1. Transfer Wealth Smartly
One of the best strategies to ensure that your assets and money are distributed to the right people, per your wishes, is by doing it yourself. Transfer money to the most important people while you’re still alive and you’ll never have to worry about anything going awry when you’re gone.
You can gift $15,000 per year to however many recipients you want before incurring any gift tax. Over the course of your life, you can gift up to $5.5 million before you have to worry about taxation, so little by little, you can distribute your wealth as you wish.
2. Draw Up a Will
If you pass away without a will in place, that’s when the most financial chaos will ensue. Once probate court gets involved, your beneficiaries are going to end up paying the price and your hard-earned money will end up going to a lawyer instead of the people you care about.
Drawing up a will is estate planning 101, but neglecting it altogether is one of the biggest mistakes you can make.
3. Roth Accounts
Your individual retirement account is where a good portion of your money is going to be, but traditional IRAs, unless given to a spouse, are subject to taxation. Although these taxes can be spread out over your beneficiary’s lifespan at the moment, that could always change.
Roth accounts, which are funded with after-tax money, have tax-free transfers. You have to make under a certain amount ($139,000 for singles) to qualify for a Roth IRA, but if you do, it’s worthwhile to start gradually transferring your money over now.
4. Setting Up a Trust
If you’ve been fortunate enough to accumulate numerous assets and wealth in your life and you aren’t ready to place it in the hands of your beneficiaries, you can set up a trust instead. Once you do, appoint a trustee that can handle the distribution of your wealth.
Permanent trusts offer the biggest tax benefits, but when you put money in one of these, it no longer belongs to you, it belongs to the trust. Your trustee controls the money, but you can put some stipulations on what they’re allowed to do.
Choosing a Few Estate Planning Strategies
Figuring out which combination of estate planning strategies you want to move forward with is something that you’ll have to plan over time. These are a few of the best and most common strategies for maximizing your wealth, but you have to ultimately do what’s best for you, your loved ones, and your money.
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