Putting Family First: Intergenerational Wealth Transfer and Investment Planning

When parents discuss their expected wealth transfer with their children, there can be many benefits for the younger generation.

One example is a basis step up, which allows the value of an asset to be determined as the higher market value at the time of inheritance, not the value at which the party originally purchased the asset. This benefits individuals who have marketable securities with large amounts of built-in gain, as the tax on the built-up capital gain will be avoided. Another prevalent example of successful wealth transfer is through charitable contributions. This can be achieved through a charitable lead trust, which gives to charity while postponing a child’s inheritance until a certain age. However your family decides to proceed with wealth transfer plans, it is important to define your goals early and keep an open line of communication between you and your advisor in order to achieve family goals. This 9-page report outlines a six-step process which can be used as a guideline for families and advisors who are involved in intergenerational wealth planning. Should you need additional information, please call your Telemus Financial Life Advisor.


Thoughts about Tax Day

April 15 (this year the 18th) is a day most of us look forward to being behind us as we have either filed our annual income tax return or have extended it and have six more months to face the reality of taxes! However, it should really be a time to consider what could have been done differently to reduce taxes or more importantly what can be done for the current year and in the future. The key is treating taxes strategically and to have a plan to control or reduce one’s taxes in the future.

Example 1: For those who are currently over the age of 70, there is the potential of making charitable contributions directly from one’s IRA instead of taking the annual required minimum distribution (RMD) as opposed to including the RMD in one’s adjusted gross income and then taking a charitable deduction. Because of the complexity of the tax laws, this is a more tax efficient way to report income. It can reduce the impact of limitations based on one’s Annual Gross Income and it has the benefit of reducing state taxes as well.

Example 2: Everyone (including those not over age 70), should consider making charitable contributions using appreciated long term capital gain property because in most cases one gets a full fair market value charitable deduction without having to pay taxes on the built-in gain.

These are just two examples of strategic tax planning which should be a part of everyone’s wealth plan. Reach out to one of our Financial Life Advisors for more information and excellent advice.


Intergeneration Wealth Transfer: Part 1

Coming Soon: The Largest Wealth Transfer in History

Financial planning has never been as critical a discipline as it is today

Analysts expect $16 trillion of ultra high net worth (UHNW) money to be transferred to the next generation, with $6 trillion of that occurring in the next 30 years. Without adequate planning, the ultra wealthy could lose up to half of their fortunes through inheritance taxes. This is why we believe that planning ahead is crucial to ensuring that your wealth is able to be passed on to your loved ones. Identifying goals with your advisor early on regarding wealth transfer and communicating those goals to the next generation can only help put your family in a better position moving forward.  Call your Telemus Financial Life Advisor to take the next step.