By Robert (Rory) J. O’Hara III, CFP®, CRPC™
Have you considered how you want to pass on your wealth to future generations?
While leaving a gift that lasts for generations may be an admirable objective, estate planning and gifting present unique challenges.
In this quick video, we explore key strategies to help you pursue your goals.
TRANSCRIPT
Hi, I’m Rory O’Hara, Founder and Senior Managing Partner at Ausperity Private Wealth. Today, I’ll share insight into effective ways to transfer wealth to future generations.
Transferring assets can be a complex process, but by using specific strategies, you can simplify and streamline wealth transfer. Below are three approaches to consider:
Direct Payments for Simplified Transfers
Direct payments allow you to transfer cash or other assets directly to a third party, reducing the need for complex estate administration.
Examples include:
- Paying tuition directly to educational institutions for your grandchildren’s education.
- Covering medical expenses by sending payments directly to healthcare providers.
This method offers a straightforward way to support your loved ones while minimizing administrative burdens.
Using Annual Gifting to Reduce Taxes
Annual gifting is a practical way to transfer wealth incrementally while taking advantage of tax benefits. By utilizing the annual gift tax exclusion, you can transfer a certain amount to individuals without incurring gift taxes.
Currently, the annual gift exclusion is set at $18,000 per person. If you exceed this amount, you may need to file a gift tax return, but that doesn’t necessarily mean you’ll owe taxes.
Consulting with a tax advisor can help you navigate the process and optimize this strategy effectively.
Irrevocable Trusts for Long-Term Wealth Management
Irrevocable trusts offer an organized approach to transferring wealth while potentially reducing taxable estate values. Assets placed in an irrevocable trust are excluded from your estate, which can help manage estate taxes.
Benefits of irrevocable trusts include:
- Tax Advantages: Contributions may apply to the annual gift exclusion or lifetime exemption, reducing gift tax exposure.
- Protection from External Risks: Assets are generally protected from creditors, lawsuits, and divorce settlements.
- Customizable Distribution Plans: Trusts can be structured with conditions based on age, milestones, or other factors.
- Intergenerational Support: These trusts can provide benefits to children, grandchildren, or charities while limiting additional taxes.
Irrevocable trusts also offer options for combining family wealth transfer with philanthropic objectives, creating a structured plan for long-term impact.
Expert Guidance for Wealth Transfer
These three strategies—direct payments, annual gifting, and irrevocable trusts—highlight some of the many ways to effectively transfer wealth to future generations.
At Ausperity Private Wealth, we believe in collaboration and tailored solutions. If you’d like to discuss your wealth transfer goals, contact me to schedule a meeting:
📞 856-252-0102
