Wealth transfer is just another name for giving away money and property. But, before you even begin to choose recipients of assets you’ve been fortunate enough – and smart enough – to accumulate, it makes sense to put yourself first. Consider your own needs for the rest of your life – living expenses, health care costs, where and how you hope to live for the next five, ten, even twenty five years. Only then is it time to consider who the other “players” in the plan might be, and how each of those factors into your wealth transfer intentions. In addition to selecting individual beneficiaries, your wealth transfer plan may incorporate philanthropic causes that have been important to you and your loved ones.
There are “now” and “later” aspects to wealth transfer planning, with some assets to be transferred during your lifetime, others only at the end of your life. “Now” transfers might include:
- Transfer of business interests to executives or family members who might take over when you retire or in the event you are unable to continue running the enterprise
- Financial assistance to family members who require special care
- Direct tuition payments to institutions where grandchildren (or grandnieces and nephews) are studying
- Contributions to causes – religious, medical research, urgent societal needs
While tax planning may not be the primary motivation, smart wealth transfer planning can certainly help minimize taxes: As smartasset.com explains, in tax year 2021, you can give any number of people up to $15,000 each (or up to $30,000 each if you’re married and you’re filing joint tax returns). “Over the course of your lifetime, you can give out up to $11.7 million of your wealth as gifts before getting hit with the gift tax under current tax law,” the authors add. In terms of “later” planning for wealth transfer with tax avoidance, smartasset.com suggests life insurance owned through an irrevocable life insurance trust.
Different kinds of trusts set up now, during life, enable wealth transfers to take place now or upon your death. Estate vehicles to explore include:
- family limited partnerships
- qualified personal residence trusts
- charitable remainder trusts
“From the dawn of time, humans have been concerned with privacy,” Steve Hartnett, Director of Education for the American Academy of Estate Planning Attorneys points out, adding that one of the greatest benefits of trusts is that they help protect privacy both at death and during life.
At Geyer Law, where we guide Indiana’s families through estate planning, probate and estate administration, evaluating each individual’s “now” and “later” goals for their family members their employees, and their favorite charities, we urge the importance of – putting yourself first!
– by Cara Chittenen, Associate Attorney at Rebecca W. Geyer & Associates