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Givers’ regret: What happens when wealthy parents try to claw back fortunes from their kids
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A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
While many wealthy parents are breathing a sigh of relief over estate tax changes in last year’s tax bill, some are questioning whether they gave too much to their children — and how to get some of it back.
Before the passage of the One Big Beautiful Bill Act last summer, the estate tax exemption was set to be cut in half to about $7 million a person at the end of 2025. Many families accelerated gifts to their kids and friends before the deadline in order to take advantage of the higher exemption, which was set during the first Trump administration. Under Trump’s second term, however, the new tax law not only raised the exemption to $15 million but also made it permanent.
Lawyers and advisors told Inside Wealth that some parents are now second-guessing their gifts and considering their legal options for potentially clawing some of it back.
It’s a somewhat unexpected element of the “great wealth transfer,” with more than $100 trillion expected to flow to heirs through 2048, as estimated by Cerulli Associates.
Mark Parthemer of Glenmede said divorce is a common reason for clients to regret transferring vast sums to their kids. Wealthy couples frequently set up spousal lifetime access trusts, or SLATs, to get assets out of their estate but keep indirect access to them through their spouse. After a divorce, the spouse who funded the trust loses the benefit of that cash flow.
“We’re now finding the rubber is hitting the road,” said Parthemer, Glenmede’s chief wealth strategist. “There’s a lot of individuals that are just statistically going to find themselves in that scenario.”
Parents have a few routes to claw back assets that were already transferred to their children. One option is to take a loan from the trust set up for their children’s benefit, though it can strain family ties.
And any route could invite scrutiny by the Internal Revenue Service.
“I’m always advising parents not to overcommit because you don’t want to ever have to be beholden to your kids,” said Robert Strauss, partner at Weinstock Manion.
Strauss said he is currently advising a husband and wife who feel financially stretched after gifting two California homes to their children. The couple wants to sell the Malibu home for at least $17 million and collect the cash, but the home is in a trust for the benefit of their children. Strauss’ plan is to divide the trust, use one offshoot to sell the Malibu property and have it lend money to parents.
“I think their fears are irrational. They could slow down their spending, and they would have plenty left, but they evidently can’t,” he said. “They feel as if they’ve transferred too much, as if they didn’t retain enough, and that they lack economic security.”
While it’s legal for the parents to take a market-rate loan from the trust, the parents risk losing their tax savings, according to Strauss. The IRS could deem that the parents are the true beneficiaries of the trust and count its assets toward their taxable estate, he said. The risk is higher if the parents do not have the assets to repay the loan, he added.
“You can’t get around the fact that they need the money, and so you’re looking to break the fewest number of eggs,” Strauss said.
Some parents feel squeezed when gifted assets significantly appreciate, according to Robert Westley of Northern Trust. Clients often use grantor trusts to transfer assets to their kids, meaning they are on the hook for the trust’s income taxes, he said. For instance, if the trust receives dividends or sells stocks, the income or capital gains tax burden falls on the grantor, the person who funds the trust. Over time, “that tax burden becomes overbearing,” said Westley, senior vice president and regional wealth advisor at Northern Trust.
An alternative to taking a loan is swapping the parents’ nonliquid assets with income-producing ones from the trust, which is permissible if they are of equal value, he said.
Todd Kesterson of Kaufman Rossin said his remorseful clients aren’t necessarily strapped for cash, but are frequently displeased when their children’s fortunes exceed theirs.
“The only regret I’ve seen is where they’ve given away a lot of money in trust, and those trusts have done incredibly well for their kids, and now suddenly their kids’ net worth is more than theirs,” said Kesterson, principal of the firm’s family office practice. “It’s happened a number of times, and they say, ‘Well, this isn’t fair. How can we reverse this?”’
While estate planners frequently use irrevocable trusts for wealth transfers, they can be modified or terminated (despite their name), depending on the trust’s terms and jurisdiction. For instance, if the trustee has the authority to do so, an irrevocable trust can be “decanted,” which “pours” the assets from an old trust into a new one with more favorable terms. Depending on the state where the trust is held, it can be terminated altogether if the beneficiaries consent, returning the assets to the parents.
All of these routes risk undesirable tax consequences or, perhaps worse, ire from heirs. When children refuse to cooperate, sometimes their parents take them to court.
Scott Rahn, founding partner of RMO LLP, gets called in when ultra-high-net-worth families can’t see eye to eye. He said inheritance disputes are getting more common as families get richer and people live longer and fall ill with conditions like Alzheimer’s disease or Parkinson’s.
“These disputes are as much about emotion as they are about money,” Rahn said.
“Often the parent wasn’t there for them. Perhaps the parent was creating the wealth, out there plowing the fields and captaining industry and these kinds of things,” he added. “The child feels connected to them financially but perhaps not as emotionally. And they’re going to have a difficult time being asked to give back the thing that meant love to them.”
Rahn said he occasionally brings in psychologists or family therapists to assist during the discussions. Courts tend to be more sympathetic if the trust creator has experienced an unforeseeable life circumstance like illness, he said. Most of Rahn’s cases eventually end in a settlement, he added.
Ultimately, Rahn said he anticipates more conflicts of this nature down the line and advises parents to build flexibility into their estate plans, such as designating a trust protector who can modify the terms of the trust if the grantor falls ill.
“This trend of giving while living isn’t going away. If you’re looking at millennials, Gen Zs, the [Generation] Alphas that are coming up, the cost to get a start in life, whether it’s a business or a home, is only continuing to increase,” he said. “I think the families who are best situated to help avoid disputes like the ones we see and avoid needing these modifications, are going to be the ones who combine that smart planning with clear communication with their heirs and beneficiaries, so that everybody’s on the same page.”
The combined market valuation of six of India’s top-10 most valued companies rose by Rs 74,111.57 crore last week, with Reliance Industries emerging as the biggest gainer. The rally came during a volatile trading week in which the BSE Sensex advanced 177.36 points, or 0.23%.According to news agency ANI, Reliance Industries added Rs 24,696.89 crore to its valuation, taking its total market capitalisation to Rs 18,33,117.70 crore.Tata Consultancy Services saw its valuation jump by Rs 19,338.68 crore to Rs 8,38,401.33 crore, while ICICI Bank added Rs 14,515.93 crore to reach a market capitalisation of Rs 9,06,901.32 crore.The valuation of Life Insurance Corporation of India climbed Rs 9,076.37 crore to Rs 5,14,443.69 crore.Meanwhile, Bajaj Finance gained Rs 3,797.83 crore, taking its valuation to Rs 5,70,515.57 crore, while Larsen & Toubro added Rs 2,685.87 crore to Rs 5,40,228.21 crore.
Airtel, HUL among laggards
On the losing side, Bharti Airtel witnessed the sharpest erosion in market value, losing Rs 20,229.67 crore to settle at Rs 11,40,295.49 crore.The market valuation of Hindustan Unilever declined by Rs 16,212.18 crore to Rs 5,17,380 crore, while State Bank of India lost Rs 12,784.4 crore in valuation to Rs 8,76,077.92 crore.HDFC Bank also saw its market capitalisation dip by Rs 2,094.35 crore to Rs 11,79,974.90 crore.Reliance Industries retained its position as India’s most valued company, followed by HDFC Bank, Bharti Airtel, ICICI Bank, State Bank of India, TCS, Bajaj Finance, Larsen & Toubro, Hindustan Unilever and LIC.
Markets end volatile week with modest gains
Ajit Mishra, SVP, research at Religare Broking Ltd, said markets ended the week with marginal gains amid a “highly volatile and range-bound trading environment”.“Benchmark indices witnessed sharp intraday swings throughout the week, driven by persistent rupee weakness, mixed global cues, sectoral rotation, and continued uncertainty around inflation and interest rates,” he said, as quoted by ANI.Benchmark indices recovered on Friday, with the Sensex closing 231.99 points higher at 75,415.35 and the NSE Nifty rising 64.60 points to settle at 23,719.30.Analysts cited optimism surrounding possible progress in US-Iran peace negotiations and easing Middle East tensions as factors supporting market sentiment.Vinod Nair, head of research at Geojit Investments, was quoted by news agency PTI as saying that domestic markets traded with a “mild positive bias” due to buying at lower levels and constructive global cues.“Globally, the AI investment theme remained the primary driver, while domestically, financial stocks led the gains,” he said.Brent crude prices climbed 2.3% to $104.7 per barrel, while foreign institutional investors (FIIs) sold equities worth Rs 1,891.21 crore in the previous session.
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LAHORE:
Imagine a country sitting at the crossroads of South Asia and Central Asia, with a population of 250 million, abundant natural resources, and a GDP exceeding $450 billion, yet struggling to convince even its own businesspeople to invest at home.
That is Pakistan’s continued uncomfortable reality in 2026, and the way things are going, the business community believes that even after elevating higher, in the past one year due to perfect diplomacy, the government needs to take strict action against those civil servants and state officials, who still try to slow the pace of overseas and local investment as well as development work, which has jeopardised the growth of the country.
“Foreign direct investment (FDI) in Pakistan fell 31% during the first 10 months of financial year 2025-26, with total inflows coming in at $1.409 billion against $2.035 billion during the same period a year earlier,” said Mian Shafqat Ali, Founder of the Pakistan Industrial and Traders Association Front. He raised alarm over what he calls a deepening investment crisis, warning that both local and foreign investment has dipped to one of its lowest levels in recent memory.
He added that the root cause of this decline is not a lack of opportunity, but a system that actively discourages investors at every step. “The real obstacle in the way of investment is the layers upon layers of bureaucratic hurdles. Without removing these barriers, the dream of increasing investment cannot be realised.”
He noted that investors, both domestic and foreign, are deeply sensitive to the environment they operate in, and Pakistan’s current legal and regulatory framework, unpredictable energy policies, fluctuating exchange rates, and ad hoc government decisions have created an atmosphere of uncertainty that keeps capital away.
The business community by and large thinks that once the US-Israel-Iran conflict is settled fully, Pakistan can have better opportunities; however they simultaneously say that to grab those opportunities, “we need to settle our systems, which are dominated by anti-investment and anti-business culture”.
There are systems, which welcome and protect overseas as well as local investment; those societies belong to the first world or second world; “unfortunately here in Pakistan we are still unable to manage the smooth flow of Chinese investments, whom we call ‘iron brothers’,” said Bilal Hanif, a Lahore-based businessman.
“We keep building new institutions and launching new investment windows, but nothing changes on the ground because the real problem is structural. A foreign investor does not just look at your pitch; he looks at your court system, your tax regime, and whether rules will be the same two years from now. On all these counts, we are falling short,” he said.
Pakistan has averaged barely $2 billion in annual FDI over the past 26 years; a figure that expert bodies like the Pakistan Business Council say should be at least $12 billion per year, or roughly 3% of GDP, to meet basic development benchmarks. Meanwhile, regional competitors such as India, Vietnam, Indonesia, and even smaller economies like Bangladesh have consistently attracted far greater inflows, benefiting from predictable regulations, stronger investor protection, and long-term policy continuity.
Mian Shafqat Ali was clear that the failure does not rest with any single institution. He said the problem is not the fault of the Special Investment Facilitation Council (SIFC) or any other body, but rather the deeply entrenched systems that make doing business in Pakistan unnecessarily complicated.
“Until policymakers are willing to make difficult structural and political decisions, investment will remain weak, no matter how many new institutions are created,” he warned.
What investors consistently ask for is not complicated; it is political stability, simple regulations, and confidence that policies of today will not be reversed tomorrow. Pakistan, unfortunately, has struggled to offer any of these in a reliable manner. Frequent political disruptions, leadership changes, and policy discontinuity have created uncertainty that discourages long-term capital, and the capital does not avoid Pakistan because of a lack of opportunity, it avoids uncertainty.
“Government should move beyond announcements and focus on real structural reforms, overhauling the regulatory framework, simplifying business registration processes, ensuring energy availability at competitive rates and most importantly, providing a stable and consistent policy environment as without fixing the foundation, everything else is meaningless,” Ali added.
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