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Estate Planning Strategies

April 05, 2023

Minimize your tax liability while preserving your wealth. Find out how to structure your estate plan to do both, here.

For individuals who have accumulated a significant amount of wealth, it is essential to consider several situations if they want to preserve that wealth for current and future generations. One of the most prominent situations is that estate taxation can erode wealth. Above certain levels of wealth, estate taxes may be difficult if not impossible to eradicate.

From the beginning, you should make certain that you choose estate planning professionals with the right credentials. They should have a detailed understanding of current estate tax laws, both Federal and state (should you live in a state that taxes the wealth of an estate at death). They should also be very familiar with specific requirements of the law and associated calculations.

While minimizing the effect of estate taxation is generally very important, of equal importance is making certain that you have an estate plan that adequately settles the financial and economic needs of your family and heirs. Of primary concern is basically “who will get what, and when will they get it?” For example, you may need to provide for a disabled child, or you may not want to leave a significant amount of wealth to a 12-year-old child, or you may have children from multiple marriages who have diverse financial resources. You can see that there can be a multitude of complicated situations within families.

And while there are many alternatives that need to be discussed and evaluated, there are also many practical methods available for accomplishing specific goals. You options include gifting, trusts, charitable bequests, and life insurance, all of which may help you direct how things will be finalized when you are no longer here to make the decisions.

One thing that you should realize is that a sound estate plan will always need to be reviewed whenever there is a significant change in personal circumstances. It is not uncommon to have a yearly estate planning review just to make sure nothing material has changed. In that way, you’ll know that you have served your family and heirs well.