(844) 845-4219 » Estate Planning Tips

8 Estate Planning Tips to Maximize Your Financial Legacy



Planning for when you’re gone isn’t something most people like to do even if they know they should put an estate plan in place. According to’s 2021 estate planning survey, 2 in 3 respondents said they don’t have a will.

Without a plan, you may be throwing money away that could help cover end-of-life costs. Worse than that, your relatives may end up with less of the money you want to leave them. Below are eight tips to ensure your financial legacy will go to the right people.

1. Create a living trust now

Create a living trust now

One of the primary benefits of establishing a living trust is that you can avoid what can be a costly probate process. Your assets, including any real estate, vehicles and bank accounts go directly to those you have listed as beneficiaries.

Unlike a will that only goes into effect once you die, a living trust begins as soon as you sign it. This helps you ensure good financial decisions even if you become temporarily incapacitated.

Also, when you opt for just a will, the costs for your beneficiaries can be anywhere from five to 15 percent of the total assets. However, a trust document minimizes these costs so your heirs receive more of their inheritance.

2. Give assets away while you are still alive

When you give money or other assets to your beneficiaries each year while you are alive, you ensure that they get the amount you intended without the tax burden on your estate or on them.

The IRS allows a lifetime tax exemption on gifts and estates. For 2019, an individual’s combined lifetime exemption from federal gift or estate taxes equates to $11.4 million. If married, the joint exemption is $22.8 million. U.S. citizens also have an unlimited exemption from the property they inherit from a spouse. You can use all or part of this gift and estate tax exemption during your lifetime. Your heirs can use any leftover portion to reduce or eliminate estate taxes.

Also, a trust can help with this process because assets can change hands while you are still alive, unlike a will. That way, your beneficiaries can receive some of their inheritance early while avoiding some of the tax burden.

For example, if you put a house in a Qualified Personal Residence Trust, this trust allows you as the homeowner to give the property to beneficiaries at a fraction of its value, further reducing estate tax obligations.

3. Convert traditional retirement accounts to Roth accounts

You can reap numerous benefits by converting these accounts to Roth accounts. First, Roth accounts are not subject to the minimum-withdrawal rules that are applied to regular IRAs. Rather than starting to empty those regular accounts when you turn 70 ½, you can leave the money in your Roth account.

Second, while you will have to pay federal income tax upon converting the account, it won’t be anywhere near the amount your beneficiaries would have had to pay in taxes.

As long as the rules remain the same, this is a good strategy to minimize the tax burden on your loved ones.

4. Leverage life insurance benefits

Proceeds from a life insurance policy can offset taxable asset losses to your beneficiaries that arise from income and estate tax obligations.

The tax-free life insurance proceeds can either go toward paying the tax burden or it can make up for assets lost in estate taxes.

5. Take advantage of the temporary increase in exemptions from generation-skipping transfer taxes

Currently, the generation-skipping transfer tax (GSTT) exemption amount affecting transfers to grandchildren will increase to $11.4 million per individual. If the transfer involves a married couple, the amount is $22.8 million.

This amount will go down as of 2026. Now is the time to take advantage of this increase to help your family avoid taxation later on.

6. Explore family limited partnerships

Although it requires very careful planning, it is possible to create a family business entity to minimize transfer taxes for those who receive your assets. Be aware that the IRS has challenged these types of partnerships in court many times to an effort to stem tax avoidance.

However, given the right circumstances, a tax and estate attorney can help you form this partnership and leverage those benefits properly to withstand any legal challenge. One strategy that has previously worked, for instance, has been to keep assets in the family limited partnership separate from personal assets and create the partnership while in good health.

7. Follow the UTMA for transfers to minors in the family

Follow the UTMA for transfers

The Uniform Transfers to Minors Act (UTMA) focuses on your minor children. Set up as a trust, this legal framework can address guardianship and how to manage the assets minor children inherit upon your death.

You can select someone (known as a custodian) to manage the assets left to your child or children. This arrangement typically ends when the child turns anywhere from 18 to 21 years old, although that age can be lower or higher depending on the state. In establishing this trust, you can pass property and other assets to minors.

8. Plan charitable transfers to reduce overall estate taxes

Since estate taxes consider the total amount of the assets in your estate, it makes sense to find ways to reduce that overall taxable amount. One way to achieve this is to donate taxable assets to charities that you designate in your trust.

The rest of the assets will then be valued at a much smaller amount to help minimize what gets taxed. That way, you can maximize the amount left to your beneficiaries.

Bottom line: Get expert advice

Before moving ahead with any estate planning actions, contact experts like a financial advisor, an estate planning attorney and a tax professional. These financial experts can help you by analyzing your unique situation and outlining an estate planning strategy that maximizes your financial legacy.

TrustScore 4.6


Contact us at (844) 845-4219

How Much Could You Save?

Just tell us how much you owe, in total, and we’ll estimate your new consolidated monthly payment.