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Wealth Plans Checklist Series: Advanced Estate Plan – Wealth Transfer Tax Planning

Modern Family Paying Taxes


Advance estate planning is about saving taxes – in this case, it’s a group of taxes known as  the wealth transfer taxes.[1]  Generally, the federal government imposes a tax on the irrevocable and completed transfer of property owned from one individual to another, either during life or at death.[2]  A transfer that takes place during life is a gift from the donor to the donee, and a transfer of property at death is a bequest from the decedent to the beneficiary.  The majority of individuals will not have to pay any taxes for transfers made either during life or at death because there are rather high threshold exemptions that allow us to transfer property tax-free before any wealth transfer taxes actually kick in.[3]

For those individuals whose net worth puts them in the category of being subject to wealth transfer taxes (discussed more below), planning ahead to avoid or minimize those taxes takes time, the right financial and legal team, and precision in execution.  While the highly technical body of federal (and some states) laws, rules and regulations governing wealth transfer taxes is beyond the scope of this article, the primary purpose for engaging in wealth transfer tax planning is to keep more in your pocket so you can ultimately pass more to your loved ones.

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