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pre-tax retirement

9 Estate Planning Strategies for Wealthy Clients


Wealthy clients are often thinking ahead; after all, they'd like to leave most of their wealth to their chosen beneficiaries and not in the pockets of the IRS. With the tax rule changes President Biden is planning, these clients have some reason to be concerned. Financial planner Bryce Sanders offers a few legal strategies these clients can use to ensure their money stays in the family.

Jul 6th 2021
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“In this world, nothing can be said to be certain except death and taxes” (Benjamin Franklin). You’ve also heard “You can’t take it with you.” Most people believe they worked hard for their money. They want to leave their business, a sum of money, or some other legacy for future generations. The tax man takes the opposite point of view, wanting to be the silent partner in your success.

Estate planning may be top of mind with many clients because the federal government is considering changing the estate tax rules to bring in more tax revenue. Clients who made decisions based on the current rules may be concerned their wealth is once again at risk. Under the current rules, the estate tax exemption is $11.7 million for individuals and $23.4 million for married couples. The federal government is considering lowering the thresholds to $3.5/7.0 million.

The stepped-up cost basis is another advantage under current estate tax rules. A person might own stocks with substantial unrealized capital gains, yet when they die, the cost basis is reset to the current value at that time. The federal government would like to collect income taxes on those capital gains, as if the person sold them at their time of death.

Talking With Your Clients About Estate Planning

These are only two elements concerning estate taxation, but they are enough to get your client concerned. Let’s assume your client already has a will. You need to get them focused on the bigger picture:

1. States levy estate taxes, too. Ten states levy their own inheritance or estate taxes. Exemption levels and tax rates vary. Estate taxes are paid by the estate of the deceased, while inheritance taxes are paid by the heirs. Your clients need to know the rules that are in force where they live.

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