Episode summary
Ranking Account Types For Meeting Intergenerational Giving Goals, With Ben Henry-Moreland
Financial Advisor Success (Kitces)
· · Hosts: Michael Kitces · Guests: Ben Henry-Moreland
Summary
The episode argues that intergenerational gifts should be matched to the goal of the gift, not just to the account with the best tax wrapper. Ben Henry-Moreland breaks gifting into several buckets: childhood spending, education, midlife support such as home purchases or business startup capital, retirement, and dynasty-style multigenerational planning. Each bucket has different tradeoffs around flexibility, tax treatment, and parental control.
He explains that the new Trump accounts sit firmly in the retirement bucket. They can be funded before a child turns 18, then convert into a traditional IRA, but the child gains control at 18 and can withdraw early with tax consequences. That makes them useful for long-term retirement saving, but less compelling for goals like education or near-term lifestyle support.
For education, he favors 529 plans and sometimes parent-owned Roth IRA funds, while for lifestyle goals he points to custodial accounts, parent-owned taxable accounts, or irrevocable trusts depending on how much control the family wants. For dynasty goals, he highlights irrevocable trusts and even multigenerational 529 strategies as ways to extend a gift beyond one generation.
Key takeaways
- Ben Henry-Moreland says the right account depends on the parent’s actual gifting goal, not just which account looks best on taxes.
- Trump accounts are best understood as retirement accounts for children, with tax-deferred growth but the child taking control at age 18.
- For education funding, Ben says 529 plans usually fit best, while Trump accounts are generally a poor match because withdrawals are taxable.
- For home purchases, business startup capital, and other lifestyle support, flexibility and control matter more, so taxable accounts, UTMA accounts, or trusts may fit better.
- For dynasty planning, Ben points to irrevocable trusts and multigenerational 529 planning as the most relevant structures.
Notable quotes
“The best type of account for a gift is really going to depend on what that parent wants to actually fund for their kids”
“And it's not just about what is going to have the most aftert tax dollars five or six decades down the line”
“these 53A accounts really are a retirement account for parents or grandparents, etc. to give to children”
“It is really going to be about how do we make our kids the happiest they can be using these dollars that we've earned during our lifetimes”
How the episode opens
The best type of account for a gift is really going to depend on what that parent wants to actually fund for their kids. What philosophy they're going to have about how to make their gift to their kids have the biggest impact on their lives, have the biggest impact on their happiness. And it's not just about what is going to have the most aftert tax dollars five or six decades down the line.
Hello and welcome back to the Financial Advisor Technician podcast. I'm your host, Adam Vanusen. On today's episode, we're going to discuss intergenerational giving strategies and how advisers and their clients can identify the appropriate account to use given the client's goals for the assets that they are giving.
Because while tax efficiency is an important part of these conversations, how the client is trying to actually support their child during their lifetimes can play an even larger role in how they decide to gift. So to help us dig deeper into this topic, I'm joined today by my colleague Ben Henry Mortland, a senior financial planning nerd here at kits.com to discuss the different types of internet intergenerational giving parents might consider, how the new section 538 Trump accounts fit in with this taxonomy, and how advisers can support their clients in identifying the appropriate account that not only offers the most tax efficiency, but also matches their goals for the money as well. So, welcome Ben and thanks for joining us again here on the Financial Advisor Technician podcast.
Hi, Adam. It's great to be back. — Terrific. So, to start before we dig into the Trump accounts and and other uh accounts parents might use for giving, perhaps you could set the stage by discussing the different types of goals parents might have for giving to their children.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- intergenerational giving
- account types
- tax efficiency
- lifetime gifting goals
- trump accounts
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Financial Advisor Success (Kitces), this episode and its artwork belong to Michael Kitces. Octagon is not affiliated with the show; this page is an independent summary.
