Boca Raton Certified Financial Planner® Professional, Stephen Ostrofsky of True North Financial Advisors explains how particular estate planning techniques transfer wealth. The transfer of one’s wealth is a both a selfless and selfish act. Perhaps like no other, being our final act. The wealth we transfer to our heirs can be simple or complex in our minds, but in the end did we help the intended recipients and are they capable of managing the wealth. Wealth is transferred and controlled through the following methods in the order of greatest control:
• Transfer by title (e.g. joint tenants with rights of survivorship);
• Transfer by contract, (e.g. IRA beneficiary designation); and
• Transfer by law, (irrevocable trust or will).
The transfer of wealth can in many instances trigger a gift or estate tax exclusion, credit or a tax. The effective management of the wealth transfer process can maximize the wealth transferred to heirs through the timing the transfers and whether amount transferred was considered:
• Lifetime Gift Credits;
• Use of Unified Credits; or
• Transfer at Death, Bequests.
Through wealth transfer strategies you can reduce (discount) the amount subject to tax or increase (leverage) the amount transferred through certain techniques that utilize trusts. You can extend the period before taxes are due for multiple lives and generations. You can benefit a cause or charity and still provide for family through charitable wealth transfer strategies. The types of trusts utilized to maximize wealth transfer include:
• Revocable Trust;
• Irrevocable Trust;
• Bypass Trusts;
• Grantor Retained Trust;
• Generation-skipping Trusts;
• Dynasty Trusts;
• Charitable Remainder Trust; and
• Charitable Lead Trusts.
With guidance from True North Financial Advisors and your team of tax and legal advisors you can:
• Develop a Comprehensive Plan;
• Minimize Taxes;
• Leverage Amount Transferred; and
• Extend Period Before Taxes Due.
If a client is advised that estate planning should be done, it is simply an invitation to the client to procrastinate. A financial planning advisor must be placed in confidence by their client in order to help them determine what the current estate plan means for their family. After a review of the client’s situation and the client clearly understands, they should become highly motivated to make decisions related to their own health, happiness and disposition of wealth.
