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Wealth Transfer Strategies for High-Net-Worth Individuals

Written By: MB Group

For most people with a high-net worth, the ultimate goal is to ensure those you care the most about are cared for and provided for—even after you're gone. And the CPAs at MB Group can utilize tailored strategies to help you achieve your short-term and long-term goals. We will help you navigate the complexities of tax laws and financial tools to give you superior peace of mind—knowing your loved ones will be cared for. While everyone's needs can vary, a few typical wealth planning strategies we use are listed below.

Transferring a Business Can Preserve Wealth 

Business success offers you the opportunity to benefit your family for several years and generations to come. Inwealth transfer most instances, the income generated in a limited liability company (LLC) will be divided based on the balance in the owner's capital accounts. Because your children or loved ones will own the majority—if not all—of the business (based on the capital accounts) the majority of the income will be passed to them. At MB Group, we'll work closely with you to properly structure the business to achieve your wealth transfer goals. 

Transfer Wealth with Roth IRA Conversions

Based on your overall financial situation and income tax bracket, it may make sense to convert traditional Individual Retirement Account (IRA) assets to Roth IRAs. When the conversion is executed, you'll pay income taxes on the converted amount. In doing so, the assets in the account will grow tax-free. And when your loved ones or family members withdraw the funds, they will pay no taxes on the distribution. 

Life Insurance Can Be Used to Convey Wealth

Life insurance policies can act as a highly effective way to transfer wealth to those you love. Even when you consider the taxation on the life insurance policy, the net sum provided to the named beneficiary will be more than the money paid into the policy. If you're looking for wealth-transfer strategies, life insurance is certainly a technique you should consider. 

Transfer Wealth with Intra-Family Loans

One very common wealth-planning strategy is to grant family loans. This tax-free wealth transfer approach can be highly effective at transferring amounts larger than either the lifetime gift exemption or the annual gift exclusion. The IRS has created specialty interest rates for loans that are set monthly, called the applicable federal rate (AFR). 

Trusts Can Be Used for Wealth Planning

There are a range of different trusts that can be used to pass on wealth. 

Insurance Trust

An insurance trust can be created to hold your life insurance policy so that the death benefit is excluded from your taxable estate. At the same time, it provides liquidity for expenses and taxes. 

Irrevocable Gift Trust

With the irrevocable gift trust, you can give your beneficiaries access to gifted funds based on the standards you set. These trusts may extend for several generations. 

Revocable Living Trusts

While revocable living trusts remain a part of your taxable estate, they can be used to transfer wealth in an efficient manner. In addition, the revocable living trust can help your beneficiaries avoid the probate process. 

Dynasty Trust

With a dynasty trust, the assets placed in it will pass from one generation to the next free of the estate tax. None of the assets in the dynasty trust are included in the beneficiaries' taxable estates or your estate. 

Contact MB Group for Tailored Wealth Planning Strategies

In the end, there are a range of different strategies our CPAs can use to transfer wealth and help you achieve your goals. We take a collaborative approach to execute strategies and will work closely with your attorney and other professional advisors for a comprehensive solution. Get started and contact the MB Group today.

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