How can an FLP fit into your overall estate planning strategy?

“Cross-functional” sales teams that collaborate with other departments often perform more effectively than siloed ones. By providing feedback and support, employees with varied skill sets and knowledge bases can help your sales team create more holistic sales strategies, better align product offerings with customer needs and efficiently adapt to market changes. Here’s how sales can leverage the expertise of marketing, product development, customer service, finance and other internal stakeholders. Fighting silos A cross-functional team is any group of employees from different departments brought together to solve a problem or pursue a goal. Your company might assemble such teams to develop new products or services, implement technology upgrades, and complete short-term projects. However, the cross-functional approach really shines when applied to sales and marketing. Even though these departments are closely connected, they often operate in separate spheres. Silos can also exist within the sales team, where individuals work largely on their own and share limited information. Many salespeople spend their time interacting with prospective customers or clients. They might only “come up for air” to share information and experiences at sales meetings or in conversations with managers. This can result in missed opportunities to communicate insights on customers, prices and other issues. Team members By building a cross-functional sales team, you can eliminate such silos. You should aim to create an environment where employees feel comfortable sharing information and working together. Seek early buy-in from employees who communicate well and are open to collaboration. They can help you promote the concept and encourage broader employee buy-in. Your team will obviously need to include members of both the sales and marketing departments. But don’t stop there. Someone from your IT department could help recommend tech solutions for sales department challenges. A customer service rep might be able to provide insights into how customers are likely to respond to changes in product features. A finance team member could weigh in on profitability by product or customer. Cross-functional sales teams don’t require complex leadership structures. In fact, appointing a team leader from within the group can encourage open participation and accountability. Other benefits The advantages of forming a cross-functional sales team extend beyond improving sales results: Such teams can infuse fresh perspectives into all your departments, inspire greater communication companywide and support more consistent decision-making. Over time, this approach can lead to clearer visibility into what’s driving revenue and profitability. If you’re looking to better align sales with your overall business strategy, contact us. We can help you identify where cross-functional collaboration will likely pay off. © 2026 

Generally, each year you can contribute up to the annual limit to a traditional or Roth IRA (or a combination of the two). But once the contribution deadline has passed, the opportunity to contribute for that year is lost forever. The deadline for 2025 IRA contributions is April 15, 2026. You may be eligible to deduct all or part of your IRA contribution and save taxes on your 2025 return. But even if you can’t claim a deduction, contributing can still be beneficial. How much can you contribute? For 2025, the IRA contribution limit is $7,000. If you’re age 50 or older, you can make an additional $1,000 catch-up contribution. Generally, contributions can’t exceed the IRA owner’s earned income. However, spousal IRAs allow contributions to be made to an IRA in a nonworking spouse’s name based on the working spouse’s earned income. The contribution limit applies to traditional and Roth IRAs on a combined basis. So, assuming you’re eligible, you can contribute $7,000 to a traditional IRA or $7,000 to a Roth IRA — or you can split the limit and, say, contribute $5,000 to a traditional IRA and $2,000 to a Roth (or whatever split you prefer that doesn’t exceed $7,000). Are you eligible to deduct your contributions? Deductible traditional IRA contributions reduce your current tax bill. Earnings in the IRA are also tax deferred. However, every dollar you withdraw is taxed (and subject to a 10% penalty before age 59½, unless an exception applies). You can make a fully deductible contribution to a traditional IRA if you (and your spouse, if you’re married) aren’t an active participant in an employer-sponsored retirement plan. But if you (and/or your spouse) are an active participant in an employer plan, your deduction might be partially or fully phased out. The phaseout applies if your modified adjusted gross income (MAGI) exceeds certain levels that vary from year to year by filing status. For 2025, the deduction phases out over the following MAGI ranges: If you’re single or a head of household: $79,000 to $89,000. If you’re married filing jointly and you’re covered by an employer plan: $126,000 to $146,000. If you’re a joint filer and not actively participating in an employer retirement plan but your spouse is: $236,000 to $246,000. If you’re married filing separately and lived with your spouse at any time during 2025: $0 to $10,000. If your MAGI is in the applicable range, you can make a deductible contribution equal to a portion of the $7,000 contribution limit. (The specific amount depends on where your MAGI falls within the range.) If it exceeds the applicable range, you can’t deduct any IRA contribution. Are you eligible to make Roth IRA contributions? Contributions to a Roth IRA aren’t deductible. However, withdrawals from a Roth IRA are tax-free as long as the account has been open at least five years and you’re age 59½ or older. This means that growth in the account is never taxed as long as you meet those two requirements. There are income limits on who can make Roth IRA contributions. For 2025, the ability to contribute phases out over the following MAGIs: If you’re single or a head of household: $150,000 to $165,000. If you’re married filing jointly: $236,000 to $246,000. If you’re married filing separately and lived with your spouse at any time during 2025: $0 to $10,000. You can make a Roth contribution equal to a portion of the $7,000 contribution limit if your MAGI falls within the applicable range. (The specific amount depends on where your MAGI falls within the range.) But you can’t make any Roth contribution if it exceeds the top of the range. Should you make nondeductible traditional IRA contributions? If you’re ineligible to make Roth IRA contributions or deductible traditional IRA contributions because your income is too high, a nondeductible traditional IRA contribution can be beneficial. While it won’t reduce your 2025 taxes, the contribution can grow tax-deferred. When you take qualified withdrawals in retirement, only the portion attributable to the growth will be taxed. The portion attributable to your contribution will be tax-free because the contribution was made with income that had already been taxed. If you don’t already have a traditional IRA, you can use a nondeductible contribution to create a “backdoor” Roth IRA. You set up a traditional IRA and make a nondeductible contribution to it. Then you can convert the traditional account to a Roth account as soon as the contribution transaction clears. Normally, Roth conversions are taxable. But in this case, the only tax due will be on any growth in the account between the time you made the contribution and the date of conversion. What else is there to consider? Making a 2025 IRA contribution can provide tax savings today or when you take distributions in retirement. And you can benefit from tax-deferred or tax-free compounding. But you need to contribute by April 15, 2026 — even if you file for an extension on your 2025 return. And be sure to indicate that it’s for 2025 and not 2026. Do you have more questions about IRA contributions or other tax-advantaged retirement savings options? Contact us. © 2026 

Most businesses close their books for tax and accounting purposes on December 31 because it aligns with the calendar year. But a calendar year isn’t always the best option. For some companies, choosing a fiscal year end that better reflects their business cycle can improve financial reporting and simplify year-end procedures and tax filing. Here’s what you should know when deciding on the right tax year end for your business. Fiscal-year basics A fiscal year is a 12-month accounting period that doesn’t end on December 31. For example, a company might operate on a fiscal year running from July 1 through June 30. Some businesses use a 52- or 53-week fiscal year. These periods don’t necessarily end on the last day of a month. Instead, they may close on the same weekday each year, such as the last Friday in March. This approach is common in industries where weekly activity cycles are more meaningful than monthly reporting. Using a fiscal year also changes tax filing deadlines. Pass-through entities — including partnerships, limited liability companies and S corporations — generally must file their tax returns by the 15th day of the third month after their fiscal year ends. For example, a business with a June 30 fiscal year end would file its return by September 15. Fiscal-year C corporations generally must file by the 15th day of the fourth month following the fiscal year close. (These correspond to the calendar-year deadlines of March 15 for pass-throughs, which is the 15th day of the third month after December 31, and April 15 for C corporations, which is the 15th day of the fourth month after December 31.) When a fiscal year makes sense Not every business can choose its own tax year. Sole proprietorships typically must use a calendar year because the business isn’t legally separate from its owner, who files an individual tax return based on the calendar year. Other businesses may be able to adopt a fiscal year if they can demonstrate a valid business purpose or qualify for certain IRS elections. In practice, this usually means aligning the tax year with the company’s operating cycle. For seasonal businesses, a fiscal year can provide a clearer view of performance. Construction companies, farms, accounting firms and retailers often experience significant fluctuations throughout the year. Consider a snowplowing company that earns most of its revenue between November and March. A December 31 year end divides one winter season into two tax years, making it harder to evaluate profitability for that period. A fiscal year ending after the winter season may present financial results more accurately than a calendar year would. Businesses that restructure or significantly change their operations may also consider changing their tax year. Doing so generally requires IRS approval by filing Form 1128, “Application to Adopt, Change or Retain a Tax Year.” Companies that change their tax year usually must also file a return for the short period created during the transition. Beyond taxes The benefits of adopting a fiscal year aren’t limited to tax reporting. Choosing the right year end can also make financial reporting and planning easier.  If a company’s busiest months fall late in the calendar year, closing the books on December 31 can disrupt operations and strain accounting staff during an already demanding period. Moving the year end to a slower time can make it easier to perform inventory counts, review contracts and complete financial statements. This can be especially helpful for businesses that rely on detailed job costing or inventory management. Completing year-end accounting tasks when operations are less hectic can reduce errors and improve the financial data that business owners and stakeholders rely on for decision-making. We can help Selecting a fiscal year end involves more than choosing a convenient date. The right year end can streamline reporting, provide more meaningful insights and support better planning. If you’re thinking about a change, contact us. We’ll help you determine the best fit for your operations and guide you through the IRS approval process. © 2026

A new but temporary special depreciation allowance for qualified production property (QPP) was created by last year’s One Big Beautiful Bill Act (OBBBA). It’s available for certain manufacturing-related real property placed in service after July 4, 2025, and before January 1, 2031. Under previous law, taxpayers had to depreciate such property over a 39-year period. The OBBBA allows them to elect a deduction equal to 100% of the property’s adjusted basis in the tax year it’s placed in service — basically, it’s bonus depreciation for certain buildings and production facilities. The IRS recently issued interim guidance (Notice 2026-16) that taxpayers generally can rely on until proposed regulations are published. It clarifies several important issues related to the deduction. Identifying QPP The guidance defines QPP as any portion of nonresidential real property that is: Subject to the Modified Accelerated Cost Recovery System, Used by the taxpayer as “an integral part” of a qualified production activity (QPA, defined below), and Placed in service in the United States or any of its territories. In addition, the property’s construction must begin after January 19, 2025, and before January 1, 2029. Its original use generally must begin with the taxpayer, though certain used property may qualify as QPP under special rules. Property (or a portion of property) is used as an integral part of a QPA if the QPA takes place in the physical space of the property (or a portion of the physical space). Each unit of property (including additions and improvements) must satisfy the integral part requirement on its own, with an exception for “integrated facilities.” Taxpayers can treat multiple properties that operate as an integrated facility on the same piece or contiguous pieces of land as a single unit of property. For example, if a manufacturer constructs a new building to store raw materials and other manufacturing inputs for activities in two factories on the same site, the three buildings constitute a single unit of property for purposes of the integral part requirement. The guidance also includes a de minimis rule: If 95% or more of a property’s physical space satisfies the integral part requirement when the property is placed in service, the taxpayer can elect to treat the entire property as satisfying the requirement. For purposes of determining whether property meets the integral part requirement, property used by a lessee generally isn’t considered to be used by the lessor taxpayer as part of a QPA. The guidance provides exceptions, though, for intercompany leases within consolidated groups and commonly controlled pass-through entities. The guidance specifies several types of ineligible property, including property used for offices, administrative services, lodging, parking, sales activities, research activities, software development or engineering activities, or other functions unrelated to a QPA. Property used to store finished products is also ineligible. Under the guidance, taxpayers may use any reasonable method to allocate a property’s unadjusted depreciable basis between eligible property and ineligible property. The use of square footage, cost segregation data, architectural or engineering plans, process diagrams, or construction invoices to allocate unadjusted depreciable basis to eligible property may be reasonable methods. Taxpayers can also use any reasonable method to allocate the basis for “dual-use infrastructure” that serves both eligible property and ineligible property (such as an HVAC or sprinkler system). Identifying QPAs A QPA is the manufacturing, production or refining of a qualified product that results in a “substantial transformation” of the qualified product (generally, any tangible personal property except a food or beverage prepared in the same building where it will be sold). The guidance explains that “substantial transformation” refers to the further manufacturing, production or refining of the constituent elements, raw materials, inputs or subcomponents into a final, complete and distinct item of property that’s fundamentally different from those original elements, materials, inputs or subcomponents. The guidance interprets the term QPA somewhat broadly. It says that a QPA can include “essential activities” that are critical to the completion of the product (for example, the receiving and storage of raw materials or other inputs to be used or consumed during a QPA). A QPA also includes certain related activities, such as oversight and direction of the manufacturing, production or refining activities that result in the substantial transformation of a qualified product. The guidance includes specific definitions for “manufacturing,” “production,” “refining” and other important terms. Notably, “production” is limited to activities in the agricultural or chemical industries. And that’s not all The interim guidance also includes special rules, election procedures and a safe harbor for property placed in service in 2025 — as well as information about how depreciation must be recaptured and included in ordinary income if a QPP change in use occurs within 10 years after the property is placed in service. We can help you navigate the rules and maximize this new tax break if you’re eligible. © 2026 

When most people think about estate planning, they focus primarily on tangible assets, such as real estate, investments and personal property. However, in some cases, intellectual property (IP) can make up a substantial portion of an individual’s wealth. Proper planning can help ensure that these assets are preserved, accurately valued and transferred according to your wishes. Defining IP IP generally falls into four main categories: patents, copyrights, trademarks and trade secrets. We’ll focus here only on patents and copyrights. They’re protected by federal law to promote scientific and creative endeavors by providing inventors and artists exclusive rights to benefit economically from their work for a certain period. Patents protect inventions, and the two most common are utility and design patents. Under federal law, utility patents protect an invention for 20 years from the patent application filing date. (It typically takes at least a year to a year and a half from the date of filing to the date of issue.) Design patents last 15 years from the patent issue date. Copyrights protect the original expression of ideas that are fixed in a “tangible medium of expression,” typically in the form of written works, music, paintings, film and photographs. Unlike patents, which must be approved by the U.S. Patent and Trademark Office, copyright protection kicks in as soon as a work is fixed in a tangible medium. And copyrights last much longer than patents. The specific term depends on various factors. Valuing and transferring IP Valuing IP is a complex process. Unlike physical assets, the value of IP often depends on future income potential. Valuation may consider factors such as licensing agreements, royalty streams, market demand, brand recognition and comparable sales. Often, a professional appraiser is needed to determine fair market value. Accurate valuation is particularly important for estate tax reporting and equitable distribution among heirs. After you know the IP’s value, it’s time to decide whether to transfer the IP to family members, colleagues, charities or others through lifetime gifts or bequests after your death. The gift and estate tax consequences will likely affect your decision. But you also should consider your income needs, as well as who’s in the best position to monitor your IP rights and take advantage of their benefits. If you’ll continue to depend on the IP for your livelihood, hold on to it at least until you’re ready to retire or you no longer need the income. You also might want to retain ownership of the IP if you feel that your children or other beneficiaries lack the desire or wherewithal to take advantage of its economic potential and monitor and protect it against infringers. Whichever strategy you choose, it’s important to plan the transaction carefully to ensure your objectives are achieved. There’s a common misconception that when you transfer ownership of the tangible medium on which IP is recorded, you also transfer the IP rights. But IP rights are separate from the work itself and are retained by the creator. Working with us If you hold intangible assets, such as a patent or copyright, contact us. We can help ensure that these potentially valuable assets are properly accounted for in your estate plan. © 2026 

Does your business own its real estate in a separate holding company, such as a limited liability company (LLC) or limited partnership? This practice can provide several advantages, including shielding property from your company’s creditors. It can also ease estate planning if, for example, you want to transfer business interests to your children while retaining ownership of the real estate. In addition, there are good tax reasons to separate the two. Let’s take a look. Asset protection and estate planning advantages Owning real estate in a separate legal entity can wall off an operating business from its real estate’s potential liabilities (and vice versa). A creditor who targets your business generally can’t reach real estate held in a separate entity. And if, for example, someone slips and falls in your office, factory or warehouse and sues, holding the property in a separate entity may help protect your operating business’s other assets. Such protection extends to bankruptcy. If your business is forced to file for bankruptcy, creditors typically can’t recover separately owned real estate. However, there’s at least one exception. Real estate you’ve pledged as collateral for a business loan may still be subject to claims by lenders. Owners of real estate in LLCs or limited partnerships also enjoy estate planning and succession flexibility. Let’s say you have two grown children, but only one is actively involved in the business. You can equitably divide assets by transferring the business to the actively involved child and the real estate to the other. Also, gradually gifting interests in a separate entity holding real estate can reduce the value of your taxable estate. Tax matters C corporations that hold real estate can risk unnecessary taxes. Real estate expenses are treated as ordinary expenses on the company’s income statement. If the property is sold, any profit is subject to double taxation: first at the corporate level and then at the owner’s individual level when proceeds are distributed. If you instead own real estate in a pass-through entity, and then lease it to your company, the profit upon sale would be taxed only once — at the individual owner level. Also, your operating business might be able to deduct lease payments so long as the rent is reasonable. To simplify matters, some business owners buy business real estate themselves. However, this can transfer the property’s liabilities directly to owners and put other personal assets — including the business interests — at risk. So it’s generally best to hold real estate in its own limited liability entity. Just make sure your entity carries adequate insurance coverage. Possible downsides Aside from the costs, there are possible downsides to owning real estate separately. For instance, you’ll need to manage separate finances, tax filings and legal structures. But for most small to midsize businesses, the advantages outweigh any disadvantages. Contact us to discuss this strategy and determine what’s right for your situation. © 2026 

Last year’s One Big Beautiful Bill Act (OBBBA) terminated several clean energy tax incentives earlier than previously scheduled. But if you bought an electric vehicle or made certain green home improvements last year, you might be eligible for a tax credit on your 2025 individual income tax return. Remember, tax credits reduce your tax liability dollar-for-dollar (unlike deductions, which reduce the amount of income subject to tax). So tax credits are especially valuable. Did you buy an electric vehicle? If you bought an eligible clean vehicle by September 30, 2025, you may be able to claim one of these tax credits on your 2025 return: New clean vehicle credit. Buyers of new electric and fuel cell vehicles may be able to claim a credit up to $7,500, depending on how the battery components and critical minerals were sourced. Vehicles that meet only one of the sourcing criteria may be eligible for a $3,750 credit. This credit was originally set to expire after 2032. But, under the OBBBA, it expired on September 30, 2025. The maximum manufacturer’s suggested retail price for a vehicle to be eligible for the credit is $55,000 for cars and $80,000 for SUVs, trucks and vans. The vehicle also must have undergone final assembly in North America. In addition, the credit isn’t allowed for vehicles with any battery components from a “foreign entity of concern.” For you to qualify, your 2025 adjusted gross income (AGI) must not exceed $150,000 ($300,000 if you’re married filing jointly and $225,000 if you’re filing as a head of household). Used clean vehicle credit . Buyers of used electric or fuel cell vehicles may be able to claim a credit of up to $4,000 or 30% of the purchase price — whichever is lower — if they bought the vehicle from a dealer. Like the new clean vehicle credit, this credit had been set to expire after 2032 but, under the OBBBA, it expired on September 30, 2025. The maximum purchase price for a vehicle to be eligible for the credit is $25,000. For you to qualify, your 2025 AGI must not exceed $75,000 ($150,000 if you’re a joint filer and $112,500 if you’re a head-of-household filer). Did you make green home improvements? If you made certain home upgrades in 2025, you may be eligible for one of these tax credits on your 2025 return: Energy-efficient home improvement credit. This nonrefundable credit equals up to 30% of qualified expenses to make your home more energy efficient. The maximum credit you can claim for 2025 generally is $1,200. There are no AGI-based limits, but there are credit caps that vary by item. Some examples of 2025 credit limits are $150 for energy audits, $250 per exterior door ($500 total), $600 for windows and $2,000 for heat pumps (superseding the usual $1,200 limit). Before the OBBBA, this credit was scheduled to end after 2032. Residential clean energy credit. This nonrefundable credit equals 30% of the cost of eligible renewable energy systems such as solar, wind and geothermal installations. There generally are no caps or AGI-based limits. Before the OBBBA, this credit was set to end after 2034. Are you eligible for a tax credit? One more clean energy credit you might be able to claim on your 2025 return is the alternative fuel vehicle refueling property credit. You may be eligible if last year you installed equipment at your home to recharge electric vehicles. The credit equals 30% of the installation cost, up to $1,000 per charging port. If you didn’t install a charging port in 2025, it’s not too late. If you install one by June 30, 2026, you potentially can claim the credit on your 2026 return next year. (Before the OBBBA, this credit was also scheduled to expire after 2032.) If you purchased a clean vehicle or made green home improvements and aren’t sure whether you’re eligible for one or more of these credits, contact us. © 2026 

Did you know that you can claim tax deductions for animals that serve a bona fide business purpose? This benefit extends beyond agricultural operations. Working animals in many sectors may qualify. Here are the details. Working animals vs. personal pets A working animal must provide a clear and direct business benefit. Common examples include: Dogs used to deter theft, vandalism or unauthorized entry at a business location, Cats used to control rodents that could damage inventory, equipment or facilities, and Animals used in agricultural operations. In these cases, the animal’s presence directly supports business operations, making related expenses potentially deductible. However, it’s important to distinguish bona fide working animals from those that provide personal companionship or emotional support. If an animal is a part-time worker and part-time pet, you can deduct only the percentage of expenses that correspond to the animal’s working time. For instance, if a dog spends approximately 60% of its time guarding a warehouse and 40% as a pet, only 60% of eligible expenses would typically be deductible. The IRS will likely deny deductions for an animal that’s clearly primarily a household pet. Likewise, service animals for owners or employees aren’t eligible for business deductions. Deductible expenses Many costs associated with the care of a working animal may be deductible as ordinary and necessary business expenses. These include costs for raising, feeding, caring for, training and managing animals used in a trade or business. Examples include: Food and treats, Veterinary care and medications, Grooming necessary for the animal’s role, Training costs related to the animal’s work function, and Supplies such as leashes, collars, bedding and shelter. The deduction applies only to reasonable expenses connected to the animal’s business use. Luxury or purely personal costs may draw IRS scrutiny. It’s important to note that different tax rules apply to farmers, ranchers and professional breeders. In general, farmers may deduct feed, veterinary care and other costs directly associated with the business use of animals. The costs associated with animals used for draft, breeding, sport or dairy purposes are typically capitalized and depreciated, rather than immediately deducted, unless they’re included in inventory. Recordkeeping requirements Proper documentation is key to supporting deductions for working animals. You’ll need to maintain records to demonstrate that the animal performs a legitimate business function, the expenses are ordinary and necessary for your industry, and any allocation between business and personal use is reasonable. Contact us to discuss your situation and assess your eligibility. © 2026 

A Health Savings Account (HSA) can be a valuable asset in your estate. Contributions to an HSA are pretax or tax-deductible, the funds grow on a tax-deferred basis, and withdrawals for qualified medical expenses are tax-free. HSA balances may be carried over from year to year, continuing to grow on a tax-deferred basis indefinitely. Over time, this can allow HSAs to accumulate substantial value (if significant withdrawals aren’t taken to pay medical expenses). But there can be major tax consequences for the designated beneficiary who inherits an HSA. So, if you have an HSA, it’s important to carefully factor it into your estate planning. Breaking down the numbers If you’re covered by a qualified high-deductible health plan (HDHP), you can contribute pretax income to an employer-sponsored HSA — or make deductible contributions to an HSA that you open for yourself — up to applicable limits. For 2026, an HDHP is a plan with a minimum deductible of $1,700 ($3,400 for family coverage) and maximum out-of-pocket expenses of $8,500 ($17,000 for family coverage). Under the One Big Beautiful Bill Act, signed into law July 4, 2025, the definition of HDHP is expanded beginning in 2026 to include bronze and catastrophic plans. You can’t contribute to an HSA if you’re covered by any non-HDHP insurance or enrolled in Medicare. However, if you already have an HSA from a time when you were eligible to contribute, you can continue to withdraw funds tax-free to pay for qualified expenses. For 2026, the annual contribution limit for HSAs is $4,400 for individuals with self-only coverage and $8,750 for individuals with family coverage. If you’re 55 or older, you can add another $1,000. Typically, contributions are made by individuals, but some employers contribute to employees’ accounts. An HSA can bear interest or be invested, growing tax-deferred, similar to a traditional IRA. After age 65, you can take penalty-free distributions to use for nonmedical expenses, but they’ll be taxable. Estate planning implications Because an HSA’s account balance (less any funds used to pay qualified medical expenses) continues to grow on a tax-deferred basis indefinitely, an HSA can provide significant additional assets for your heirs. However, the tax implications of inheriting an HSA differ substantially depending on who receives it. So it’s important to carefully consider your beneficiary designation. If you name your spouse as a beneficiary, the inherited HSA will be treated as his or her own HSA. That means your spouse can allow the account to continue growing tax-deferred and withdraw funds tax-free for his or her own qualified medical expenses. If you name your child or someone other than your spouse as a beneficiary, the HSA terminates, and your beneficiary is taxed on the account’s fair market value. Note, however, that any of your qualified medical expenses paid with HSA funds within one year after death aren’t taxable to the HSA beneficiary. What if your estate is the beneficiary of the HSA? The full amount of the HSA is taxed to you in the year of death. In some situations (for instance, if you’re in a low tax bracket and the beneficiary is in a high tax bracket), this may be a good tax planning strategy. But in others (if you’re in a high tax bracket and your beneficiary is in a low tax bracket), it could be a bad idea tax-wise. As with most tax planning issues, be sure to consider the tax consequences and other relevant factors when making a beneficiary designation. Also, keep in mind that, if you do have qualified medical expenses during your life, it generally will be more tax efficient for you to use tax-free HSA distributions to pay them. You won’t have to tap non-HSA funds for medical expenses, leaving you with more non-HSA assets to pass on to your nonspouse heirs. For those heirs, the income tax treatment of non-HSA assets will typically be more favorable. Have questions? An HSA is a tax-efficient way to fund your health care expenses during your life while helping you build more assets to pass on to your heirs. However, careful planning is critical, especially regarding HSA beneficiary designation. Contact us to discuss how to incorporate an HSA into your estate plan. © 2026