These Are the Best Ways To Transfer Wealth

I’m a Financial Advisor Who Works With Wealthy Families: These Are the Best Ways To Transfer Wealth

Andrew Lisa   Tue, May 30, 2023

It’s one thing to make money, but building generational wealth requires strategic planning for what happens with your assets after you’re gone. GOBankingRates spoke with financial and estate planning professionals with wealthy clientele and found there is no one-size-fits-all solution.

“No two individuals or families are identical, so every estate plan must be as unique as the people creating it,” said Seth Bier, a Los Angeles estate planning attorney and founder of Bier Law. “We focus on planning for what’s most important for each client, but our universal goals are planning for people to keep as much of their hard-earned money as possible, keep them out of court, and bring their loved one’s closer together during tough emotional situations.”

Here are the best ways to make that happen.

Keep More Money in the Family by Minimizing Costs and Taxes

Expensive estate transfers shrink inheritances.

Bier explained that the costliest part of the process is usually probate, an often-lengthy legal process that validates wills. In his home state of California, for example, the so-called 4-3-2-1 law requires estates to pay a succession of attorney fees that pile on as the estate becomes more valuable. It’s 4% on the first $100,00, 3% on the next $100,000, 2% on the next $800,000 — that’s 9% on the first $1 million alone — then 1% on the remainder up to $9 million.

Depending on Where You Live, You Might Pay Taxes Twice

After the judicial system gets its bite, it’s the Taxman’s turn.

“In 2023, we each have a federal estate tax exemption of $12.92 million,” said Bier. “That means 97% of Americans who pass away this year will not have to pay any federal estate tax. For the very fortunate 3% who would have to pay a federal estate tax, advanced planning can help minimize the 40% tax by removing assets from their estate and taking advantage of the unlimited marital deduction and generation-skipping tax exemption.”

And the IRS isn’t the only one in line.

“While many states do not have an estate tax like the federal system, the savvy will determine if their state has an estate tax and implement a plan to mitigate those taxes,” said Robert E. Kabacy, an estate planning lawyer with the firm Kell, Alterman & Runstein.

Do What the Wealthy Do: Put Your Trust in Trusts

So, how do the wealthy remove assets from their estate, avoid probate proceedings and capitalize on unlimited deductions?

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https://finance.yahoo.com/news/m-financial-advisor-works-wealthy-133542196.html