Bank of America reveals disruptive pitfalls in wealth transfer
Having a will, a trust, and regular meetings with a financial advisor may seem like a solid estate plan. But without careful coordination, those pieces can work against one another, creating unintended consequences for the very people the plan is meant to protect.
Bank of America Private Bank warns that gift and estate decisions made by one generation often collide with choices other relatives make independently.
The result is duplicated contributions, wasted tax exemptions, and inheritance disputes that no single legal document can prevent on its own.
Rocky Fittizzi, who leads full family engagement at the bank’s Planning Center of Excellence, outlined specific scenarios where isolated planning backfired on careful families.
For families navigating wealth transfers under the current $15 million per-person federal exemption, these coordination gaps can erode the benefits of otherwise strong strategies.
How isolated estate decisions create overlapping gifts and tax waste
Fittizzi described ‘full family engagement’ as looking at the family tree vertically and horizontally, and directly involving grandparents, parents and children, as well as other relatives, stepchildren or close friends who may factor into a plan.
The goal is to identify conflicts before they become locked into irrevocable legal structures that no one can affordably unwind.
Without that cross-generational visibility, a grandparent’s generous education contribution can duplicate what the child’s parents are already funding for the same student.
That wasted annual exclusion capacity could have been directed to other family members or channeled into a different vehicle, Bank of America Private Bank noted.
The same blind spot appears when parents leave large sums to adult children who are already financially established and face their estate tax exposure.
Rather than helping, the inheritance can inflate the next generation’s taxable estate and trigger a second layer of federal tax at a rate of 40%.
The $15 million exemption does not eliminate the need for coordination
The federal estate, gift, and generation-skipping transfer tax exemption rose to $15 million per individual in 2026, or $30 million for a married couple.
Those thresholds were set by the One Big Beautiful Bill Act, signed in July 2025, and will be indexed for inflation beginning in 2027.
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The annual gift tax exclusion stands at $19,000 per recipient in 2026, and married couples can combine exclusions to transfer $38,000 per person each year, Bank of America reported.
Those numbers create substantial room for lifetime gifting, but only if family members coordinate who is giving what, to whom, and when.
Nearly half of the 2,000 U.S. consumers surveyed for MDRT’s 2025 Great Wealth Transfer study have taken no action to prepare an estate plan of any kind, and just 22% have discussed their estate plan with family or heirs.
Silence about estate plans fuels family conflict after a death
The Fidelity Investments 2025 Family and Finance study confirmed the scale of this communication gap across American households in stark terms.
While 97% of families acknowledged that estate planning conversations are important, nearly half had not yet had one, the study reported.
Julie Virta, a senior wealth executive at Vanguard, raised a similar concern in a February 2026 commentary published by Kiplinger.
She warned that parents who postpone sharing their plans often run out of time before their heirs receive the clarity they need.
That silence carries serious financial consequences for families, extending well beyond the hurt feelings and strained relationships that follow a death.
Heirs who do not understand the reasoning behind unequal distributions often challenge estate documents in court, Tasha Dickinson, a partner at Day Pitney, warned.
One structure Bank of America highlights for real estate holders
Bank of America Private Bank outlined several approaches that become available once multiple generations are part of the same conversation and planning process.
The specific tools depend on each family’s priorities, its asset mix, and what coordinated discussions reveal about each member’s financial position.
Scott Rahn, founding partner at RMO Lawyers, told The Daily Upside that a lack of candor about wealth leads to a fractured understanding about the purpose and intent of a family’s fortune.
Clients spend so much time and effort building wealth but so little time understanding and communicating about it
Real estate holders may benefit from gifting shares of a limited liability company that holds the properties, because recipients cannot immediately sell them.
That structure can allow donors to claim a discounted valuation, enabling more assets to move out of the taxable estate, the bank explained.
What families preparing for wealth transfers need to weigh
Fittizzi emphasized that the first step is a complete financial analysis covering cash flow projections, a net worth statement, and an assessment of specific assets.
That analysis needs to happen well before any trust or gift decision gets finalized, not after, the bank’s guide recommended.
Dickinson cautioned that wealthy families frequently transfer too much too early in pursuit of tax savings, locking themselves into decisions that cannot be reversed.
According to Fittizzi, families who commit assets to irrevocable structures without coordinating across generations risk creating the conflict and inefficiency they set out to prevent.
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