SmartAsset and Yahoo Finance LLC may earn commission or revenue through links in the content below. Estate planning usually involves determining how to pass assets on to younger generations. But instead of leaving a piece of real estate, bank account or burgeoning stock portfolio to your children, the smarter tax move might be to leave those assets to your parents. That’s the crux of a clever tax minimization strategy known as “upstream gifting,” which Charles Schwab highlighted. The strategy revolves ar ...

Core Insights - The article discusses various strategies for managing capital gains taxes during retirement, particularly for individuals with significant investment portfolios and assets [2][4][10]. Tax Implications and Strategies - A step-up in basis allows heirs to inherit assets without the tax burden of capital gains accrued during the original owner's lifetime, applicable in community-property states [1][6]. - The long-term capital gains cap for 2025 is set at $533,401 for single filers and $600,051 for married couples filing jointly, with a net investment income tax applicable for incomes exceeding $250,000 for married couples [3][11]. - Tax-loss harvesting is recommended as a strategy to offset gains by selling stocks with unrealized losses [6]. Gifting and Charitable Contributions - Donating appreciated stock to charity can eliminate capital gains taxes and provide a tax deduction, with suggestions to pre-fund charitable giving through donor advised funds [7]. - Gifting appreciated stock to a family member in a lower tax bracket can shift the tax burden, with an annual gift-tax exclusion of $38,000 for married couples [8]. Financial Planning for Education - Establishing 529 accounts for grandchildren can help fund education and allows for tax benefits, including the application of the annual gift exclusion [9]. Retirement Financial Management - The article emphasizes the importance of consulting financial advisers for significant withdrawals and considering partial Roth conversions to optimize tax brackets [11][12]. - It highlights the financial security of being debt-free and having sufficient investments to enjoy retirement while planning for a financial legacy [10][12].