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Winter Newsletter 1/12/2026
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Avoiding Probate with a TOD Deed and TOD Account
If you want to leave your home to your children or other heirs and keep the property out of the costly and time-consuming probate process, you could place your home in a living trust. Trusts offer numerous advantages, but they incur up-front costs, often have ongoing administrative fees, and involve a complex web of tax rules and regulations.
More than half of U.S. states offer a simpler and less expensive way to avoid probate through a transfer-on-death (TOD) deed (also called a beneficiary deed). As the name suggests, this is a legal document that directly transfers ownership of the property from you to your designated beneficiary or beneficiaries upon your death. You retain full ownership and control while you are alive, and your beneficiary has no rights to the property until after your death. (Beneficiaries also inherit any associated financial obligations, such as a mortgage or lien.)
The TOD deed must be filed with the appropriate land records office. The deed supersedes your will, so be sure the provisions of your will match the deed. If you change your mind, the deed can be revoked and/or replaced through a new filing. As with all beneficiary documents, it would be wise to designate contingent beneficiaries in the event that a designated beneficiary predeceases you.
In some states, a married couple who own a house together through joint tenancy or as community property with right of survivorship would each have to complete a TOD deed. The deed for the first spouse who dies would be void, and the deed for the second spouse would transfer ownership to the designated beneficiary(ies).
TOD accounts
In most states, you can apply a transfer-on-death provision to individual non-retirement brokerage accounts. This typically involves filing a form with the financial institution to designate a beneficiary or beneficiaries (including contingent beneficiaries) and register the account as TOD. Ownership of the TOD account would transfer directly to the designated beneficiary(ies) upon your death without going through probate. Like TOD deeds, a TOD account designation supersedes your will.
For a joint account, the effect of a TOD designation would depend on the type of account.* Retirement accounts generally go directly to the beneficiary(ies) without probate and do not require being retitled as TOD.
Bank accounts offer a similar designation called Payable on Death (POD). One key difference is that POD accounts typically do not allow contingent beneficiaries.
States in dark blue allow a TOD deed
Estate and capital gains taxes
A TOD deed or account designation does not remove the property or account assets from your taxable estate. However, with high federal estate tax exclusion amounts, few estates would likely be subject to federal estate taxes.**
If your heirs sell your home or account assets, they could be subject to capital gains taxes regardless of whether they receive the property/account through a living trust or a TOD deed. However, the step-up in basis provision of U.S. tax law automatically sets the basis as the fair market value of the home or account at the time of your death, effectively eliminating all capital gains up to that time. Your heirs could shelter $250,000 of gains ($500,000 for a married couple) if they live in the home for two out of five years before selling. (There is no shelter provision for financial accounts.)
Although you do not need an attorney to execute a TOD deed in most states, you may want to consult an attorney familiar with the laws of your state. You should consider the counsel of experienced estate planning, legal, and tax professionals before implementing trust strategies.
*A TOD designation on a joint ownership/tenancy or tenants by/in the entirety account would only become effective if both owners die simultaneously. A TOD on a tenants in common account would be similar to an individual account.
**For estates of those who die in 2025, the exclusion is $13.99 million, with a combined $27.98 million exclusion for a married couple.
IMPORTANT DISCLOSURES
The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth ManagementSM, 226 W. Eldorado St., Decatur, IL 62522. 217-425-6340.
Have You Set a Retirement Savings Goal?
It’s difficult to reach a destination unless you know where you’re heading. Yet only 54% of workers or their spouses have tried to estimate the savings they would need to live comfortably in retirement.1
To get a start on establishing a retirement savings goal, use the simple worksheet on this page to compare the income you think you will need (or want) with the sources of income you expect. Keep in mind that estimates are in today’s dollars, so your desired income should account for the rising cost of living between now and the time you plan to retire.
How much will you need?
Everyone’s situation is different, but one common guideline is that you will need at least 70% to 80% of your pre-retirement income to meet your retirement expenses. This assumes that you will have paid off your mortgage, will have lower transportation and clothing expenses when you stop working, and will no longer be contributing to a retirement savings plan.
Although some expenses may be lower, others might increase, depending on your retirement lifestyle. For example, you may want to travel more or engage in new activities.
Unfortunately, medical expenses will likely be higher as you age. A recent study suggests that a man, woman, or couple who retired in 2024 at age 65 — with median prescription drug expenses and average Medigap premiums — might need $191,000, $226,000, or $366,000 in savings, respectively, to cover retirement health-care expenses (not including dental, vision, or long-term care).2 Future retirees may need even higher levels of savings.
Estimate income sources
You can estimate your monthly Social Security benefit at different retirement ages by establishing a my Social Security account at ssa.gov/myaccount. The closer you are to retirement, the more accurate this estimate will be. If retirement is many years away, your benefit could be affected by changes to the Social Security system, but it might also rise as your salary increases and the Social Security Administration makes cost-of-living adjustments.
If you expect a pension from current or previous employment, you should be able to obtain an estimate from the employer.
Add other sources of income, such as from consulting or a part-time job, if that is in your plans. Be realistic. Consulting can be lucrative, but part-time work often pays low wages, and working in retirement is less likely than you might expect. In 2025, 75% of workers expected to work for pay after retirement, but only 29% of retirees said they had actually done so.3
Get Started
This worksheet might give you a general idea of the savings needed to generate your desired retirement income.
The income from your savings may depend on unpredictable market returns and the length of time you need your savings to last. Higher returns could enable your nest egg to grow faster, but it would be more prudent to use a modest rate of return in your calculations. Remember that all investing involves risk, including the possible loss of principal, and there is no guarantee that any investment strategy will be successful. Investments seeking higher rates of return also involve a higher degree of risk.
A more detailed projection
A rough estimate of your retirement savings goal is a good beginning, and a professional assessment may be the next step. Although there is no assurance that working with a financial professional will improve investment results, a professional can evaluate your objectives and resources and help you consider appropriate long-term financial strategies.
1–3) Employee Benefit Research Institute, 2025 (Health-care expenses include Medigap premiums, Medicare Part B premiums and deductibles, Medicare Part D premiums, and out-of-pocket prescription drug expenses; projection is based on a 90% chance of meeting expenses and assumes a 7.32% return on savings from age 65 until expenditures are made.)
IMPORTANT DISCLOSURES
The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth ManagementSM, 226 W. Eldorado St., Decatur, IL 62522. 217-425-6340.
What is it and what do you need to know? OBBBA
The recently signed One Big Beautiful Bill Act brings several changes that will affect older adults. Some could save seniors money; others add new rules to keep in mind. Below is an overview of key impacts.
New $6,000 senior deduction
- Applies for tax years 2025-2028 if you’re age 65+ ($12,000 if both spouses qualify).
- You can claim it whether you itemize or take the standard deduction.
- It’s on top of the regular standard deduction and the existing age-65+ add-on (2025: $2,000 for single/head of household, $1,600 per qualifying spouse for married filing jointly).
- Income limits: full benefit up to $75,000 modified adjusted gross income (single) / $150,000 (married filing jointly); phased out entirely at $175,000 / $250,000.
- This does not make Social Security tax-free, but it can lower taxable income and sometimes reduce how much of your benefits are taxed.
Medicare impacts
- While OBBBA doesn’t directly cut Medicare benefits, it increases the federal deficit enough to trigger automatic spending reductions under budget rules starting in 2026. The Congressional Budget Office estimates it would result in approximately $500 billion in mandatory Medicare spending cuts between 2026 and 2034.
- Certain legally present immigrants will no longer be eligible for Medicare unless they are U.S. citizens, green card holders, or certain Cuban-Haitian entrants. This change will phase out coverage for some who are currently enrolled.
- Streamlined enrollment for low-income seniors into Medicare Savings Programs and related Medicaid benefits is suspended through at least September 2034, meaning more paperwork and potentially fewer seniors getting help with premiums and cost-sharing.
Medicaid eligibility changes
Starting in 2027, several updates will affect Medicaid coverage and payments:
- More frequent renewals – Adults in the ACA Medicaid Expansion will need to renew coverage every six months instead of once a year. (ACA Medicaid Expansion refers to states that broadened Medicaid to cover more low-income adults under the Affordable Care Act — 10 states have not adopted it.)
- Shorter response windows – Applicants will have less time to submit documents (like bank statements) when requested by the state.
- Annual renewal for long-term care – Seniors in nursing homes or on long-term care Medicaid will still renew annually, but missed paperwork deadlines could still result in lost coverage.
- Payment caps – In expansion states, certain Medicaid provider payments will be capped at Medicare rates; in non-expansion states, the cap will be 110% of Medicare rates. While aimed at Medicaid, this could also affect reimbursement rates for some Medicare Advantage plans.
Nursing-home staffing mandate paused
- A new federal rule was set to require nursing homes to meet specific minimum staffing levels — for example, having a certain number of nurses and aides per resident, and ensuring staff were on duty around the clock.
- Under OBBBA, this requirement is on hold until 2034. During that time, the federal government (through CMS) cannot enforce the staffing rule.
- Nursing homes will still have to follow existing state rules on staffing, but those rules vary widely — some states have strict requirements, others do not.
- For families, this means staffing levels may not increase as quickly as originally planned, so it’s worth asking a facility how they handle staffing and care coverage.
If you’d like to talk through how these changes might affect you in relation to our work together, just give us a call. We’re here to help you plan ahead and keep everything on track.
Securities and Investment advice offered through Investment Planners, Inc. (Member FINRA/SPIC) and IPI Wealth Management, Inc., 226 W. Eldorado St., Decatur, IL 62522. 217-425-6340
[1] https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors
[2] https://www.cms.gov/newsroom/fact-sheets/medicare-and-medicaid-programs-minimum-staffing-standards-long-term-care-facilities-and-medicaid-0
[3] https://www.thinkadvisor.com/2025/07/30/what-obba-means-for-medicare-rules-and-payments/
[4] https://www.kff.org/medicaid/what-are-the-implications-of-the-2025-budget-reconciliation-bill-for-hospitals/#:~:text=On%20May%2022%2C%202025%2C%20the,needed%20care%20as%20a%20result.
Will You Pay a Medicare Surcharge?
Medicare is a federal program that provides health insurance to retired individuals, regardless of their medical condition, and certain younger people with disabilities or end-stage renal disease. Medicare has several parts, many of which include a premium cost based on your tax filing status and income. If your income is high, in some cases you may be subject to a premium surcharge called the income-related monthly adjustment amount (IRMAA).
What does Medicare cover?
Medicare coverage consists of two main parts: Medicare Part A (hospital insurance) and Medicare Part B (medical insurance). These parts together are known as Original Medicare. A third part, Medicare Part C (Medicare Advantage), covers all Part A and Part B services and may provide additional services. A fourth part, Medicare Part D, offers prescription drug coverage that can help you handle the rising costs of prescriptions.
What does Medicare cost?
Most people age 65 or older who are citizens or permanent residents of the United States are eligible for Medicare Part A without paying a monthly premium. Although Medicare Part B is optional, most people sign up for it. If you want to join a Medicare Advantage plan, you’ll need to enroll in both Parts A and B. And Medicare Part B is never free — you’ll pay a monthly premium for it, even if you are eligible for premium-free Medicare Part A. If you delay starting Part B or Part D after age 65, you may also be subject to a surcharge unless you continue to work and are covered by a workplace health plan. The standard Part B premium is $185.00 in 2025. However, premiums for Part B and Part D can vary based on income levels. If your modified adjusted gross income (MAGI) as reported on your federal income tax return from two years ago is above a certain amount, you’ll pay the standard premium plus the IRMAA surcharge. You’ll receive a notice from the Social Security Administration if you’re subject to IRMAA.
The table shows what you’ll pay per month in 2025 based on your tax filing status and income:
What can you do to lower your income?
Most people may see a decline in their income once they retire. However, high-income Medicare recipients may want to lower their income to help reduce the potential premium surcharges. Here are some ideas:
- Put off transactions that could increase income, such as the sale of real estate or stocks.
- Defer distributions from tax-qualified accounts such as IRAs and 401(k)s as long as possible.
- Rethink the timing of converting IRA funds to a Roth IRA to avoid increased taxable income.
Since your income is based on information from two years ago, it may subsequently change, or you may experience a life-changing event (as defined by the SSA) that causes a reduction in your income. Report income changes to the SSA as soon as possible. You’ll need to provide documentation verifying the event and your reduction in income. Visit https://www.ssa.gov/benefits for more information.
Get help
Navigating Medicare programs and their costs can be tricky. You might consider consulting with an appropriately qualified professional for help.
IMPORTANT DISCLOSURES
The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth ManagementSM, 226 W. Eldorado St., Decatur, IL 62522. 217-425-6340.
Quarterly Report: 2nd Quarter 2025
Versatile 529 Plans Can Help with More than Just College
529 plans were originally created in 1996 as a tax-advantaged way to save for college. Over the past several years, Congress has expanded the ways 529 plan funds can be used, making them a more flexible and versatile savings vehicle.
College, plus other education expenses
A 529 savings plan can be instrumental in building a college fund — its original purpose. Funds contributed to a 529 savings plan accumulate tax-deferred and earnings are tax-free if the funds are used to pay qualified education expenses, which now include:
- College expenses: the full cost of tuition, fees, books, and equipment (including computers) and, for students attending at least half time, housing and food costs at any college in the U.S. or abroad accredited by the U.S. Department of Education
- Apprenticeships programs: the full cost of fees, books, and equipment for programs registered with the U.S. Department of Labor
- K-12 tuition expenses: up to $10,000 per year
If 529 funds are used to pay a non-qualified education expense, the earnings portion of any withdrawal is subject to ordinary income tax and a 10% penalty.
Estate planning tool
529 plans offer grandparents an opportunity to save for a grandchild’s education in a way that accomplishes estate planning goals, while still allowing grandparents access to those funds if needed.
Specifically, due to an accelerated gifting feature unique to 529 plans, grandparents (or other relatives) can contribute a lump sum to a 529 plan of up to five times the annual gift tax exclusion and avoid gift tax by making an election on their tax return to spread the gift equally over five years. In 2025, the gift tax exclusion is $19,000, so grandparents could gift up to $190,000 to a 529 plan for their grandchild ($19,000 x 5 years x 2 grandparents) and avoid gift tax. These funds are not considered part of the grandparents’ estate for federal estate tax purposes (unless one or both grandparents die in the five-year period, in which case special allocation rules apply). And if a grandparent is also the account owner of the 529 plan (529 plan rules allow only one account owner), then the grandparent will retain control of the 529 plan funds (even though the funds are not considered part of the estate) and can access them for health-care needs, an emergency, or any other reason (but the earnings portion of any non-qualified withdrawal will be subject to ordinary income tax and a 10% penalty).
Student loan repayment
Nearly 43 million borrowers have student loans, and the average loan balance is approximately $38,000.1 To help families who might have leftover 529 funds after college, Congress expanded the approved use of 529 plan funds in 2019 to include the repayment of qualified education loans up to $10,000 for the 529 beneficiary or a sibling of the beneficiary. This includes federal and private loans.
Source: ISS Market Intelligence, 529 Market Highlights, 2019–2024
Retirement builder: Roth IRA rollover
As of 2024, 529 account owners can roll over up to $35,000 from a 529 plan to a Roth IRA for the same beneficiary. Any rollover is subject to annual Roth IRA contribution limits, so $35,000 can’t be rolled over all at once. For example, in 2025, the Roth IRA contribution limit is $7,000 (for people under age 50) or 100% of annual earned income, whichever is less, so that is the maximum amount that can be rolled over in 2025.
There are a couple of other caveats. For the rollover to be tax- and penalty-free, the 529 plan must have been open for at least 15 years. And contributions to a 529 account made within five years of the rollover date can’t be rolled over — only contributions outside the five-year window can be rolled over.
Participation in a 529 plan generally involves fees and expenses, and there is the risk that the investments may lose money or not perform well enough to cover college costs as anticipated. The tax implications of a 529 plan can vary significantly from state to state. Most states offering their own 529 plans may provide advantages and benefits exclusively for their residents and taxpayers, which may include financial aid, scholarship funds, and protection from creditors. Before investing in a 529 plan, consider the investment objectives, risks, charges, and expenses, which are available in the issuer’s official statement and should be read carefully. The official disclosure statements and applicable prospectuses contain this and other information about the investment options, underlying investments, and investment company and can be obtained from your financial professional.
1) educationdata.org, 2024
IMPORTANT DISCLOSURES
The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth ManagementSM, 226 W. Eldorado St., Decatur, IL 62522. 217-425-6340.