An Intentional Legacy: How to Position Your Assets for a More Thoughtful Wealth Transfer

For many high-net-worth families, legacy planning isn’t just about who gets what. It’s about how your wealth is passed on — thoughtfully, efficiently, and in a way that reflects your values.

Yet even well-crafted estate documents can fall short if investment assets aren’t positioned correctly. Without a strategy, heirs can inherit assets that are heavily taxed while others pass untouched. The good news? With a few intentional decisions today, you can help ensure more of what you’ve built benefits the people and causes that matter most to you.

This overview highlights six key areas that, together, form the foundation of a tax-aware wealth transfer strategy. Each will be explored more fully in future articles.

1. The Role of Asset Location

Most investors focus on what to own — stocks, bonds, real estate. But where you hold those assets can have just as much impact over time. This concept, called asset location, means aligning investments with the tax characteristics of your accounts.

For instance, income-generating investments like bonds or REITs may fit better in IRAs (where taxes are deferred), while growth-oriented assets — like stocks — often belong in taxable or Roth accounts where favorable or tax-free treatment may apply¹.

Over time, strategic asset location can help improve after-tax efficiency, though results depend on individual circumstances and factors such as market performance, tax law changes, and transaction costs.

2. The Step-Up in Basis: A Quiet but Powerful Tax Benefit

When certain assets — such as stocks or real estate — are held in a taxable account and passed at death, they may receive a step-up in cost basis. That means your heirs’ cost basis resets to the market value on the date of death, often eliminating built-up capital gains².

In simple terms, if you bought stock for $500,000 and it’s worth $1 million when you pass away, your heirs could sell it immediately and owe little to no capital gains tax. That’s why placing high-growth assets in taxable accounts can be so effective for wealth transfer — and why reviewing how those assets are titled is worth your attention.

3. Rethinking IRA Assets — Especially if You’re Charitably Inclined

Traditional IRAs and 401(k)s are funded with pre-tax dollars and grow tax-deferred — but when inherited, they’re taxed as ordinary income. Most beneficiaries must now deplete these accounts within 10 years, potentially triggering higher tax bills.

However, charitable organizations don’t pay income tax. That means IRAs can be excellent assets to leave to charity, since the full amount passes tax-free. By contrast, appreciated assets left to heirs can benefit from the step-up in basis, reducing or even eliminating capital gains. In essence, aligning your charitable intent with your IRA assets can help both your family and the causes you care about.

4. Using Roth Accounts to Pass on Tax-Free Growth

Roth IRAs offer one of the most efficient ways to transfer wealth: qualified withdrawals are tax-free for both you and your heirs³. Because Roths have no required minimum distributions during your lifetime, they can continue compounding untouched.

When inherited, Roth IRAs must be distributed within 10 years — but those withdrawals are typically tax-free under current law. That makes them an ideal home for high-growth assets you’d like your heirs to enjoy without a tax drag.

5. Considering a Roth Conversion for Legacy Planning

One way to create that tax-free inheritance is through a Roth conversion — moving funds from a traditional IRA into a Roth and paying the tax bill now, so your heirs don’t later.

This strategy can make sense if you expect your heirs to be in higher tax brackets than you, or if you want to pre-pay taxes at today’s known rates. However, conversions come with trade-offs: the upfront tax cost can be substantial, and the benefits depend on future tax rates, investment performance, and timing.

In some cases, combining a Roth conversion with a charitable gift can offset some of that tax cost, aligning generosity with tax efficiency.

6. Coordinating Charitable Giving as Part of Your Legacy Plan

Charitable planning can do more than reduce taxes — it can strengthen your legacy. Whether through lifetime giving, donor-advised funds, or qualified charitable distributions (QCDs) from IRAs, the goal is to give in ways that are both meaningful and tax-aware⁴.

The key is intent. Tax advantages should never be the only reason for giving; they’re a byproduct of thoughtful stewardship. When designed well, charitable gifts can reduce taxes, simplify your estate, and amplify the impact of your generosity.

Building a Legacy of Intention and Stewardship

Each of these strategies — from asset location to charitable giving — works toward one broader purpose: helping your wealth do more good, both for your family and beyond.

Future articles will take a closer look at each concept, sharing examples of how these strategies can fit together in real-world planning. The goal isn’t to prescribe one perfect solution, but to help you think more intentionally about how to align your portfolio, your values, and your long-term goals.

Follow along in future articles as we explore each of these strategies in more detail, or reach out to discuss how these concepts may apply to your own plan.

Footnotes

1. Asset Location Considerations: Asset location strategies involve trade-offs and may not always improve after-tax results. Outcomes can vary due to changes in tax law, market performance, trading frequency, and transaction costs. Investors should review their circumstances with a qualified professional before making changes.
   2. Step-Up in Basis: Step-up in basis rules apply under current tax law and could change in the future. Not all assets are eligible (e.g., retirement accounts do not receive step-up treatment).
   3. Roth IRA Tax Treatment: Roth IRA growth and withdrawals are generally tax-free if certain conditions are met, including age and holding period requirements. Early withdrawals or ineligible contributions may be subject to taxes and penalties.
   4. Charitable Strategies: Qualified Charitable Distributions (QCDs) are available only for individuals age 70½ or older and must be made directly from an IRA to a qualified charity. Donor-advised funds and private foundations are not eligible for QCDs.

The views expressed represent the opinion of Resolute Wealth Advisor, Inc. (RWA). The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While RWA believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and the RWA’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Past performance is not indicative of future results.