You & Your Money

Estate Tax Changes Are Coming: 5 Ways To Prepare Now to Minimize Impact on Your Wealth

August 30, 2023 Weiss, Hale & Zahansky Strategic Wealth Advisors Season 2 Episode 33
You & Your Money
Estate Tax Changes Are Coming: 5 Ways To Prepare Now to Minimize Impact on Your Wealth
Show Notes Transcript

Is your estate strategy prepared for possible changes? 🏠
 Here are 5 key considerations provided by Laurence Hale, AAMS®, CRPS® that you may want to consider as part of your financial strategy. 

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Welcome to You And Your Money. Empowering you to reach your goals with tips to help you Plan Well, Invest Well and Live Well. Today's episode features Laurence Hale, principal managing partner and chief investment officer at Weiss. Hale and Zahansky Strategic Wealth Advisors. Now on to today's topic. All right, So let's dive into today's topic. The possibility of tax increases and evolving estate tax laws are prompting people to review their estate plans. And why don't you share some key considerations in navigating those changes? Absolutely, Gary. And, you know, things are always changing. And the landscape of taxes and making sure you're on top of those is really essential. And staying proactive and informed in light of these potential increases is a good, good thing to be on top of some key considerations that individuals should keep in mind when reviewing their state plans. There's really five of them. One reviewing your estate plan itself. Number two, exploring life insurance options. Third, understanding state estate taxes. Fourth, considering generation skipping transfer taxes. And finally, fifth, incorporating charitable giving into your estate planning strategy. And by addressing these considerations, individuals can better navigate the changing landscape and make sure they're protecting their financial strategies. All important considerations. Now let's explore the first consideration Reviewing the estate plan. Now, what steps can individuals take to maximize the current estate tax exemption? Absolutely. And, you know, making sure that you're reviewing your estate plan periodically is key. It's not something that you want to put on the shelf and ignore for ten, 15, 20 years, which you know, is somewhat human nature. But to make the most out of your current estate tax exemption, you should review your estate plan every roughly 5 to 7 years and in times of changes, maybe more frequently than that. This can involve implementing strategies like gifting assets to family members or creating trusts to reduce the size of your estate. You know, gifts are an effective way to utilize the current estate tax exemption amount before a future decreases in that limit. So trusts, on the other hand, can help minimize estate taxes and protect assets of heir. So there's some interesting things you can do. All right. Let's talk about life insurance. How can life insurance play a role in estate planning and mitigating tax liability? Sure. A lot of people don't really think of life insurance as an estate tax or estate planning strategy, more as protection for lost income or, you know, the loss of a loved one to cover some liabilities. But it can be a valuable tool when you're talking about estate planning. And the good thing is, is life insurance proceeds are generally not subject to estate taxes, allowing them to be used to pay potential estate taxes or provide additional assets to beneficiaries. So things like survivorship policies, life insurance policies in particular can help minimize tax liabilities for air. So that may be a couple where the death benefit doesn't kick in until both of the spouses pass away. And by leveraging life insurance, individuals can ensure that beneficiaries receive the full value of their estate, while also providing some liquidity to cover any estate taxes owed. All right, Good strategies here. Let's move on to the third consideration, state estate taxes. How should individuals approach the complexities of state estate taxes? Yeah, we're you know, we're taxed by more than one entity in this country. And it's important to stay on top of what's going on, particularly in the state that you're a resident of. Thankfully, Connecticut's paired their estate taxes with the federal limit, so it makes it a little bit easier currently. But that can change. So in many states they are different from federal estate taxes. And some states have lower exemption amounts in the federal limit, meaning that individuals may be subject to state estate taxes even if they aren't subject to federal estate taxes. So to navigate this, it's recommended to consult with a financial advisor or state planning attorney who are familiar with the laws in that specific state. And they can definitely provide more guidance on whether the estate taxes are potentially on the state level. Apply to how they may strategize within their financial plan. All right. Good stuff again. Now, let's discuss the fourth consideration. The general skipping transfer tax. Please explain how this tax can factor into estate planning. Yeah, generation skipping transfer taxes is a tax on the transfer of assets to grandchildren or more remote descendants. So kind of more than one level down. And this aims to prevent double taxation of inherited wealth across generations. So currently the flat tax rate stands at 40%, pretty significant by considering generation skipping transfer attacks, individuals can explore strategies to optimize wealth transfers and potentially minimize tax liabilities for future generations. All right, Let's move on to charitable giving. How can charitable contributions be incorporated into estate planning? Well, charitable giving obviously is near and dear to, I think, all of our hearts. And it's not only a way to support causes that are important to you, but they can offer some strategies, can offer significant benefits. When you're talking about estate planning. So by incorporating charitable gifts into your strategy, individuals can reduce the size of their estates and potentially lower their estate tax liability. In addition, charitable contributions can provide a tax deduction, quite often allowing individuals to optimize their overall tax position while still making a positive impact on society, which is obviously a great thing. Yeah, see, that's a win win situation. That's good stuff. Hey, before we wrap up, do you have any final thoughts for our listeners? Yeah, you know, I'd encourage everyone to periodically review their estate plan to make sure that it aligns to your current wishes, family circumstances and your personal goals. So given the potential changes in estate tax laws that may be coming over the next couple of years, consulting with a financial advisor or estate planning attorney is really a crucial thing to do to make sure you develop a comprehensive estate plan tailored to your individual financial situation and goals. So additionally, it's important to stay informed as estate tax is subject to political changes and economic conditions which we know are constantly changing. Absolutely. Good advice, as always, Laurence, thanks for sharing these valuable insights on navigating estate tax changes. If you'd like to learn more about how we sale and semansky strategic Wealth advisors can help you to create a strategic financial plan and help navigate estate taxes. Why don't you call them? It's 860-928-2341. Check out their website at whzwealth.com to request a complimentary consultation. Laurence, good information today. Thank you. Thanks, Gary. That's it for today. As always, thanks for listening to You And Your Money. If you enjoy our show, find even more episodes, videos and other resources at our web site whzwealth.com. Be sure to come back next week for more tips to help you live fearlessly and pursue your financial and life goals. Until then, live well. Weiss, Hale and Zahansky Strategic Wealth Advisors offer securities and advisory services through Commonwealth Financial Network member FINRA/SIPC, a registered investment advisor. Fixed insurance products and services offered through CES Insurance Agency. They practice at 697 Pomfret Street, Pomfret Center, Connecticut, 06259 and can be reached at 860-928-2341. Weiss, Hale and Zahansky Strategic Wealth Advisors do not provide legal or tax advice. The tenured financial services team strive to support clients and achieving their financial life goals. For more information regarding wealth management and customize financial planning with Weiss, Hale and Zahansky Strategic Wealth Advisors, please visit www.whzwealth.com.