As tax laws evolve, savvy investors and their advisors are exploring innovative strategies to protect wealth and minimize tax liabilities. With the potential sunset of the Tax Cuts and Jobs Act and new requirements from the Secure Act, there are timely opportunities for using trust strategies to achieve significant tax savings.
Key Trust Strategies for Wealth Preservation
1. Charitable Remainder Trusts for IRA Heirs: If you’ve inherited an IRA, the new rules require that most beneficiaries withdraw all funds within 10 years, potentially triggering higher taxes. However, by assigning your IRA to a Charitable Remainder Unitrust or Annuity Trust, you can stretch out the income over 25 to 35 years, reducing your tax burden. This strategy is particularly effective for those in higher tax brackets, allowing you to manage your income and taxes more efficiently.
2. Non-Grantor Trusts for Qualified Small Business Stock: If you hold significant shares in a small business, a Non-Grantor Trust can be a game-changer. This type of trust allows you to take advantage of a tax-free exclusion on capital gains, potentially saving you millions. Plus, it offers protection from lawsuits and creditors, providing peace of mind along with financial benefits.
3. Grantor Retained Annuity Trusts (GRATs): Concerned about the future growth of your estate? A GRAT might be the answer. These short-term trusts help remove appreciation from your taxable estate, enabling you to pass on more wealth to your beneficiaries without eating into your lifetime exemption for gift and estate taxes.
Why Consider These Strategies?
According to Aaron White, Chief Growth Officer at Adero Partners, it’s crucial to align these strategies with your overall financial goals. Whether it’s ensuring enough assets to support your lifestyle, planning for the next generation, or making a charitable impact, trust strategies can offer tailored solutions
At Virtue CPAs, we specialize in helping high-net-worth individuals navigate these complex decisions. Our team can guide you through the process, ensuring that your estate is structured in a way that maximizes benefits for you and your heirs.
Take Action Today
Don’t wait until tax laws change or new rules take effect. Now is the time to explore your options and implement strategies that protect your wealth. Contact us today for a consultation, and let’s discuss how we can tailor these trust strategies to your unique situation.
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