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How to Help Guarantee a Smooth Transfer of Assets (So That You No Longer Have to Worry About the Future of Your Family)
A study referenced in Forbes shows rich Boomers (Ages 59-77) are stressed about how they’ll hand their fortunes down to their kids.
70% of HNW investors are concerned about their heirs using the money wisely.
76% say a “smooth transfer of assets” is one of their biggest financial worries.
70% are concerned about how to pass money to heirs in the most “tax-optimized way”.
Here are 10 ways to help ensure your assets transfer smoothly to your heirs – and so that they don’t squander your money after you’re gone.
- Don’t realize capital gains unless you must. Heirs will get a step up in basis eliminating any tax on those gains up to the date of your death.
- If you have over $7.5M per person (or around $14.5M per married couple), then look for ways to get anything over that outside of your taxable estate to avoid the 40% death tax or inheritance tax in 2026 or after when this is the amount estimated to be applied. Currently through 2025, the threshold is $13.61M per person (so $27.22M husband and wife). There are several different ways to do this. Feel free to reach out to discuss.
- Of which, the lowest hanging fruit is to give away the annual exclusion amount each year to your kids and/or grandkids via trusts or 529s. The amount for 2024 is $18,000 per person. So, a married grandma and grandpa could give away $36,000 to each grandchild and each child, along with other individuals. The amount given away reduces their taxable estate.
- Communicate to your heirs what your ideas are for how they might spend the inheritance. Gather their feedback and then respond accordingly. Perhaps they’ll totally agree or perhaps they will make you think and perhaps approve of other things to spend on.
- A book called Family Wealth by James E. Hughes, Jr. states that in order to keep family wealth generational (and not to have it lost or spent), then you should ensure all heirs, or their spouses, work and earn money on their own, be it a low paying job or not.
- “If you can give your child only one gift, let it be enthusiasm!” – Bruce Barton. Give them the gift of enthusiasm in general. But digging deeper, espouse in them enthusiasm for their career, their family, their opportunities. But always ensure one adult in a relationship is earning money.
- If you can’t convince to them to do that on your own or if they won’t on their own free will, then write it into the trust that they get “x” amount of dollars at age “y” as long as they or their spouse are gainfully employed as defined as… Obviously consult an estate planning attorney on this.
- Communicate this desire of yours to them. Be clear. If it’s in the trust, let them know. Let them know who the successor trustees or the corporate trustees are.
- You can write in a no-contest clause to discourage in-fighting. If you try to fight what is in this trust, then you won’t get any of it. Communicate this to them ahead of time, too.
- If adult kids need money and you want to gift it before you die, there are many ways to do that. You can probably even keep a ledger showing how much was given to who. Then have your trust honor that ledger and deduct those amounts from the applicable heir’s final inheritance. As with everything, communicate this clearly to future heirs as well.
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*Commonwealth Financial Network® and One Bridge Wealth Management do not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation