Asset Protection Tools- Estate Planning Tips to Keep Your Money in the Family

Share this post
financial assets

Utilize Asset Protection Tools Now to Keep Your Money in the Family

The prospect of estate planning can seem overwhelming. You need asset protection tools to get your started in the planning process. Financial planners recommend having an estate plan. It can be crucial to ensuring your money and assets go to your intended heirs. The good news is your family probably won’t have to worry about paying estate taxes. Most estates won’t trigger the federal estate tax, as it only applies in tax year 2022 to estates worth more than $12.06 million, or double that for a married couple. That dollar amount moves to $12.92 million in 2023.

The bad news is that avoiding estate tax is only one of your worries. Heirs may be responsible for paying federal income taxes on some assets and retirement accounts, and if you don’t plan correctly, your money could end up in the hands of an ex-spouse or creditor.

Meeting with an estate attorney is the best way to sort through this complex issues. Not having an estate plan can lead to confusion about your wishes, as well as emotional stress for your family. However, the estate planning process can become incredibly complex, especially if you have a large number of assets. These are the beginning steps for asset protection. Start with these estate planning tips.

  • Draw up a will.
  • Check your beneficiaries.
  • Set up a trust.
  • Convert traditional retirement accounts to Roth accounts.
  • Gift your money while you’re alive … but wisely. 

    You might not have to worry about estate tax planning if you simply give away your money while you’re alive. As of 2021, the IRS allows individuals to give up to $15,000 per person per year in gifts. If your goal is avoiding estate tax, those gifts can bring its value down. The money is also tax-free for recipients. However, be careful about giving away assets that appreciate in value, such as stocks or a house, which receive a step-up in basis when part of an estate. That means the taxable amount of an asset is adjusted upon the owner’s death and, as a result, it may be beneficial to transfer certain assets after death rather than before. Speak to a tax professional for guidance in this area.

    Married couples can use a spousal lifetime access trust to gift a large amount of money from one spouse to the other. This irrevocable trust can be used to move cash out of an estate while still keeping funds accessible. Another way to reduce your estate value is through charitable donations.

    Complex strategies and the ever-evolving tax code can make estate planning feel intimidating. With the right asset protection tools, you can get your future set and your family cared for. However, ignoring it can be a costly mistake for your heirs, even if you don’t have a lot of money in the bank. Talk to a professional to see what estate planning strategies may be right for you.