Wealth Transfer: Be Rational and Be Strategic!

Wealth transfer is one of the most personal topics within the financial field. Issues like estate tax and gift planning go far beyond numbers and financial records. While there is a strategic side to wealth transfer, there is also an extremely emotional one, which needs to be handled with the utmost delicacy. If you’re looking to solidify the best course of action for your wealth, you should work with a CPA firm that understands not only the financial aspects of wealth transfer, but also the emotional and psychological ones.

Before entering into the wealth planning process, it’s a good idea to familiarize yourself with these two very distinct sides of wealth transfer – emotional and strategic – and understand that each must be taken into consideration before any concrete plans are established.

Wealth Transfer: The Emotional Side

Wealth transfer processes delve into the innermost dynamics of your personal and familial history: They may reopen old wounds, unravel intricate family histories and bring to light issues you might have preferred remain buried.

So, before a CPA firm jumps into any structural planning, it must navigate the personal side of your plans for your wealth. Dedicated solely to the safety and wellbeing of your wealth, a CPA offers you a more objective opinion – one that isn’t influenced by family history. How you transfer your wealth is ultimately your own decision, but a CPA helps to compartmentalize your thoughts, see things rationally and consider future consequences.

Wealth Transfer: The Strategic Side

Once a client’s personal matters are carefully sorted through, a CPA begins developing the best course of action for the client’s wealth. When it comes to this more strategic, tactical component of wealth transfer, a CPA typically provides three options:

Wills

A will is a legal declaration containing your instructions and wishes for your property and assets to be distributed after your passing. It is one of the most uniform options for wealth transfer and remains the most basic estate plan. The downside to a will is that estates typically fall into probate and are thus subject to estate taxes.

Gift Planning

A gift or asset transfer to children or other beneficiaries may help reduce your taxable estate. You may gift, tax free, up to $14,000 per recipient per year – or $28,000 per recipient for married couples if you combine gifts. Additional gifts require the filing of a gift tax return.

Medical Or Education Gifting

If you pay someone’s medical or education expenses directly to the service provider, you make this payment as an extra gift. For example, if you write a check for tuition directly to a grandchild’s school, you can still gift that grandchild the annual per-recipient amount.

529 College Plans Gifting

You can contribute to a child or grandchild’s 529 college savings plan as your annual gift. In fact, with college gifting, you have the option of contributing up to five years’ worth of annual gifts in one year ($70,000 per person or $140,000 per couple) to one person.

Trusts

A trust may enable you to better meet your estate planning goals. There are several types of trusts:

  • Irrevocable Life Insurance Trusts
  • Charitable Trusts
  • Revocable Living Trusts

Trusts help transfer wealth, but they also keep a portion of your estate out of the probate, therefore minimizing your estate taxes.

Wealth transfer is a process that must navigate strategic as well as emotional realms to be successful. You want to partner with a CPA firm that not only is knowledgeable about the financial side of wealth transfer, but also acknowledges the emotional aspect – and takes the time to work through the two together, always with your best interest at heart.

LBA Haynes Strand provides personalized service that reflects the high standards we demand of ourselves. Our caring, competent and client-focused staff are eager to assist you and start planning your financial future. Contact us for a no-cost consultation today!