Transferring wealth is a little more complicated than simply sending money from one person to another after a loved one passes away. It can be an overwhelming feat to tackle no matter what financial situation you’re in. Additionally, it’s estimated that up to $68 trillion dollars will be transferred from baby boomers to their heirs in the next few years. It is more important than ever to meet with your financial advisors to ensure that this “great wealth transfer” will be a smooth one for you and your loved ones.

By constructing a tax-efficient wealth transfer strategy with your wealth manager, you’ll be able to properly pass on your legacy while simultaneously minimizing your taxes. Here are a few basic tips that can help you transfer your wealth effectively and efficiently.

Establish a Well-Designed Estate Plan

About 68% of Americans die without creating a simple will. A will, by itself, subjects your assets (and beneficiaries) to the stress, delays, and costs of probate. Conversely, a well-designed estate plan can help reduce or eliminate both probate and estate taxes. As financial advisors, we strongly recommend updating and reviewing your estate plan with a CERTIFIED FINANCIAL PLANNER™, or CFP® certificant, professional by your side. Each state has its own set of specific rules, so it’s imperative to have a local wealth manager involved make sure you are on the right track.

Consider Setting Up an Irrevocable Grantor Trust

Setting up an irrevocable grantor trust is a popular financial planning strategy to pursue, especially with interest rates being at historic lows. Working this into your wealth strategy removes the transferred assets (plus any future appreciation) from the grantor’s estate while retaining access to a certain level of cash flow. Common types of irrevocable grantor trusts are the grantor retained annuity trust and intentionally defective grantor trust. These kinds of trusts can provide significant savings when it comes to gift and estate taxes.

Be Careful with Charitable Giving

Most people do their charitable giving with “after tax” cash from their income. However, as many financial advisors will tell you, this is not the most efficient method to utilize.

Gifting highly appreciated securities–from real estate to business interests–can give you a huge  tax benefit by eliminating capital gains taxes while still receiving a charitable tax deduction.

Have an Open Discussion with Your Beneficiaries

Believe it or not, transferring wealth is only half the battle. According to a study in Money magazine, family assets are lost from one generation to the next about 70% of the time. This devastating reality can be avoided by keeping the communication lines open between you and your beneficiaries.

Make sure to discuss your long-term objectives for the wealth and help your family understand the role they play. Financial literacy is key to helping the next generation make intelligent decisions when it comes to their inherited assets.

Our Financial Planners Can Help You Construct a Tax-Efficient Wealth Transfer Strategy

Especially with your hard-earned wealth, it’s important to leave as little to chance as possible. Morgan Rosel’s team of financial advisors have the tools, experience, and personalized touch to help facilitate your wealth transfers while being as efficient as possible when it comes to taxes. Interested in learning more about strategy when it comes to transferring wealth? Check out this case study in which we share how we saved a client millions of dollars in taxes through a wealth transfer strategy.