What the new tax law could mean for you

Estate planning is intended to help ensure that your assets are distributed according to your wishes. But circumstances can change in ways that are difficult to predict. A qualified disclaimer allows disclaimed assets to pass from a primary beneficiary to a contingent beneficiary without negative tax consequences. This flexibility can be beneficial in a variety of situations. Planning for disclaimers A disclaimer is an irrevocable, unqualified refusal by a beneficiary to accept a bequest, allowing the property to pass to another beneficiary. Normally, using a disclaimer to direct property to someone else would be considered a taxable gift. But there’s an exception for “qualified” disclaimers. To qualify, a disclaimer must: Be in writing, Be delivered to the estate’s representative within nine months after the transfer is made (or, if the disclaimant is a minor, within nine months after the disclaimant turns 21), Be delivered before the disclaimant accepts the property or any of its benefits, and Cause the property to pass to the deceased’s surviving spouse or to someone other than the disclaimant, without any direction from the disclaimant. This last point is critical and requires some planning on your part. To ensure that the disclaimant doesn’t direct the property’s disposition, the property must pass automatically to a contingent beneficiary according to the terms of your will or trust. Disclaimers in action Here are a couple of examples of situations when qualified disclaimers can provide estate planning flexibility: Scenario 1. Suppose your will leaves a significant inheritance to your daughter, naming a trust for her children’s (your grandchildren’s) benefit as the contingent beneficiary. By the time you die, your daughter has built a substantial estate of her own. If she accepts the inheritance, it will ultimately be taxed as part of her estate. Your daughter can disclaim the inheritance and allow it to pass directly to the trust for her children’s benefit, avoiding double taxation. Before making a disclaimer, however, she should check that it won’t trigger the generation-skipping transfer tax. Scenario 2. Suppose your son is the primary beneficiary of your traditional IRA and your favorite charity is the contingent beneficiary. Your son will have to pay income tax on the distributions, and the account will have to be depleted within 10 years. The distributions could even push him into a higher income tax bracket. And, if your estate’s value exceeds the exemption amount, some or all of the IRA also may be subject to estate tax. If your son is financially secure at the time of your death, he might want to disclaim the IRA and allow it to pass directly to the charity. By doing so, he eliminates his income tax liability while creating a charitable deduction that reduces the size of your taxable estate. Turn to us for help Qualified disclaimers can provide estate planning flexibility after death, helping families adapt to changing tax laws, financial needs and other personal circumstances. But disclaimers generally will be effective only if you’ve named appropriate contingent beneficiaries. If you’re reviewing your estate plan or considering ways to provide greater flexibility for your heirs, contact us. We can help you determine whether qualified disclaimers should be factored into your overall estate planning strategy. © 2026 

Even with a relatively low unemployment rate (averaging around 4.4% over the past year), layoffs and terminations continue to affect workers across many industries. If you’ve recently lost your job, you’re likely focused on replacing income and evaluating your next steps. But some tax implications related to a job loss also may require attention. Here are a few important areas to consider. Unemployment, severance and other income Many people are surprised to find out that federal unemployment compensation is taxable. (Some states do exempt it from state tax.) Although severance pay is also taxable and subject to federal income tax withholding, some elements of a severance package may get special tax treatment. For example: Incentive stock options (ISOs). If you sell stock acquired by way of an ISO from your former employer, part or all of your gain may be taxed at lower long-term capital gain rates rather than at ordinary income tax rates — depending on whether you meet the required holding-period rules. “Golden parachute” payments. If you received (or will receive) such a payment, you may be subject to an excise tax equal to 20% of the portion of the payment that, under complex rules, is treated as an “excess parachute payment.” This is on top of ordinary income tax. Job placement assistance. The value of such assistance you receive from your former employer usually is tax-free. However, the assistance is taxable if you had a choice between receiving outplacement help or cash. Finally, be aware that payments from your former employer for accumulated unused paid time off, such as vacation time or sick time, are taxable. Health coverage If your former employer pays for some of your medical coverage for a period of time after termination, you won’t be taxed on the value of the benefit. Under the COBRA rules, employers that offer group health coverage generally must provide continuation coverage to most terminated employees and their families. The cost of COBRA coverage can be high because you typically will have to pay the portion your employer had been paying in addition to what you’d been paying as an employee. So you may want to look for your own coverage through the Health Insurance Marketplace at healthcare.gov to see if you can purchase less expensive coverage there. Medical insurance premiums not paid pretax from a paycheck are potentially tax deductible. But you must itemize deductions, and you can deduct eligible medical expenses only to the extent that they exceed 7.5% of your adjusted gross income. If your COBRA coverage is for a high-deductible health plan or you purchase bronze-level coverage on the Marketplace, you can make tax-deductible contributions to a Health Savings Account — and you don’t have to itemize to claim the deduction. HSA withdrawals used for qualified medical expenses are tax-free. Retirement savings Do you have a retirement plan with your former employer, such as a 401(k) plan? You may be able to leave the account there. But consider the investment options it offers and the fees that will apply. If you get a new job, you may want to roll over the funds to your new employer’s 401(k) plan. That will leave you with fewer retirement accounts to keep track of. But again, consider the investment options and fees of the new plan. In many cases, a direct, tax-free rollover from your old 401(k) to an IRA is the best move. You’ll generally have a much wider variety of investment options and more control over fees because you choose the brokerage firm, bank or other IRA custodian. If you’re doing a rollover, request a direct rollover from your old plan to your new plan or IRA. Otherwise, you’ll need to make an indirect rollover within 60 days to avoid tax and potential penalties. If you make withdrawals from your former company’s plan or IRA to supplement missing income, you’ll generally owe income tax on them. And, if you’re under age 59½, you’ll owe an additional 10% penalty unless you qualify for an exception. (If you have a Roth IRA, you can withdraw up to your contribution amount without incurring taxes or penalties.) If a distribution from your former employer’s retirement plan includes employer securities in a lump sum, the distribution is taxed under the lump-sum rules — except that net unrealized appreciation in the value of the stock isn’t taxed until the securities are sold or otherwise disposed of later. Further, any loan you’ve taken out from your former employer’s retirement plan, such as a 401(k)-plan loan, may be required to be repaid within a specified period or even immediately. If it isn’t repaid, it may be treated as if the loan is in default. If the balance of the loan isn’t repaid within the required period, it will typically be treated as a taxable distribution. Guidance available A job loss can create tax consequences that aren’t always obvious. Reviewing your options before making decisions about severance, health coverage or retirement accounts may help you avoid unnecessary taxes and penalties. If you’d like guidance, contact us. © 2026

If you’re a real estate developer or a small business owner who owns commercial real estate, you might be thinking about selling a property. If it has appreciated significantly, a Section 1031 like-kind exchange may allow you to defer tax on some or all of the gain. With this transaction, you exchange one property for another qualifying property rather than sell the property outright. You generally don’t pay tax on the gain on the relinquished property until you sell the replacement property. You may be familiar with the basics of a Sec. 1031 exchange, but you might not understand all the rules and restrictions. Here are four common myths to be aware of so you can avoid missing planning opportunities or facing unexpected taxes. Myth 1: The replacement property must be identical to the property you give up The definition of like-kind property is surprisingly broad. To qualify for Sec. 1031 exchange treatment, you may exchange any real property held for investment or productive use in your trade or business (relinquished property) for like-kind investment, trade or business real property (replacement property). For these purposes, most real property is considered like-kind with other real property. However, neither the relinquished property nor the replacement property can be real property held primarily for sale. Myth 2: You never have to pay current-year tax in a like-kind exchange A properly structured Sec. 1031 exchange can defer gain. But that doesn’t mean every exchange is completely tax-free. If it’s a straight property-for-property exchange, you generally won’t have to recognize any gain from the exchange. You’ll take the same basis (your cost for tax purposes) in the replacement property that you had in the relinquished property. Even if you don’t have to recognize any gain on the exchange, you must report it on Form 8824, “Like-Kind Exchanges.” However, the properties aren’t always equal in value. In these situations, some cash may be added to the deal. This cash is known as “boot.” If you receive boot, you’ll have to recognize gain up to the amount of boot received. For example, let’s say you exchange a building with a basis of $100,000 for a building valued at $125,000, plus $10,000 in cash. Your realized gain on the exchange is $35,000 because you received $135,000 in value for an asset with a basis of $100,000. However, because it’s a Sec. 1031 exchange, you have to currently recognize (and pay tax on) only $10,000 of your gain — the amount of cash (boot) you received. It’s also important to remember that no matter how much boot you receive, you’ll never recognize more than your actual realized gain on the exchange. In addition, your basis in the like-kind replacement property you receive equals the basis you had in the relinquished property reduced by the amount of boot you received but increased by the amount of any gain recognized. Myth 3: Cash is the only type of boot Boot can take forms other than cash. If the property you’re exchanging is subject to debt from which you’re being relieved, the amount of the debt is generally treated as boot. The reason is that if someone takes over your debt, it’s equivalent to that person giving you cash. Of course, if the replacement property is also subject to debt, then you’re treated as receiving boot only to the extent of your net debt relief — the amount by which the debt you become free of exceeds the debt you pick up. Myth 4: You must have the replacement property lined up immediately It’s possible — but rare — to find someone who wants to simultaneously swap like-kind properties with you. Fortunately, you don’t have to acquire the replacement property from the same party you relinquish your property to. And you don’t have to acquire the replacement property on the same day you transfer the relinquished property. In most Sec. 1031 exchanges, the relinquished property is sold first, and the taxpayer uses the exchange proceeds to acquire a replacement property. However, a qualified intermediary must hold the proceeds from the relinquished property until they’re transferred to acquire the replacement property. And deadlines apply: Generally, you must 1) identify a potential replacement property within 45 days after transferring the relinquished property, and 2) complete the acquisition of the replacement property within 180 days. These deadlines are strictly enforced. Missing either one can cause the entire transaction to lose tax-deferred treatment. While you don’t need to have the replacement property lined up immediately, you do need a plan. Begin evaluating replacement property options as early as possible and work closely with your professional advisors throughout the process. Don’t let misconceptions derail your Sec. 1031 exchange Like-kind exchanges can be a tax-savvy way to dispose of investment or business real property — and retain working capital for your business or investment activities. But you’ll need to meet all the requirements. If you’re considering selling investment or business real estate, contact us to discuss this strategy further. © 2026 

Your estate plan should be flexible enough to adapt to changing laws, family circumstances and financial situations. If it includes an irrevocable trust, there’s a risk that the trustee will be unwilling (or unable) to make appropriate moves in response to changes. A trust protector can provide the needed flexibility and mitigate other risks that could derail your wishes. What powers can you bestow? A trust protector is to a trustee what a corporate board of directors is to a CEO. A trustee manages the trust on a day-to-day basis. The protector oversees the trustee and weighs in on critical decisions, such as the sale of closely held business interests or investment transactions involving large dollar amounts. There’s virtually no limit to the powers you can confer on a trust protector. For example, you can enable a trust protector to: Replace a trustee, Appoint a successor trustee or successor trust protector, Approve or veto investment or beneficiary distribution decisions, and Resolve disputes between trustees and beneficiaries. More specifically, a protector with the power to remove and replace the trustee can do so if the trustee develops a conflict of interest or fails to manage the trust assets in the beneficiaries’ best interests. A protector with the power to modify the trust’s terms can correct mistakes in the trust document or clarify ambiguous language. Or a protector with the power to change how trust assets are distributed, if necessary to achieve your original objectives, can help ensure your loved ones are provided for as you would have desired. A word of warning: Although it may be tempting to provide a protector with a broad range of powers, this can hamper the trustee’s ability to manage the trust efficiently. Keep in mind that the idea is to protect the integrity of the trust, not to appoint a co-trustee. What are the qualifications? Choosing the right trust protector is critical. Given the power he or she has over your family’s wealth, you’ll want to choose someone whom you trust and who’s qualified to make investment and other financial decisions. Many people appoint a trusted advisor — such as an accountant, attorney or investment advisor — who may not be able or willing to serve as trustee, but who can provide an extra layer of protection by monitoring the trustee’s performance. Appointing a family member as protector is also possible, but it can be risky. If the protector is a beneficiary or has the power to direct the trust assets to him- or herself (or for his or her benefit), this power could be treated as a general power of appointment, potentially triggering negative tax consequences. The right decision for your family Bear in mind that a trust protector isn’t essential. In most circumstances, well-established irrevocable trusts function according to their original owners’ intentions without a protector’s intervention. But if you decide to mitigate any lingering risk by naming a protector, work with experienced legal and estate planning advisors to draw up the paperwork that specifies your protector’s powers. Contact us for additional details. © 2026 

Strategic planning isn’t meant to be a one-time exercise. Your plan should evolve with your business — and the environment in which it operates. Regular reviews help ensure your business remains focused on the right priorities and positioned to take advantage of new opportunities. Even if you can’t find time for extensive “big picture” thinking, try to conduct some form of active strategic planning at least once a year. Doing so will help you identify emerging challenges and evaluate progress toward short- and long-term goals. A fresh strategic plan also provides stakeholders with an up-to-date map they can use to orient decisions and measure outcomes. Get going Sometimes businesses procrastinate on new strategic planning because they’re busy pursuing current goals and are profitable enough not to mess with “the formula.” But more often, businesses delay it because a new strategic plan requires research they may not have time to conduct and fresh ideas that can be hard to generate. If you can’t commit to an annual review, don’t let more than three years pass without productively engaging in strategic planning. If it makes the undertaking easier, you might want to seek professional assistance — for instance, to perform research, lead strategy sessions, model financial outcomes, identify potential risks and assemble strategic ideas into a workable plan. In addition to freeing up your time, professionals offer experience and objectivity. Facilitators can put attendees at ease, foster creative thinking and adhere to productive agendas. Brainstorm without distraction Retreats often facilitate strategic planning sessions. So consider whether an off-site location makes sense given your attendees and project ambitions. There’s potential for excessive spending and counterproductive distractions. But if you plan carefully, you can arrange a distraction-free experience that allows participants to freely brainstorm. Your first session should review your business’s: Mission (what it does), Vision (where it’s going), Current financial results, Recent successes and setbacks, and Future performance based on internal and external trends. Next, come up with 1) several goals, 2) strategies for pursuing them and 3) metrics for measuring your progress. Some of these may be similar to existing objectives, action plans and measurements and may not require a lot of extra work. New ideas, however, should be thoroughly discussed and outlined. To ease the pressure of strategic planning, avoid trying to do everything at once. If you can accomplish the three points mentioned earlier in one session, schedule a follow-up meeting to develop a timeline and assign responsibilities. That plan should be formally approved by your business’s owners before it’s put into action. Helpful voices Your employees can play an important role in helping your new strategic plan succeed. To the extent practical, involve ordinary workers in the strategic goal-setting process. This will help build engagement and instill a sense of personal responsibility for your plan’s success. When you communicate the final plan, be sure it includes realistic ways for workers and others to be involved. We can help ensure your new plan is supported by sound financial analysis. For guidance on evaluating your business’s performance, identifying growth opportunities and facilitating planning sessions, contact us. © 2026 

Many parents don’t know that the so-called “kiddie tax” exists. Others assume it affects only minor children. But it also can apply to full-time students through age 23 and 18-year-olds even if they aren’t full-time students. When it applies, most of the child’s unearned income may be taxed at the parent’s higher tax rate. The purpose of the kiddie tax is to minimize the ability of parents to significantly reduce their family’s taxes by transferring income-producing assets to their children in lower tax brackets. If your child has investment income from custodial accounts or other assets, understanding these rules can help you avoid unexpected tax consequences. Who it affects The kiddie tax generally applies to most unearned income of individuals who, at the end of the tax year, are: Under age 18, Age 18 (unless they provide more than half of their own support from earned income), or At least age 19 but under age 24 and full-time students (unless they provide more than half of their own support from earned income). So, for a student, the kiddie tax can be an issue until the year that he or she turns age 24. For that year and future years, even full-time students who are still supported by their parents are kiddie-tax-exempt. How it works Earned income from a job or self-employment is never subject to the kiddie tax. And the tax is assessed on a child’s (or young adult’s) unearned income only to the extent that it exceeds the applicable threshold, which is $2,700 for 2026. Unearned income usually means interest, dividends and capital gains. These types of income often come from custodial accounts that parents and grandparents set up and fund for younger children. For 2026, the first $1,350 of unearned income is taxed at 0%. The second $1,350 is taxed at the child’s (or young adult’s) rate. This might also be 0% for some or all of the second $1,350, depending on 1) how much of the unearned income is made up of long-term capital gains and qualified dividends, and 2) whether the child’s (or young adult’s) taxable income is low enough for him or her to qualify for the 0% rate. Then the excess is taxed at the parent’s rate. This could be up to 20% on long-term capital gains and qualified dividends and as much as 37% on interest, short-term capital gains and nonqualified dividends — depending on the parent’s taxable income. When it applies For 2026, Form 8615, “Tax for Certain Children Who Have Unearned Income,” must be filed and kiddie tax paid for any child (or young adult) who: Has more than $2,700 of unearned income, Is required to file Form 1040, As of December 31, 2026, is under age 18, is age 18 and didn’t have earned income in excess of half of his or her support, or is age 19, 20, 21, 22 or 23 and a full-time student and didn’t have earned income in excess of half of his or her support, Has at least one living parent, and Isn’t married and filing a joint return for the year. The kiddie tax threshold is annually adjusted for inflation, but generally only in increments of at least $100. So it doesn’t necessarily go up every year. It didn’t increase for 2026, so it may be more likely to increase for 2027. Planning opportunities The kiddie tax can increase a family’s overall tax liability if investment income is generated in a child’s name. In some situations, it may make sense to review the types of investments owned in custodial accounts and the timing of investment sales. For example, growth-oriented investments that generate little current income may help reduce exposure to the kiddie tax until your child is old enough that this tax no longer applies. At that time, appreciated investments can begin to be sold, with the gains taxed at your child’s own, potentially lower, rate. If you’d like help evaluating your family’s situation, contact us. We can assess potential kiddie tax exposure and suggest tax-efficient investment strategies. © 2026 

If you’re self-employed, you probably have questions about deducting business expenses on your federal income tax return. Here’s a quick overview of the filing requirements for sole proprietors and independent contractors, and five examples of expense deductions that are commonly overlooked or misunderstood. Filing basics Sole proprietors and independent contractors must report their business activity on Schedule C, “Profit or Loss From Business,” of their personal tax returns (Form 1040). Business income includes money earned from customers, side gigs, online sales and other self-employment activities. Income may be reported on Forms 1099-NEC or 1099-K, but you must report all taxable business income, even if you don’t receive a tax form. Although employees can no longer deduct unreimbursed business expenses, self-employed individuals can offset their business income with various deductions for business-related expenses. This is a major tax advantage for the self-employed. When evaluating whether costs are deductible, follow this golden rule: Business expenses must be ordinary (common in your industry) and necessary (helpful and appropriate for the business). Of course, you’ll need to keep detailed records to support your business deductions. Obvious examples of potentially deductible expenses are supplies, materials, and, if you have employees, payroll and benefits. Other business-related expenses may also be deductible on Schedule C, though the rules are sometimes confusing. Below are five common examples. 1. Home office Unlike employees who work remotely, you can deduct the costs for a workspace in your home that’s used regularly and exclusively as your principal place of business. This can include a portion of actual indirect home expenses — such as rent or mortgage interest, insurance, utilities and repairs — based on your business-use percentage. For instance, if you use 10% of your apartment’s square footage for business, you can deduct 10% of your rent. You can also fully deduct direct expenses (for example, the cost of painting your office) and, if you own your home, claim a depreciation allowance under IRS tables. In lieu of tracking your actual expenses, the IRS also offers a simplified method of $5 per square foot for up to 300 square feet. 2. Education The costs of refresher courses, continuing education classes, vocational training and other education programs may be deductible if you’re required to take them to maintain or improve skills required for your current trade or business. Qualifying expenses include tuition, books, supplies and fees, and potentially travel costs to attend education programs. However, costs of education that’s needed to meet the minimum requirements for a trade or business or that qualifies you for a new trade or business generally aren’t deductible. For example, you can’t claim the cost to obtain an undergraduate degree as a business expense. 3. Business meals You generally can deduct 50% of the costs of business meals if they aren’t “lavish or extravagant.” This applies to food and beverages provided to customers, clients, suppliers, employees, agents, partners or professional advisors — whether established or prospective. Although entertainment costs aren’t deductible under current law, food and beverages might be deductible even if they’re provided at a nondeductible entertainment activity. But such a deduction is available only if: The food and beverage items are separately purchased or identified from the entertainment costs on bills, invoices or receipts, and The amount charged for food or beverages reflects the venue’s usual selling price for those items if purchased separately from the entertainment or approximates the reasonable value of those items. Say, for example, that you take a customer to a World Cup match this summer. The ticket costs aren’t deductible. But if you buy the customer popcorn, nachos and drinks while there, you can deduct half of those costs as long as you have proper documentation, such as the itemized receipt, and records showing who attended and the business purpose. 4. Business travel If you travel to a temporary location for business purposes, you can deduct your travel expenses, including round-trip airfare, hotel costs and other incidentals (such as tips and cab fares). However, the primary purpose of your trip must be business related. For instance, you might travel to a different city or country to attend a trade show or educational conference. Beware: Some allocations may be required if a trip combines business and pleasure — for example, if you fly to a location for four days of business meetings and stay for an additional three days of vacation. Only the reasonable cost of lodging and 50% of meals incurred during the business days are deductible. Lodging and meal costs incurred for the personal vacation days aren’t deductible. On the other hand, with respect to the cost of the travel itself (for example, plane fare), if the trip is primarily for business purposes, the travel cost can be deducted in its entirety, and no allocation is required. Conversely, if the trip is primarily personal, none of the travel costs are deductible. If your spouse joins you, his or her travel expenses generally aren’t deductible, unless your spouse is your employee and has a bona fide business reason to be there. But the restrictions apply only to additional costs incurred by having your nonemployee spouse travel with you. For example, the expense of a hotel room or for traveling by car would likely still be fully deductible because the cost to rent the room or travel by car alone vs. with another person would be the same, even in a rented car. 5. Business vehicle expenses If you drive your personal vehicle for business purposes, you may be eligible to deduct some auto-related expenses on Schedule C. The amount of your deduction is based on the percentage of business use. For example, suppose you use your car 60% for business driving in 2026. That means you can deduct 60% of your vehicle costs — such as gas, repairs and insurance — plus a generous depreciation allowance, subject to certain limits for “luxury cars.” And, if you buy the vehicle in 2026, you may also qualify for a Section 179 deduction and 100% bonus depreciation, subject to applicable eligibility requirements and limitations. Be aware that the IRS is a stickler for documentation. Briefly stated, you must keep a contemporaneous log listing every business trip and proof of your expenses. Alternatively, you can cut down on recordkeeping by using the standard mileage rate of 72.5 cents per business mile (plus business-related tolls and parking fees) in 2026. Don’t leave tax savings on the table Many self-employed taxpayers miss legitimate deductions because they fail to keep adequate records or misunderstand the rules. Tracking expenses throughout the year can make tax filing easier, help ensure you don’t miss legitimate deductions and strengthen your position if the IRS questions a deduction. We can help you identify qualifying business expense deductions and establish recordkeeping practices that support them. Contact us to start discussing a tax strategy tailored to your small business. © 2026 

A properly structured grantor retained annuity trust (GRAT) can be a powerful tool for those with estates large enough that gift and estate taxes are a concern. It allows you to transfer wealth to your loved ones at little or no tax cost while continuing to enjoy an income stream for a period of years. However, there are some drawbacks to a GRAT. GRAT benefits A GRAT is an irrevocable trust that allows you, as the grantor, to transfer appreciating assets to beneficiaries while retaining the right to receive fixed annuity payments for a specified term. At the end of the term, any remaining assets pass to the beneficiaries you’ve named, such as your children. The projected value of what will remain in the trust for the beneficiaries after the annuity is paid is generally a taxable gift for federal purposes. This is calculated by assuming the GRAT assets will grow at the Section 7520 rate, regardless of the specific assets’ projected or actual growth rate. For taxpayers with estates that currently exceed the federal gift and estate tax exemption (or that might grow to exceed it in the future), one of the most attractive features of a GRAT is its ability to reduce gift and estate taxes. GRATs are commonly funded with assets that are expected to increase significantly in value, such as closely held business interests, stocks or investment portfolios. Any appreciation of the trust assets above the Sec. 7520 rate, also known as the “hurdle” rate, can pass to beneficiaries free of additional gift or estate tax. Many GRATs are structured as “zeroed-out” GRATs, meaning the present value of the annuity is nearly equal to the value of the assets contributed to the trust. As a result, the taxable gift is minimal or even close to zero. GRAT drawbacks One of the most significant risks of using a GRAT is that the grantor must survive the trust term. If you die before the GRAT expires, some or all of the trust assets may be included in your taxable estate, potentially eliminating the anticipated tax benefits. For this reason, shorter-term GRATs are often preferred, particularly for older individuals or those with health concerns. Also, the investment performance of a GRAT’s assets matters. A GRAT succeeds only if the trust assets appreciate at a rate greater than the hurdle rate. If the assets underperform or decline in value, the GRAT may produce little or no wealth-transfer benefit. While you, as the grantor, generally will still receive the annuity payments, the effort and costs associated with establishing the trust may be wasted. Bear in mind, too, that because a GRAT is irrevocable, you can’t simply change the terms or reclaim the transferred assets once the trust has been established. This lack of flexibility requires careful planning and consideration of future financial needs. Right for you? A GRAT can be a powerful estate planning tool for individuals with large estates and a desire to transfer wealth tax efficiently to future generations. However, it isn’t right for everyone. Factors such as life expectancy, asset performance expectations, cash flow needs and overall estate planning objectives should all be carefully evaluated. We can help you determine if a GRAT is right for you. © 2026 

Ahh, summer! You’re probably looking forward to time off from work — anything from a long-anticipated trip abroad to a U.S. road trip to a “staycation,” where you might enjoy reading a good book with an iced drink in your own backyard. But not everyone takes a summer vacation. In fact, several studies say that only about half of Americans take time off in the warmer months. Despite providing paid time off (PTO) as a fringe benefit, your business may also employ workers who don’t take holiday or sick days. This can be a problem for both workers who lose their valuable benefits and your organization, which may experience lower productivity and higher fraud risk. Let’s look at the problems and some solutions. Too much time in The 2025 FlexJobs Work and PTO Pressure Report found that 23% of U.S. workers didn’t take any days off in the previous year. Other surveys have shown that most employees leave at least some PTO unused at the end of the year. Depending on your business’s policies and applicable state laws, employees could lose unused PTO hours when a new calendar year begins. Unfortunately, your business is also likely to suffer if workers don’t take time off. Overworked employees are generally more stressed, less productive and more prone to making errors. The primary reason workers don’t take time off, according to the FlexJobs survey, is that they feel their workload is too heavy. In addition, some employees fear that taking vacation time makes them look less committed to the job. This can result in poor morale across your organization. Failure to take time off is a major red flag for occupational fraud, too. Employees engaged in fraud schemes typically decline vacations and time off for illness because they fear exposure if others fill in for them. For this reason, your business should consider requiring workers to take a minimum amount of PTO each year. Encouraging time off In addition to establishing an official PTO policy, supervisors should regularly remind their reports to schedule days off. To appease workers who worry about their workload, arrange for other employees or a temporary worker to fill in for them. You might want to tell them that taking accrued time off won’t negatively affect their performance evaluations. After all, the business will likely benefit when workers return from vacation refreshed and newly energized. For supervisors to play this role, they’ll need access to running PTO totals — possibly through your payroll management system. You may also want to engage a third-party provider to send easily digestible wellness content and vacation reminders to employees. Other strategies If some of your workers always end the calendar year with unused PTO, you might want to consider revising your plan to allow them to carry over a certain number of days. Just understand that large amounts of carried-over PTO can add liabilities to your balance sheet. Also, know that some states (including California and Montana) place significant restrictions on PTO forfeiture, which might require you to carry over all or some of your employees’ unused balances. Another option? Establish a PTO contribution program. These programs allow employees with unused vacation hours to convert them to retirement plan contributions. If you offer a 401(k) plan, it can treat these amounts as pretax contributions similar to employee payroll deferrals. Alternatively, the plan can treat the amounts as employer profit sharing. If your 401(k) plan doesn’t already include a PTO contribution arrangement, you’ll need to amend it. You must continue to follow the plan document’s eligibility, vesting, rollover, distribution and loan terms. True cost Contact us for details on creating and administering a tax-advantaged PTO contribution arrangement. We can also help you evaluate your PTO policies, determine the hidden costs of unused PTO, and recommend strategies that support both your workforce and your business goals. © 2026