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A Closer Look at Legacy Wealth Planning and Some of the Components of a Legacy Wealth Plan
WHAT IS LEGACY WEALTH PLANNING?
DENNIS D. DUFFY Iowa Estate Planning Attorney
The process of estate planning can involve some added complexities when there is a considerable amount of wealth involved. For high net worth individuals, estate planning is better described as legacy wealth planning. Let's take a look at this type of planning and examine some of the components of a legacy wealth plan.
ESTATE TAX EFFICIENCY Estate tax efficiency is going to be a primary concern for high net worth families. Accumulating wealth is difficult, but retaining this wealth over generations can be equally challenging. One major source of asset erosion is the federal estate tax. The maximum rate of this death levy is 40 percent, and the amount of the credit or exclusion is $5.34 million. Once you have transferred $5.34 million tax-free, the estate tax becomes applicable. A legacy wealth plan will include the implementation of estate tax efficiency strategies. There are a number of different ways that you can mitigate your exposure. The ideal course of action will vary depending upon the circumstances. When you discuss your situation with an estate planning attorney, he or she will gain an understanding of your financial profile and make the appropriate
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recommendations. Tax efficiency devices that are utilized would include generation-skipping trusts, qualified personal residence trusts, charitable lead trusts, charitable remainder trusts, grantor retained annuity trusts, qualified terminable interest property trusts, and family limited partnerships. In addition to the federal estate tax, some states impose an estate tax on the state level. Our firm practices in the state of Iowa. Fortunately, Iowa does not have a state-level estate tax.
FAMILY HEIRLOOMS Legacy wealth planning can involve the preservation of family heirlooms. Some of these may be very valuable financially, and some of them may only have moderate value on a monetary level. However, these heirlooms have value that goes beyond mere dollars and cents. When you carefully pass along family heirlooms to those that you will be leaving behind, you are keeping memories alive. These pieces were touched by those who came before you, they passed through your hands, and now you are handing them off to the next generation. This is
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an extraordinarily meaningful act that adds mortar to the substance of your family legacy.
PHILANTHROPIC ENDEAVORS Your legacy wealth planning efforts can involve charitable giving. When your name is attached to acts of generosity you will always be remembered in a positive light. It can be personally meaningful to give to charitable causes and institutions that you believe in. At the same time, you can oftentimes gain tax benefits when you give to qualified charities. If you would like to research charities to see how wisely they utilize their resources, there are websites out there that can help. One of them is CharityNavigator.org. This site provides in-depth ratings so that you can be aware of the way that charitable organizations are being run. You can subsequently use this information when you are making decisions with regard to acts of charitable giving.
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ETHICAL WILL There is a type of will that you may not have heard of called an ethical will. This type of will has nothing to do with the transfer of property, and it has nothing to do with health care choices. It is not legally binding in any way. Yet, it can be one of the most valuable documents that you leave behind. Ethical wills have been used since biblical times, stemming from the Judaic tradition. With an ethical will you leave behind your moral and spiritual values. Your loved ones can draw from this wisdom after you are gone. When you leave behind financial resources you are providing support. However, there is a different type of support that cannot be bought. When you are no longer around to provide guidance on a personal level, your ethical will could serve as the next best thing when family members are looking for answers.
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FREE REPORT CONCLUSION It is important to craft your legacy carefully when you have been able to accumulate a significant store of wealth. You must first and foremost take steps to preserve the family wealth in light of the existence of the federal estate tax. Charitable giving can be a part of your legacy wealth plan. If you do things correctly you can satisfy your philanthropic urges as you simultaneously gain estate tax efficiency. In addition to financial matters, you can address matters of the heart by passing along family heirlooms and personal wisdom. To learn more about legacy wealth planning, contact a licensed estate planning attorney.
REFERENCES Internal Revenue Service http://www.irs.gov/Businesses/Small-Businesses&-Self-Employed/Estate-and-Gift-Taxes
Living Trusts: Plan Ahead for Your Family's Future Creating Trusts and Living Trusts Put Your Family First A Living Trust is a very versatile estate planning tool - one that can be customized to suit all your needs. Click to Download Your Free Report Today
Charity Navigator http://www.charitynavigator.org/
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About the Author Dennis D. Duffy Dennis Duffy combines an extensive background in business with a wide range of legal experience to provide his clients with a uniquely practical perspective. An attorney since 1989, he practices primarily in Estate Planning, Wills, Trusts and Probate. Mr. Duffy also offers frequent educational seminars on a variety of estate planning topics to both the general public and private groups in the Quad Cities area. Experience Mr. Duffy has been practicing law since 1989, when he joined the general practice firm of Bozeman, Neighbour, Patton&Noe in Moline Illinois. In 1990, Mr. Duffy and five other attorneys founded the law firm of Anderson & Nelson, with offices in Rock Island, Illinois and Davenport Iowa; the firm eventually grew to 12 attorneys, with Mr. Duffy as managing partner. He founded Duffy Law Office in 1995. Before returning to school for his advanced law and business degrees, Mr. Duffy worked for nearly a decade for Per Mar Security & Research Corp. in Davenport, as Vice President. Mr. Duffy is a member of the American and state bar associations of both Iowa and Illinois as well as the Scott and Rock Island County Bar Associations. He is an executive member of the American Academy of Estate Planning Attorneys. He is coauthor of the book Estate Planning Basics – A Crash Course in Safeguarding Your Legacy. Also, the American Academy of Estate Planning Attorneys announced that Mr. Duffy was honored with the Academy Fellow designation. The Fellow program recognizes Academy Members who demonstrate advanced expertise and significant practical experience in the estate planning, trust, tax planning, guardianship, probate and estate administration fields.
Duffy Law Office Helping Families Preserve their Wealth www.duffylawoffice.com 1840 E. 54th Street Davenport, IA 52807 (563) 445-7400
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