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When most people think about gifting strategies, they picture money moving from parents to children or grandchildren. But in some situations, families may benefit from thinking about wealth transfers in the opposite direction. 

It’s called “upstream gifting,” and while it’s certainly not appropriate for every family, it’s one example of how in certain circumstances, coordinated estate and tax planning strategies may help improve tax efficiency for some families. These are often the kinds of opportunities families don’t realize exist until someone takes a closer look. 

What Is Upstream Gifting?

At a high level, upstream gifting involves transferring appreciated assets from an adult child to a parent or older family member. If structured appropriately and aligned with the family’s broader estate plan, the assets may eventually pass back to the next generation through inheritance. 

Why would someone do this? 

Under current federal tax law, certain inherited assets may receive a step-up in cost basis at death, although the availability and impact of this treatment depends on individual circumstances and future tax law. In some cases, inherited assets may receive a basis adjustment to fair market value at the owner’s death under current law, which could reduce future capital gains exposure. Depending on the family’s circumstances, the strategy may create tax efficiencies in certain situations.

A Real-Life Example

We recently worked with a client who had accumulated a substantial position in Walmart stock over several decades. Much of the stock had been held since the 1990s, which meant there was a very large, unrealized capital gain embedded in the account. 

Selling the shares outright would have created a significant tax bill. 

During planning conversations, we also reviewed the client’s mother’s financial picture. She was financially secure, had her own brokerage assets, and was in a much lower tax bracket. The client was also an only child, which simplified some of the estate planning considerations that can arise when multiple heirs are involved. 

After discussions around the family’s estate plan, overall financial goals, and potential risks, the client transferred shares to their mother. 

Several things happened as a result: 

Depending on future tax law and the family’s circumstances, a basis adjustment could reduce future capital gains exposure. 

Of course, strategies like this require careful coordination and are highly dependent on family circumstances, tax laws, and estate planning considerations. But it illustrates an important point: Comprehensive planning discussions can sometimes uncover strategies families may not have previously considered. 

The Little Things Matter 

One thing we often tell clients is this: 

If they didn’t have us tomorrow, they would probably still be okay. Their retirement goals may still be achievable. Their financial foundation may already be strong. 

But our role is to continually look for ways to make things a little better. 

Sometimes that means identifying investment opportunities. Sometimes it means improving efficiency. And sometimes it means uncovering planning strategies most people have never heard of. 

Not every idea will apply to every family. In fact, upstream gifting can create additional considerations involving: 

That’s why these conversations should always involve coordination with estate attorneys, tax professionals, and financial advisors before implementing anything.

Planning Isn’t Just About Big Decisions 

Many people think financial planning is only about major milestones like retirement, selling a business, or creating an estate plan. 

But in practice, meaningful value is often created through a series of smaller planning decisions made over time, particularly when tax, investment, and estate considerations are evaluated together. 

Sometimes those conversations lead to strategies families may not have previously considered, including techniques designed to improve tax efficiency or align assets more intentionally with long-term family goals. 

Upstream gifting is one example. Under current tax law, certain inherited assets may receive a step-up in cost basis at death, which in some situations could reduce future capital gains exposure for heirs. However, strategies like this are highly dependent on individual circumstances and may not be appropriate for every family. 

These arrangements can involve significant legal, tax, and family-governance considerations, including: 

That’s why planning strategies involving gifting or estate transfers should always be evaluated in coordination with qualified legal, tax, and financial professionals before implementation. 

Our role is not to guarantee outcomes or eliminate uncertainty. Rather, it is to help clients evaluate opportunities, identify tradeoffs, and make informed decisions within the context of their broader financial plan. 

The goal of planning is rarely perfection. More often, it’s about making thoughtful adjustments over time that may improve efficiency, flexibility, and long-term alignment with a family’s objectives. 

Sometimes the most valuable question in the planning process is simply: 

“What might we be missing?” Schedule a consultation with us today.  

Disclosure: This article is provided for informational and educational purposes only and should not be construed as individualized investment, legal, or tax advice. The examples discussed are simplified and are not intended to represent the experience of all clients or predict future outcomes. Tax and estate planning strategies involve risks and may not be appropriate for every individual or family. Outcomes depend on personal circumstances, applicable law, and future tax rules, which may change over time. Individuals should consult qualified tax, legal, and financial professionals before implementing any strategy discussed.

Family wealth planning decides whether your retirement savings support multiple generations or end with a single one. Start by naming who you are planning for, the freedoms you want to protect, and the time horizons that matter, such as short-term income needs, multi-decade growth, or intergenerational transfer. Making those priorities explicit reduces hidden conflict and forces trade-offs among lifetime spending, education funding, business continuity, and philanthropic goals.

What you need to know

1. Define family wealth planning goals and a retirement mission

Start with a clear mission to guide both day-to-day choices and long-term transfers. List shared objectives and rank them by urgency and time horizon so the family sees where trade-offs will be required. Typical goals include lifetime retirement income, education funding, business continuity, legacy gifts, and charitable giving; putting them on paper turns intentions into decision points.

Time horizon changes everything. A 10-year horizon calls for cash and low-volatility solutions, a 30-year horizon tolerates more growth and illiquidity, and a perpetuity horizon benefits from endowment-style rules and trusts. Prioritize explicitly so meetings and estate decisions do not stall over competing aims.

Turn values into measurable rules so conversations move from emotion to numbers, and use concrete tools such as target annual distributions or withdrawal guardrails to operationalize the mission. Sample templates to test with advisors include:

Match scenarios to financial tools so the plan has concrete next steps. Accumulators ($1–3 million) typically focus on liquidity and education funding; pre-retirees ($3–10 million) balance guaranteed income with growth and add layered trusts; families with businesses or ultra-high-net-worth assets prioritize succession planning, dynasty trusts, and tolerance for illiquidity. Once priorities are set, move to a governance framework and decision rules that keep those choices consistent across generations.

2. Build a family governance framework to keep decisions calm

Decisions get emotional; a governance framework keeps outcomes steady. Form a family council and draft a concise family constitution that lays out mission, membership, roles, conflict-resolution steps, and amendment rules so everyone understands how choices will be made. The council is the operating forum for ongoing issues and for carrying out the constitution’s processes. For practical steps on structuring decision rights and meetings, review guidance on five steps for establishing family governance.

Keep the constitution short, three to ten pages, with annexes for legal detail. A five-item starter template is:

Set a steady rhythm with an annual full-family meeting and quarterly council sessions for operational items. Start each meeting with the family story so older members frame history and values before numbers come up. A sample agenda might include family history and values (15 minutes), an education topic (20 minutes), investment and tax updates (20 minutes), decisions and action items (25 minutes), and a wrap with next steps (10 minutes).

Make decision rules explicit: use consensus for core values issues, simple majority for routine matters, and a supermajority for major changes like trust amendments. Assign clear duties to avoid overlap, with stewards focusing on values, trustees administering legal assets, beneficiaries receiving distributions, and an advisor liaison coordinating outside experts. Provide for neutral facilitation or arbitration when disputes arise, and translate governance into enforceable legal and succession documents so plans remain effective as ownership moves to the next generation.

3. Choose legal and tax tools that support income and transfer goals

Legal and tax choices shape how predictable retirement income will be and how smoothly assets transfer. Revocable trusts give flexibility while the grantor lives but offer limited creditor protection and remain in the taxable estate. Irrevocable trusts, such as dynasty trusts, remove assets from the estate and can shield them from creditors at the cost of direct control. An irrevocable life insurance trust (ILIT) commonly keeps life insurance proceeds out of the estate while providing tax-efficient liquidity to heirs.

Centralize ownership when appropriate using family limited partnerships, LLCs, or holding companies to preserve control while transferring value. These structures separate economic interest from voting power and can create valuation discounts for minority transfers, so document roles in operating agreements, adopt clear distribution policies, and consider an independent manager or family council to enforce governance. Coordinate ownership structures with succession planning to reduce friction and preserve business continuity.

Tax mechanics are not one-size-fits-all, so understand annual gift exclusions, the lifetime gift and estate exemption, portability rules, and generation-skipping transfer tax before deciding whether to use exemptions now or later. Also weigh income tax consequences such as basis step-up versus retained basis, and coordinate federal planning with state estate and inheritance rules. Work with counsel and your tax advisor to tailor choices to your facts and current law. For an accessible primer on the variety of legal vehicles and types of trusts, review trusted bank guidance. If dynasty trusts are part of your plan, consider state law implications and research the best states for dynasty trusts.

Design trusts and entity choices to align with retirement income and preservation strategies, and use family office planning to centralize administration, valuations, and trustee actions. Once legal settings are in place, build an investment and income plan that funds your priorities and supports transfer goals, then use advisers to implement and monitor the plan.

4. Assemble your advisory team or pick the right family office model

Complex assets need coordination more than piecemeal advice. If your family holds private equity, has cross-border tax exposure, manages a significant art collection, runs family-owned businesses, or faces security concerns, fragmented advice can become a liability. Evaluate a single-family office, a multi-family office, or a curated external advisory team when those needs exceed what discrete advisors can coordinate.

Each model trades cost for control and convenience. A single-family office delivers bespoke services and full control but carries fixed operating costs that make sense only at substantial asset levels. A multifamily office shares infrastructure to reduce fixed costs while still providing expertise, and an external advisory network lets you pay only for specialties at the expense of central coordination. Match the model to your complexity and willingness to fund ongoing governance.

Core professionals form the backbone of an effective plan. Typical roles include a financial planner for cash flow and retirement income, a CPA for tax strategy and compliance, an estate attorney for trust strategies, a trustee or corporate trustee for fiduciary administration, an investment manager for portfolio construction, a philanthropic advisor for giving strategy, and a family facilitator for communication and education.

Assign a coordinator to keep documents, calendars, and decisions aligned; that role turns discrete advice into a working plan by tracking deliverables, updating legal documents, and convening reviews. Prefer fee-only advisors for clearer incentives and transparent billing, and avoid commissions or undisclosed revenue sharing that can cloud recommendations. Use your advisory model to implement the legal vehicles and distribution policies you established earlier. For guidance on advisor selection and services, see our resources at Financial Advising, Willow Financial.

5. Run your first family meeting and prioritize the next-step action plan

A meeting turns plans into action when participants arrive prepared and focused. Use a pre-meeting checklist: gather estate documents and recent account statements, write a one-paragraph scope statement that defines what you will and will not decide, confirm who will attend and their roles, and select a neutral facilitator to keep time and manage conflict. Preparing ahead raises the odds that the session produces clear decisions rather than confusion.

Follow a tight agenda that begins with story and values, then moves to education and decisions. A useful sequence is opening story and shared values (10–15 minutes), objectives and ground rules (10 minutes), an education module (15 minutes), proposals and discussion (20 minutes), action owners and deadlines (15 minutes), and a close with the next meeting date (5 minutes). Start values-first facilitation to build stewardship and alignment rather than imposing rules. For practical meeting formats and sample agendas, consult the guide to designing an effective family meeting.

Short education modules help heirs act responsibly by covering financial basics and staged governance scenarios. Offer 20-minute financial literacy sessions, stage role-play trustee decisions, and outline mentoring plans for key successors. End each module with a concrete ask, such as practice a decision, review a statement, or mentor a sibling, so learning converts into ownership.

After the meeting, lock in owners and a 90-day action plan with clear deadlines and accountability. A concise plan might include updating beneficiaries (owner: executor, due 30 days), drafting the family constitution (owner: council chair, due 60 days), reviewing annual gift allowances with the CPA (owner: tax advisor, due 45 days), and scheduling the next family meeting (owner: facilitator, due 90 days). Immediate actions you can take are scheduling the meeting, gathering five recent account statements, and nominating a facilitator or requesting a fee-only second opinion from a trusted planner.

Family wealth planning: next steps for retirement

Your retirement plan succeeds when the family moves together. Start by defining shared goals and a retirement mission, then establish a governance framework so decisions remain steady when markets or emotions rise. Align legal and tax tools to protect income and ease transfers, and choose an advisory model that fits your complexity and budget. For next-step resources, you can visit the Willow Financial page.

Required minimum distributions can lead to large tax bills or stiff penalties if they are overlooked. Start
with a few simple yes/no questions: what year were you born (SECURE 2.0 moved the baseline to age 73
for many), which account types you hold (traditional IRA, 401(k), 403(b), and similar plans), whether you
are still working and your employer’s plan allows a delay, and whether you own 5 percent or more of the
business sponsoring the plan.

What you need to know

Deadlines matter. The first required minimum distribution is due by April 1 of the year after you reach the
required age, and all subsequent RMDs are due by December 31 each year. Delaying the first distribution
can create the April 1 trap: two distributions in one calendar year can push taxable income into a higher
bracket, and missed or incorrect distributions risk an excise tax. Assemble the inputs you need before you
run the math so timing choices are deliberate.

Do you need to take an RMD this year?

Quick checklist:

Generally, you can take your first RMD by April 1 of the year after you reach RMD age, or you may choose
to take it by December 31 of the year you reach that age to spread taxable income across two years.. If
you delay, you will also owe the 2027 RMD by December 31, 2027. Two distributions in the same calendar
year can raise taxable income enough to move you into a higher bracket, so weigh the timing decision
carefully.

Before you run any calculations, gather exact inputs: prior-year December 31 balances, birthdates for you
and your spouse, the types of plans, current beneficiary information, and any pending rollovers or
conversions. Custodians often provide year-end balances on request.

How to calculate your RMD, step by step

Use this formula for each account: divide the prior-year December 31 balance by the life-expectancy
factor for your age this year. The Uniform Lifetime Table applies to most account owners, while the Joint
and Last Survivor Table applies when your spouse is the sole beneficiary and more than ten years
younger. Life-expectancy factors change annually, so consult IRS Publication 590-B or a current life- expectancy table for authoritative factors.

  1. Gather the prior-year December 31 balance for the specific account.
  2. Determine which IRS life-expectancy table applies (Uniform Lifetime Table or Joint and Last Survivor
    Table).
  3. Find the life-expectancy factor for your age this year on the appropriate table.
  4. Divide the account balance by that factor to compute the RMD for the account.
  5. Compute RMDs for each account separately, then aggregate where allowed (traditional IRAs may be
    aggregated; employer plans must be satisfied per plan). Schedule distributions and document
    instructions with custodians

Examples make the math concrete. For a 73-year-old with a year-end balance of $250,000 and a factor of
26.5, divide 250,000 by 26.5 for an RMD of about $9,434. For a 75-year-old with $500,000 and a factor of
24.6 the RMD is roughly $20,325, and for an 80-year-old with $300,000 and a factor of 20.2 the RMD is
about $14,851.


Calculate each account’s RMD separately, then decide how to take distributions. You may aggregate
distributions from traditional IRAs and take a combined total from a single IRA, but employer plans such
as 401(k)s must be satisfied separately for each plan. A calculation tool can pull year-end balances, apply
the proper table, and show per-account and aggregate totals.

Which accounts trigger RMDs and how inherited plans differ

Certain retirement accounts require withdrawals once you reach the required beginning age. Common
accounts that trigger required minimum distributions include traditional IRAs (including SEP and SIMPLE
IRAs) and workplace plans such as 401(k)s and 403(b)s. Confirm plan rules for profit-sharing and other
defined contribution arrangements.


An exception is the Roth IRA: the original owner does not take lifetime RMDs. However, Roth 401(k)
balances do require distributions unless rolled into a Roth IRA. If you plan to roll a Roth 401(k) into a Roth
IRA, confirm whether the receiving custodian accepts the rollover.


When someone inherits an account, distribution rules depend on the beneficiary type. Beneficiaries
generally fall into categories such as surviving spouse, eligible designated beneficiaries, and non-spouse
beneficiaries who are generally subject to the 10-year rule. A surviving spouse can treat the account as
their own, roll it into their own plan, or remain a beneficiary and delay required distributions until the year
the decedent would have reached the RMD age.


Inherited Roth IRAs still follow beneficiary distribution rules even though withdrawals may be tax free.
Consolidating legacy IRAs with a single custodian often simplifies year-end balance tracking and makes
qualified charitable distribution planning easier, but confirm whether the receiving employer plan accepts
rollovers before moving funds. Rollovers do not satisfy required minimum distributions, so plan timing
accordingly.

Missed distributions and penalties, plus how to fix them

Missing an RMD can trigger a steep excise tax. The penalty used to be 50 percent, and SECURE 2.0
reduced the excise tax to 25%, and to 10% if corrected within the applicable correction period as defined
by the IRS. Waiver of the penalty is subject to IRS approval based on reasonable cause.
To correct a missed RMD, calculate the shortfall, take the corrective distribution for that prior year, and
report it properly. File Form 5329 and attach a letter of explanation if you request abatement; the IRS can
waive the excise tax when you demonstrate reasonable cause and prompt action. Remember that a
corrective distribution for a prior year does not satisfy the current year’s required withdrawal, so plan for
both amounts if needed.


For example, a $4,000 missed RMD would have carried a 25 percent penalty of $1,000 under the prior rate, while the reduced 10 percent penalty would be $400. Prevent misses with concrete controls: set calendar reminders for December 31 and April 1, authorize your custodian to make recurring year-end distributions, use automated monitoring tools with alerts, and have an advisor review your withdrawal plan annually.

Five tax-smart strategies and how bucket planning reduces RMD spikes

When you face required minimum distributions, the goal is to thoughtfully manage the timing and
character of taxable income based on your individual circumstances.. These strategies may help manage
the tax impact of RMDs and, depending on your broader income picture, may also affect Medicare
premium surcharges (IRMAA) and the taxation of Social Security benefits.

Qualified Charitable Distributions (QCDs)

1. Make direct IRA-to-charity transfers to satisfy RMDs without generating taxable income. QCDs are
available beginning at age 70½, must be sent directly from the custodian to a qualified public charity,
and cannot fund donor-advised funds or private foundations. Use QCDs in years when you plan to give
to reduce taxable income. For practical steps on charitable giving from retirement accounts, see our
post: STOP WRITING CHECKS TO CHARITY! Willow Financial

2. Targeted Roth conversions before RMD. Convert traditional IRA dollars to a Roth in lower-income years
to remove that money from future RMD calculations. If you’re subject to an RMD for the year, you
generally need to satisfy the RMD requirements first before completing certain transactions (including
some conversions). Confirm the ordering rules with your custodian and tax professional.. Conversions
increase current-year taxable income, so model the tax cost and sequence conversions to avoid
pushing you into a higher bracket. Conversions can shift when taxes are paid and may reduce future
RMD amounts, but they increase taxable income in the year of conversion.

3. Plan rollovers. Rolling IRAs into an employer 401(k) can delay RMD treatment if the plan permits, while
rolling Roth 401(k) balances into a Roth IRA can eliminate lifetime RMDs for the original owner. Confirm
plan rules and timing before executing a rollover because employer plans differ.

4. Timing and sequencing. Avoid creating two large distributions in the same calendar year and sequence
withdrawals across accounts to smooth taxable income. Use low-income years for conversions and
spread withdrawals to limit bracket creep and the income-related monthly adjustment amounts
(IRMAA) for Medicare premiums. Model different sequences to see how they affect taxes over time.

5. Bucket planning and account sequencing. Separate near-term cash, intermediate taxable investments,
and long-term tax-advantaged growth so you can draw from the most tax-efficient source each year.
Hold taxable assets for early needs, convert modest IRA amounts in low-tax years, and reserve IRA-to charity transfers for years when you plan to give. This approach is designed to help manage liquidity so
that RMDs may be funded from more stable assets during market downturns, depending on portfolio
structure and market conditions.

Practical RMD checklist, timeline, and when to call an advisor

Turn strategy into routine with a calendared workflow. In January gather prior-year statements, note
December 31 balances for each account, and slot time to discuss Roth conversion ideas with your tax
professional. Document beneficiary designations and confirm plan rules so year-end work is straightforward.


In spring decide whether to take your first required minimum distribution in the year you reach RMD age or delay to April 1 of the following year, and mark both deadlines on your calendar. If you delay, model how two distributions in one year affect taxable income and Medicare premiums. Schedule distributions early to avoid processing delays.

In summer run tax projections to evaluate tradeoffs of partial Roth conversions or additional withdrawals
across different years, recognizing that outcomes depend on future tax rates and individual
circumstances. Copy this checklist into your calendar or share it with your custodian.

For additional reading and step-by-step resources, explore our Financial Planning collection for practical
checklists and guides. Call your custodian or a fee-only advisor when plan rules are unclear, you hold
accounts at multiple institutions, or inherited accounts use different payout tables. Reach out before a
large Roth conversion or qualified charitable distribution, or if projected withdrawals push you into a
higher tax bracket.

Required minimum distributions don't have to create surprise tax bills. Confirm whether you must take an
RMD this year and compute each amount using the prior-year December 31 balance divided by the life expectancy factor for your age. Keep in mind that different account types and inherited plans change the
calculation and timing.

Take the next step: pull last year’s December 31 statements for each retirement account and calculate
your RMDs, or schedule a consultation to discuss your situation and determine whether planning
strategies may be appropriate for you.. To book a focused 30-minute RMD planning session, schedule a
meeting to discuss your situation and determine whether certain planning strategies may be appropriate.
We can review assumptions and coordinate with your tax professional.

Let’s be honest.

Very few people are sitting at their kitchen table writing checks anymore. Most charitable giving today comes straight out of a checking account automatic draft, online donations, recurring monthly gifts. It’s easy, it feels good, and it supports causes we care deeply about.

But just because something is easy doesn’t mean it’s the most efficient way to give.

If you have appreciated investments especially employer stock, you may be unintentionally making generosity harder on yourself than it needs to be.

Why how you give matters

Most people focus on how much they give to charity. That’s important. But how the gift is funded can make a meaningful difference in both taxes and day-to-day cash flow.

When gifts come from income, that money is first earned, taxed, and then donated. For many families, that approach quietly puts pressure on monthly cash flow especially in years when giving is consistent and meaningful.

There may be a more thoughtful way to structure those gifts.

Appreciated stock: an overlooked opportunity

Appreciated stock is simply an investment that is worth more today than when it was acquired. For many people we work with, that includes Walmart stock, particularly shares that vested through Restricted Stock Units over time.

Walmart stock has increased significantly over the past year, and we often see families holding shares with sizable built-in gains. At the same time, charitable donations continue to come directly out of checking accounts.

That mismatch is where opportunity often lives.

A real-world example

We recently met with a client who was donating $12,000 per year to their church and another $4,000 to other local non-profits. The money was coming straight from their checking account each month.

Meanwhile, they held Walmart stock that had vested in 2024 and appreciated meaningfully. Selling those shares would have created a large capital gain. And like many people, they mentioned something that felt familiar:

“We’re starting to feel a little tight on cash at the end of the month.”

By stepping back and looking at the full picture, we identified another way to fund their generosity.

Instead of donating cash, the client donated appreciated Walmart stock directly. The result?

· The church received the full value of the gift

· The client avoided creating additional capital gains

· Monthly cash flow improved by roughly $1,300 per month

Same generosity. Better structure.

Why donating appreciated stock can be so effective

When long-term appreciated stock is donated directly to a qualified charity:

· The charity can typically sell the stock without paying taxes

· The donor may receive a charitable deduction for the full market value, depending on personal circumstances

· The donor avoids realizing capital gains that would have occurred if the stock were sold first

In simple terms, this approach can allow people to give more efficiently while preserving flexibility in their own finances.

Looking for simplicity? Consider a Donor-Advised Fund

For some families, donating directly to multiple charities using stock can feel complicated. That’s where a Donor-Advised Fund can be helpful.

A Donor-Advised Fund allows you to:

· Donate appreciated stock in one transaction

· Receive the charitable deduction in the year of the contribution

· “Bundle” or front-load giving in higher-income years

· Distribute grants to charities over time at your own pace

It can be a clean, simple way to align tax planning with long-term charitable intent.

An important warning before you move forward

This strategy is not right for everyone.

If you donate stock that has only been held for a short period of time generally less than one year the tax deduction may be limited to what you originally paid for the stock, not its current value.

That’s why it matters where the stock came from, when it vested, and how long it has been held. Shares from long-held Restricted Stock Units often work well. Other situations may not.

Details matter here, and assumptions can be costly.

This isn’t about giving less

To be clear, this is not about telling people to stop giving to charity. It is also not about giving more but instead maximizing the amount that you are already donating.

It’s about being intentional.

For many families, donating appreciated investments instead of income can:

· Support causes they care deeply about

· Reduce unnecessary tax friction

· Create breathing room in monthly cash flow

Final thought

If you are charitably inclined and hold appreciated stock funding gifts from your checking account may not be your most thoughtful option.

We are not telling you to stop giving. We are encouraging you to give in a more tax-efficient manner.

Before making any changes, review your situation with a financial advisor and tax professional. If you have questions about whether donating appreciated stock or using a Donor-Advised Fund could fit into your charitable plan, please reach out to our team. We are always happy to help.

Households that have made charitable giving a central part of their financial strategy will want to take notice of a significant change taking effect next year. The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduces new limits on the deductibility of charitable contributions—rules that could reduce the tax benefits for many individuals who itemize. With year-end planning underway, now is the time to reassess your giving strategy under this new landscape.

What’s Changing for Households that Itemize

Beginning in 2026, charitable contributions will only be deductible to the extent they exceed 0.5% of a taxpayer’s adjusted gross income (AGI). This floor applies across all types of contributions, regardless of whether the gift is in cash, appreciated securities, or other property.

Example Household

Consider a household receiving $55,000 in Social Security benefits, a $65,000 pension, and $70,000 in IRA distributions—resulting in a total AGI of $190,000. This household gives $30,000 each year to charity and regularly itemizes deductions.

Under the new law, the first 0.5% of AGI—$950 in this example—is not deductible. This means their deductible charitable amount drops from $30,000 to $29,050. While the impact may seem small in absolute terms, over many years this change reduces the overall tax efficiency of sustained giving.

Why 2025 May Be a Critical Year for Strategic Giving

For households using donor advised funds (DAFs), 2025 presents a key planning opportunity. The current rules still allow full deductibility of charitable contributions (up to the existing AGI limits) without the 0.5% floor. At the same time, individuals over age 65 benefit from an increased standard deduction and, in some states, enhanced state and local tax (SALT) benefits.

This creates a window to bundle multiple years of giving into 2025. By doing so, households can exceed the deduction threshold this year, make a sizable contribution to a DAF, and still take the standard deduction in 2026—a year in which no new charitable giving would be needed.

Additionally, those holding appreciated assets—such as stock or mutual funds—can donate those positions to a DAF and avoid capital gains tax while preserving the full deduction value under 2025’s more favorable rules.

Next Steps: Reassess Your Giving Plan Before Year-End

With the One Big Beautiful Bill Act taking effect in 2026, this year offers a final opportunity to give under more favorable deduction rules. For households who give regularly—or are considering significant contributions—now is the time to review your strategy.

Before December 31, 2025, meet with your financial advisor and tax professional to determine whether making a charitable contribution this year aligns with your broader financial and tax goals. A well-timed gift, especially when using tools like donor advised funds or appreciated assets, could offer meaningful tax savings while supporting the causes you care about most.

Did you know Northwest Arkansas has the 22nd fastest population growth rate in America?¹

Bentonville is home to Walmart’s headquarters, and thanks to the corporation’s continued influence on housing demand, this area of NWA is an especially attractive market for real estate investors. Aside from Walmart, other tech startups and large corporations operate in the area, further driving population growth and demand.

For executives, particularly those looking to divest some appreciated stock or concentrated equity positions, investing in NWA real estate may be an appealing option. Not only does it enable you to invest in a tangible piece of property, but it also creates an opportunity to benefit from the region’s continued growth.

Let’s take a look at what’s going on in NWA’s real estate market for 2025 and beyond.

2025 Housing Market Trends

Like most other markets in the country, NWA experienced a Covid-era boom in housing demand, which led to a lack of inventory and diminishing days on market. In 2024, Benton County’s average active listings were down 7.8% from 2019. In the first half of 2025, however, it looks like the market is finally course-correcting, with a 16.1% year-over-year increase in average listings per month.²

This change of pace indicates that more sellers are ready to enter and participate in the market. With more inventory, plus longer average days on market (upwards of 70 days on average), buyers are starting to regain the upper hand.² As an investor, this may give you more negotiating power in purchasing a property with favorable terms.

Drew Taylor of Taylor Team Homes has observed this shift firsthand: “We have seen an ability to negotiate more with the right, motivated sellers. The price you paid for a property is forever. The interest rate is not. Many investors now are able to negotiate on the price more and plan for a refinance later to improve their cash flow and returns.”

Similarly, home values aren’t spiking like they did between 2020–2022, but they continue to rise at a healthy, sustainable pace. The price-per-square-foot is up 7.7% year-over-year—indicating a gradual appreciation in property value, as opposed to the rapid (yet unsustainable) growth we saw just a few years ago.²

Predictions for the remainder of 2025 suggest that modest year-over-year growth will continue. This assumption is supported by the area’s relatively strong job market, growing population trends, and ongoing demand for rentals.

Potential Barriers to Entry

Those interested in purchasing property as an investment should consider the potential challenges—especially when getting started.

Lending requirements tend to be stricter for investment properties than primary residences. Expect to put down 20% or more and maintain a high credit score. Mortgage rates are typically higher for investment properties as well, since they’re considered riskier loans.

According to Taylor, investors face several key obstacles: “Challenges include structuring the financing, finding tenants, managing the property, and coordinating improvements/repairs.”

Once you have one property up and running, however, acquiring the funding for future properties may be easier. You may be able to pull equity from the first property to use as a down payment on the next, for example.

You could also be up against larger corporations and developers, which tend to scoop up apartment complexes or plots of land. Even small-scale “flippers” can make the housing market more competitive for investors and homeowners alike.

Getting Started: Define Your Investment Strategy

Before diving into the market, it’s crucial to establish clear investment criteria. Taylor recommends that “investors often clarify a ‘buy box’ when they start investing. ‘Buy box’ means a set of criteria to make searching for investment easier. My buy box is multi-family property that are duplexes, triplexes, or fourplexes in Class C and Class B neighborhoods. Other investors may want single family homes within walking distance of an elementary school. Either way, that clarity on a ‘buy box’ makes it easier for the investor to know if something is a potential fit.”

The Case for Professional Property Management

One often-overlooked aspect of real estate investing is property management. Taylor emphasizes the importance of staying current with market trends: “Many investors choose to hire a property management company to ensure that their rents rise alongside the market rents. Market rents have risen quickly, yet many of the self-managing property owners have not been aware of these changes and have lost out on returns. At Cedar Oaks Management, we are able to help take care of the hassle of the management side and help the rents stay with the market, reducing the unknowns of buying real estate.”

Interested in Real Estate Investing?

If you’ve already built substantial wealth and are looking to diversify your portfolio, real estate investing may be worth considering. Before researching properties, consider what sort of property owner you’re interested in being. Unlike other intangible assets, a property requires maintenance and recurring costs to keep its value growing.

To talk more about the ins and outs of investing in Northwest Arkansas’ real estate market, feel free to reach out to our team today.

Disclaimer: This content is for educational purposes only and should not be considered personalized investment advice. Individual circumstances vary, and executives should consult with qualified financial and tax professionals before making investment decisions.

Sources:

  1. https://talkbusiness.net/2025/03/census-northwest-arkansas-benton-county-remain-fastest-growing-in-state/
  2. https://www.nwalook.com/mid-year-review-of-northwest-arkansas-real-estate/

This blog was originally posted to Pathway by Willow.

While portfolio growth is a good indicator that your investment strategy is working, having highly appreciated stock can put you between a rock and a hard place—either sell and take a big tax hit or hold indefinitely and risk exposing your portfolio to additional volatility.

Fortunately, there are a few strategic ways to manage appreciated stock that don’t involve paying more tax than necessary. Whether your gains come from long-held company shares, a concentrated position, or just successful stock selection, below are some appreciated stock strategies to consider.

The Challenge With Selling Appreciated Stock

When you sell appreciated stock within a taxable account, you likely trigger capital gains tax. This taxes the difference between what you paid for the stock (your basis) and its fair market value (FMV) when you sell. Depending on how long the stock was held before being sold, your capital gains tax could be as high as your ordinary income tax rate. For long-term capital gains (meaning the stock was held for at least a year), the tax rate tends to be lower, usually up to 20%, but as low as 0% depending on your other taxable income.

And for those in higher income brackets or experiencing a liquidity event (such as selling a business or exercising stock options), that tax bill can be even steeper. That’s why it’s important to have a plan in place before you sell.

Strategy #1: Donate to a Donor-Advised Fund (DAF)

As we explored in our previous article, a donor-advised fund (DAF) can be a powerful way to reduce your tax liability (particularly when it comes to appreciated assets) and support causes you care about.

Rather than sell your shares outright, pay capital gains tax, and donate what remains of the proceeds, a DAF enables you to make charitable contributions out of your appreciated stock—without triggering a taxable event. Not only can you potentially receive a charitable deduction for the full FMV of the stock, but you may be able to mitigate some of that capital gains tax liability.

Strategy #2: Gifting to Family

If you have older parents or young adult children, you might consider gifting appreciated stock to those family members in lower tax brackets. This strategy is most effective when your loved ones have a lower taxable income and aren’t subject to the same capital gains tax rate as you are. They will inherit your cost basis, but should they choose to sell the stock right away, their total tax liability should be lower (since they’re subject to less capital gains tax than you).

If you do consider this avenue, just be mindful of annual and lifetime gift tax limits. In 2025, you can give up to $19,000 per person without triggering gift reporting requirements.

Strategy #3: Strategic Selling

If you prefer to sell your shares outright, consider waiting to sell until you’re experiencing a lower-than-usual income year. Or, space the sale of multiple appreciated assets across different tax years. You can also pair it with tax-loss harvesting in other parts of your portfolio to offset gains.

Preserving the Value of Your Appreciated Stocks

To see what works best for your unique situation, explore your options with a financial advisor who can help you evaluate what fits your broader goals. If you’re curious about using appreciated stock to fund a donor-advised fund or want help building a tax-savvy giving strategy, we’re here to help.

Disclaimer: This content is for educational purposes only and should not be considered personalized investment advice. Individual circumstances vary, and executives should consult with qualified financial and tax professionals before making investment decisions.*