If you are reading this, you likely spent decades building your assets. Our job is to help you ensure they survive the transfer to the next generation intact.
This week, we are tackling the single most common "kitchen table" mistake we see families make: Transferring the house to the kids too early.
Let's dive in.
LEGACY TIP OF THE WEEK
The "Digital Master Key"
Does your spouse (or Executor) know the passcode to your phone? In 2026, most brokerage accounts, bank apps, and even utility bills require Two-Factor Authentication (2FA) sent to your mobile device. If you pass away or become incapacitated, and your family cannot unlock your phone, they are locked out of everything, even if they have a valid Power of Attorney. Apple and Google are notoriously difficult to deal with after a death.
Write down your phone passcode and place it in your physical safe or fireproof box today. Do not email it.
The "Step-Up in Basis": Why Gifting is Expensive
You may have heard friends say: "Iâm just going to sign the deed over to my son now so we don't have to deal with probate later."
Please stop. While this avoids probate, it often triggers a massive Capital Gains Tax bill for your son later. To understand why, you need to understand "Cost Basis."
The Rules of the Road:
-
Cost Basis: This is what you originally paid for an asset (e.g., you bought your home in 1990 for $100,000).
-
Capital Gain: This is the profit when you sell (e.g., the home is now worth $800,000. The gain is $700,000).
Scenario A: You Gift the House While Alive If you give the house to your son today, the IRS says he takes over your Cost Basis.
-
He owns the house. His basis is $100,000.
-
If he sells it for $800,000, he owes taxes on $700,000 of profit.
-
Estimated Tax Bill (Fed + State): ~$140,000.
Scenario B: He Inherits the House After You Die If he inherits the house through a Trust, he gets a "Step-Up in Basis."
-
The IRS "resets" the value of the house to what it was worth on the day you died.
-
His new basis is $800,000.
-
If he sells it immediately for $800,000, his profit is $0.
-
Estimated Tax Bill: $0.
Most people try to save $3,000 in probate fees and end up costing their family $140,000 in taxes.
You want a structure that removes the asset from your estate for protection purposes (like a properly drafted Bulletproof Trust) but retains the "Power of Appointment" so your heirs still qualify for the Step-Up in Basis. This is the "Goldilocks" zone of estate planning.
CASE STUDY
The "Joint Owner" Nightmare
(Anonymized from a recent client review in Ohio)
Margaret (78) wanted her daughter, Sarah, to help pay her bills. To make it easy, Margaret added Sarah as a "Joint Owner" on her checking account, which held $150,000.
Two years later, Sarah caused a serious car accident. She was sued for $500,000. Because Sarah was a legal "owner" of the checking account, the victim's lawyer targeted Margaretâs $150,000 to pay Sarahâs debt.
The court allowed the seizure. Margaret lost her savings because of her daughterâs accident.
Never make a child a "Joint Owner" of your assets just for convenience.
The Better Path: Use a Power of Attorney or name them as a Trustee. This gives them the authority to sign checks for you, but they do not own the money. Therefore, their creditors cannot touch it.
Not sure if this structure fits your situation? Every family is different. What works for a married couple in Texas looks different from a widow in New York or a business owner in California.
If you want to talk through how this might apply to your specific circumstances, we offer a free 45-minute clarity call with an asset protection specialist. Just answers to your questions and a clear sense of whether this path makes sense for you.
â Schedule Your Free Clarity Call â
What to Ask Your CPA This Month
Tax season is here. Before you file your 2025 return, ask your accountant these three plain-English questions:
-
[ ] "Did we file Form 709 for any gifts I made last year?" (If you gave anyone more than $19,000 in 2025, you likely need to file this informational return. No tax is usually due, but failure to file starts a penalty clock.)
-
[ ] "Am I close to the IRMAA surcharge brackets?" (If your income is just over a specific threshold, your Medicare premiums could double next year. Sometimes, deferring a small amount of income can save you thousands in premiums.)
-
[ ] "If I have a Trust, does it need to file a separate 1041 return?" (Many Revocable Trusts use your personal SSN, but Irrevocable Trusts often need their own tax ID and filing. Don't assume; ask.)
FROM THE INBOX
Q: "I have a Revocable Living Trust. Doesn't that protect me if I get sued?"
A: This is the most common myth we encounter. The answer is No.
A Revocable Living Trust (RLT) is fantastic for avoiding probate (the court process after death) and keeping your affairs private. However, because you can "revoke" it at any time and take the money back, the law considers the money yours. If a judge orders you to pay a creditor, they can order you to revoke the trust and hand over the cash.
For asset protection, shielding wealth from lawsuits, nursing home spend-down, or creditors, you generally need an Irrevocable Trust. The key difference is that in an Irrevocable Trust, you give up the legal right to demand the principal back, which breaks the link between you and the liability.
HOW DID YOU LIKE THIS WEEK'S NEWSLETTER?
Your feedback helps us make this briefing even better.
If you found this intelligence valuable, please forward it to a friend or family member who needs to protect their legacy. We grow through your word-of-mouth.
Questions? Reply to this email or contact us at legalteam@lambergg.com
DISCLAIMER: This newsletter is for educational purposes only. Lambergg provides asset protection education, not legal advice. The information presented reflects general principles and may not apply to your specific situation. Tax laws, estate planning rules, and asset protection strategies vary by state and change frequently. Always consult with a qualified attorney and tax professional for advice tailored to your individual circumstances. Nothing in this briefing should be construed as creating an attorney-client relationship.
What is your biggest worry regarding your children's inheritance right now?
Is it their spending habits? Their spouse? Or the taxes?
Reply to this email and let us know. We read every single response personally, and it helps us decide what to cover next Friday.
Until next week, protect what matters.
The Lambergg Team
