax efficiency, it's a planning path worth considering.

We wrap by encouraging anyone interested to consult a professional. Bruce and Jason emphasize that true legacy planning requires coordination between legal, tax, and investment disciplines. For families who want to ensure their wealth benefits multiple generations without being eroded by taxes or liabilities, this approach offers clarity and control.

Bruce explains the concept in his book, which came out last year, Moving to Tax Free: https://movingtotaxfree.com/

For more information about anything related to your finances, contact Bruce Hosler and the team at Hosler Wealth Management: Visit them online at https://www.hoslerwm.com/

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