For more on how to have a strategic estate planning discussion with clients, Scott Luhnau, estate planning consultant on our practice management team, shares answers to a few common questions.
Q: Which estate tax topics should I cover with my clients?
A: With the federal lifetime estate tax exemption to sunset in 2025, now is an opportune time to ensure your client is taking advantage of the current $12,920,000 million exemption amount.1
Other considerations:
- Determine whether their assets are subject to state estate tax, which varies by state
- Ask your client whether they expect to have a future liquidity event like an inheritance or business sale that needs to be factored into his or her estate plan.
Q: Which types of trusts should I recommend to my clients?
A: Trusts give clients more control over how and to whom assets are transferred. The types of trust will vary by client need, but a few common ones are:
- Irrevocable life insurance trust
- Generation-skipping trust (GST)
- Intentionally defective grantor trust
Q: How can I make sure your client’s assets are titled properly so they flow through their estate plans?
A: Assets such as life insurance, annuities or individual retirement accounts (e.g., IRAs, 401K plans, Roth IRAs) pass directly to heirs through a beneficiary designation. The following are common ways to title assets to help transfer them more smoothly upon a client’s death:
- Joint Tenants with Rights of Survivorship (JTWRS)
- Pay on Death (POD)
- Transfer on Death (TOD)
Q: What factors should clients consider when deciding whether to pass their assets outright to their children or within a trust?
A: Along with the age of children, other factors to consider are:
- Level of a child’s financial maturity and ability to be responsible with an inheritance
- Whether they want to provide a financial legacy for grandchildren
- Whether they want to provide protection from creditors/predators
1“What’s New – Estate and Gift Tax”
The information provided here is for general informational and educational purposes only and should not be considered an individualized recommendation or personalized advice. Information is obtained from what are considered reliable sources, but Mariner Advisor Network does not warrant the accuracy of the information. Any expressions of opinion are subject to change without notice.
The use of trusts involves complex laws, tax rules, and regulations. Interested parties are strongly encouraged to seek advice from qualified tax, legal, and financial professionals before making any financial-related decisions.