Messier Financial Advisors
1330 Post Oak Blvd., Suite 2800
Houston, TX 77056
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Transferring Wealth the Right Way

One of the most rewarding benefits of wealth is the ability to make a lasting impact long after you’re gone. To this end, you could set up trusts that provide a financial cushion, pay educational costs or provide business seed capital for multiple generations of family members. Maybe you want to have your name on a library or to fund scholarships at your alma mater. Perhaps there is medical research or another cause that you strongly support.

The idea of making the world a better place certainly has its appeal. It’s also nice to know that you can provide that financial cushion that helps your kids and grandkids pursue careers that they really love.

Planning Is Paramount

The movement of intergenerational wealth over the next 50 years may be substantial. The keys to a successful wealth transfer and accomplishing legacy goals all lie in the planning – from deciding on your specific objectives to discussing your intentions with future heirs and working with your financial advisor and estate planning team to execute the plan.

The Dream Team

An estate planning team will usually consist of your financial advisor, attorney and CPA or tax professional. This concentration of financial and legal firepower helps you address all aspects of your wealth transfer.

The attorney can draft documents to set up trusts or foundations; the CPA can help optimize tax outcomes; and your financial advisor works to coordinate these activities and to address specific investment implications and create appropriate investment strategies.

There are so many great ways to transfer assets if you do the work ahead of time. But if you don’t properly structure your estate, you could end up leaving Uncle Sam and your local state a large amount of estate taxes which could equal what you leave for your own family.

A Taxing Issue

Though far less onerous than it was a decade ago, the estate tax should still figure prominently in your planning. In 2017, it affects estates larger than $5.49 million.

This means that even if you have an estate plan in place, you need to review documents to make sure they’re in line with the estate tax environment. You should also use that opportunity to make sure your plan still reflects your intentions.

Family in Focus

Deciding how to divide and transfer your estate can have a major impact on family dynamics. There may be family members who feel that they didn’t get their “fair share” or others who may feel burdened. The best way to address these problems is by letting family members know your intentions ahead of time and, ideally, achieving some kind of consensus early on.

When you get everybody into a room to talk about things like a family financial philosophy and multigenerational roles and responsibilities, it boosts the power of that legacy to actually accomplish the goals you’re hoping to accomplish.

Starting Now

Regardless of the specific mechanics of your ultimate plan, there are steps that you can begin to take today to help reduce your estate tax burden – and they all revolve around giving away assets to reduce the size of your estate.

It may be tough for people who have retired recently to start to look at what they have and start giving it away. But the sooner you get started making gifts and funding trusts, the greater are your chances of leaving something substantial to your family or philanthropy – instead of to estate taxes.

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