Many of our clients have shared some inspirational stories of how they’ve come to amass their wealth. It takes more than just financial insight, with personality characteristics that are closer to those of true leaders – determination, resolve, daily hard work, an entrepreneurial attitude, and a relentless drive to excel. Many have also taken calculated career or business risks that have yielded great returns.
Managing that wealth, however, is a little different than acquiring it. If you have significant assets, you’ll likely face unique and complex challenges regarding your wealth and your legacy, such as coping with higher taxes, dealing with a larger investment portfolio, managing multiple properties, and/or keeping track of your philanthropic activities. Dealing with heirs and family dynamics can also present challenges.
You have worked hard to build your wealth. Be sure to take into consideration these strategies designed to help preserve it:
Assessing your tax situation
Wealthy individuals can face a substantial tax burden, particularly when it comes to estate taxes. The 40% federal estate tax kicks in at $11,400,000, but as recently as 2017, the estate tax exemption was only $5,490,000. Investors must be prepared should it be revised downward in the future. It’s also important to consider the impact of state taxes. Currently, six states have an inheritance tax, while 12 states and the District of Columbia have an estate tax. If you live in any of these states, your heirs could be faced with an even bigger tax bill. Your tax, estate, and financial advisors can help you better understand your family’s potential tax ramifications so that you can plan accordingly.
Updating your estate plan
Most estate planning professionals will recommend that you have your plan reviewed every three to five years or upon a significant life event. Your family situation can change substantially through the years due to births, deaths, marriages, and divorces. Or perhaps you’ll experience changes in your business or career. Tax laws and other laws are constantly shifting at the federal and state level. Periodically reviewing your plan will help to ensure it still reflects your needs and your goals. Neglecting this important aspect can result in unintended consequences down the line.
Establishing a trust
A trust can help ensure that your plans are carried out according to your wishes and bypass probate. It may also help you protect your assets from a lawsuit or creditors. Trusts can be designed to assist with tax planning to help you maximize what you leave to your heirs. The role of trustee is important, as the trustee manages and controls the assets in the trust. You can name yourself as trustee, while you are able. You should also name a successor trustee, who may be an individual or entity, such as Stifel Trust Company, to step in when you are no longer able to serve.
Leveraging other tax-advantaged strategies
We can work with your other professional advisors who can explore life insurance options and/or an irrevocable life insurance trust (ILIT) to help with estate taxes and to generate a tax-free death benefit. An ILIT can protect your insurance benefits from divorce, creditors, and legal action against you and your beneficiaries. It also avoids probate and shields assets from the expense and loss of privacy associated with it.
We do not offer legal or tax advice. With your permission, Kletschke Wealth Management Group will work with your legal and tax advisors to review and implement your wealth protection strategies. You’ve worked hard to accumulate your wealth; contact Kim, Korey, or Tyler and we’ll work hard to help you with strategies designed to preserve it!
Trust and fiduciary services are provided by Stifel Trust Company, N.A. and Stifel Trust Company Delaware, N.A. (collectively Stifel Trust Companies), wholly owned subsidiaries of Stifel Financial Corp. and affiliates of Stifel, Nicolaus & Company, Incorporated, Member SIPC & NYSE. Unless otherwise specified, products purchased from or held by Stifel Trust Companies are not insured by the FDIC or any other government agency, are not deposits or other obligations of Stifel Trust Companies, are not guaranteed by Stifel Trust Companies, and are subject to investment risks, including possible loss of the principal invested. Stifel Trust Companies do not provide legal or tax advice.