Every individual has an estate, whether they manage their estate or not, certain rules apply which may result in unintended consequences, unless an estate plan is developed. The transfer of one’s wealth is a both a selfless and selfish act. Perhaps like no other, being our final act. The estate plan that is designed to transfer wealth to your heirs can be simple or complex. In the end, did your estate plan help the intended beneficiaries and are your heirs capable of managing the wealth on their own. Let’s review some important estate planning concepts to better understand how things work.
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 in many instances can trigger a gift, tax or use of estate tax credit exemption. The effective management of the wealth transfer process can maximize the value transferred to heirs through the timing the transfers and whether amount transferred is:
Lifetime Gift Credits;
Use of Unified Credits; or
Transfer at Death, Bequests.
Through creative wealth transfer strategies you can reduce (discount) the assets subject to taxation or increase (leverage) the amount transferred through certain techniques that utilize trusts. You can extend the period before taxes are due for multiple generations. You can benefit a cause or charity and still provide for family needs through charitable wealth transfer strategies. The types of trusts utilized to maximize wealth transfer include: Revocable Trust; Irrevocable Trust; Bypass Trusts; Grantor Retained Trusts; Generation-skipping Trusts;Dynasty Trusts; Charitable Remainder Trusts; and Charitable Lead Trusts.
With guidance from True North Financial Advisors and your team of tax and legal advisors you can:
Develop a Comprehensive Estate Plan;
Minimize Taxes;
Leverage Amount Transferred; and
Extend Period Before Taxes Become Due.
Boca Raton Certified Financial Planner® Professional, Stephen Ostrofsky of True North Financial Advisors can explain how particular estate planning techniques transfer wealth. 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. In most instances, after an explanation of a client’s situation and they clearly understand, they will become motivated to make decisions related to their own health, happiness and disposition of their hard-earned wealth.
