Estate Planning for the Wealthy
By Alan Olsen
When was the last time you looked at your estate plan? If you can’t answer that
question, either because it’s been so long that you can’t remember or because you
still don’t have an estate plan in place, then you have some work to do. With the New
Year almost here, now is a great time to take a closer look at your estate plan, or to
start one, if you haven’t already. Estate planning is important for everyone,
especially if you have a lot of wealth and you want to control what happens to it
after you pass on. To that end, let’s take a look at some of the important tips to keep
in mind for your estate plan.
Estate Tax Could Be Eliminated
Before we get started, there is one important factor to be aware of regarding estate
planning and taxes. Now that Donald Trump has been elected president, there could
be some changes coming to the estate tax laws: namely he wants to eliminate the
estate tax completely. Currently, any assets that exceed $5.45 million are taxed at a
40 percent rate for one’s beneficiaries. That money would be tax free if Trump’s
proposal is passed.
Remember Your Will
One of the first steps you should take is to draw up a will. That seems like a no-
brainer, but the fact is nearly 70 percent of all adults in America as of November of
last year did not have a will. Without a will, your estate will end up being divided in
probate court and likely won’t end up where you intended.
What About Beneficiaries?
Of course, you get to choose who inherits your money, so make sure you choose
wisely and specify which assets go to whom. It’s always a good idea to reevaluate
your plan whenever a major life change occurs, such as a new child, a divorce or
marriage or a death in the family.
Trust the Trust
Setting up a trust is always a good idea if you have a large estate. Having a trust,
with a trustee, allows you to determine how your assets are used and protects them
from being abused or misused after you’re gone. There are several types of trusts,
but permanent or irrevocable trusts usually provide the most tax benefits. However,
when you place assets in such a trust they become property of the trust, which
means they are not subject to estate taxes.
Consider a Roth IRA
Another smart move for many people is to convert a traditional IRA to a Roth IRA.
The money from a traditional IRA is taxable if it’s transferred to anyone other than
your spouse. However, you can avoid this by slowly converting traditional IRA
accounts to Roth IRA accounts.
Give it Away Before You're Gone
One of the best ways to protect your money and other assets is to give it away
before you pass away. You can give away up to $14,000 per person in gifts every
year. Those gifts will decrease the value of your estate and they are tax-free for the
recipients. You can also donate your assets to charitable causes, which also provides
a nice tax break. For more estate planning ideas to protect your wealth
contact GROCO for help.
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