4 Wealth Transfer Strategies Most People Learn About Too Late
Written by
Gabrielle Olya
Edited by
Kristen Mae
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Many Americans hope to leave a financial legacy, but without the right estate planning strategies, much of that wealth could be lost to taxes, probate or family conflict. A robust estate plan includes thoughtful transfer strategies that ensure heirs get to hold on to as much wealth as possible — and these strategies should be put in place as early as possible for a smooth transition of assets.
Here are four commonly overlooked estate planning moves that can help protect your wealth and preserve it for your loved ones.
1. Use Lifetime Gifting To Reduce Estate Taxes
Gifting assets during your lifetime — either directly or through vehicles like a family limited partnership — not only reduces your taxable estate but allows you to witness the impact of your generosity.
Yet, many high-net-worth individuals don’t take full advantage of the annual or lifetime gift tax exemption until it’s too late, said Michelle Taylor, a financial advisor at GFG Solutions and the founder of the Women and Wealth Initiative.
“There’s a saying that I like to remind clients to think about: Would you rather give with a cold hand or a warm one?” she said. “This helps people think through what matters most when it comes to gifting.”
2. Set Up a Trust To Control and Protect Wealth
Trusts are another powerful tool that are often underutilized.
“Whether it’s a revocable living trust to avoid probate, or more advanced strategies like a spousal lifetime access trust (SLAT) or irrevocable life insurance trust (ILIT), these can help control how and when wealth is distributed, protect assets from creditors and preserve family harmony,” Taylor said.
These can be especially helpful in cases where there are blended families or complex business interests.
3. Use Life Insurance To Create Tax-Free Inheritance
Life insurance can play a key role in wealth transfer planning, especially when structured properly.
“Life insurance can be a smart way to create liquidity to pay estate taxes or equalize inheritances among heirs, but the structure matters,” Taylor said. “Policies held inside a properly designed trust — like an ILIT — keep the death benefit out of your estate and in your family’s hands.”
4. Plan Early To Minimize Estate Taxes
Estate tax minimization strategies — such as freezing the value of appreciating assets or leveraging valuation discounts — can dramatically reduce what’s owed. But timing is everything.
“These are highly time-sensitive and must be planned for years in advance,” Taylor said.
How To Implement Wealth Transfer Strategies
Wealth transfer strategies should be implemented in your overall financial plan as early as possible, and should be continually updated as policies or personal circumstances change.
“Personal financial situations can shift unexpectedly, especially in today’s rapidly evolving legislative landscape,” said Brian Tullio, CFP, wealth manager at Fairway Wealth Management.
“To avoid unintended estate tax exposure, stay proactive and integrate estate planning into your ongoing financial planning discussions,” he said. “As your circumstances change or new laws are enacted, regularly reviewing and updating your estate plan will serve as a critical part of your overall comprehensive wealth planning.”
It’s also crucial to communicate your plans clearly with loved ones.
“A lot of financial damage happens not because the documents were wrong, but because the family wasn’t prepared,” said Dr. Stephan Shipe, CFP, founder of Scholar Financial Advising. “I always tell clients, if you don’t make these decisions clearly and intentionally, your kids will have to. And they’ll be doing it without you in the room.”
That’s why he emphasizes the importance of both documentation and dialogue.
“A trust or estate plan can help protect assets, but it won’t prevent conflict if no one understands how or why the plan was created,” he said. “That’s when even a so-called simple estate becomes complicated.”
Looking to build a legacy? Check out our Life to Legacy guide for expert advice and smart moves you can make today.
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