Full Article Link: Nasdaq – 4 Wealth Transfer Strategies Most People Learn About Too Late
“A lot of financial damage happens not because the documents were wrong, but because the family wasn’t prepared. I always tell clients, if you don’t make these decisions clearly and intentionally, your kids will have to. And they’ll be doing it without you in the room.”
—Stephan Shipe, Founder of Scholar Financial Advising
Key Takeaways
- 1. Use Lifetime Gifting To Reduce Estate Taxes
Many high-net-worth families fail to take advantage of annual or lifetime gift tax exemptions early enough. Gifting during your lifetime can significantly reduce the size of your taxable estate and allows you to witness the impact of your generosity. - 2. Set Up a Trust To Control and Protect Wealth
Trusts—whether revocable or more advanced vehicles like SLATs and ILITs—can help avoid probate, dictate how and when assets are distributed, and protect wealth from creditors. These are especially valuable for complex family or business situations. - 3. Use Life Insurance To Create Tax-Free Inheritance
When structured properly, life insurance can provide tax-free liquidity for heirs. Holding policies inside an irrevocable life insurance trust (ILIT) ensures that the death benefit stays outside of your taxable estate. - 4. Plan Early To Minimize Estate Taxes
Strategies such as freezing the value of appreciating assets or leveraging valuation discounts must be implemented well in advance. Early planning is critical to minimize estate tax exposure. - Communicate Your Plans Clearly
As Dr. Stephan Shipe highlights, even the best legal documents can’t prevent conflict if family members are left in the dark. Estate planning requires both proper documentation and open dialogue with heirs to avoid misunderstandings.