We are in the midst of the greatest generational wealth transfer in history. It’s estimated that the baby boomer generation and approximately 45 million households will be passing on a staggering $68 trillion dollars over the next 25 years. With the majority of this wealth being passed to the next generation, it’s best to have the right strategy for the amount of wealth you will be passing on to avoid your beneficiaries being unprepared and hit with giant tax bills. 

Know Where Your Money Is

When planning for your estate, you’ll need to know where your money or assets are. Will you be leaving behind a sizable IRA? Do you own multiple properties? Are you transferring cash? There are different implications and intricacies with leaving different types of assets to loved ones. Knowing the best ways to pass along your different assets is key to avoiding unnecessary taxes or fees.

Retirement Accounts 

With IRAs there are many rules to how the money can be accessed or left to a beneficiary. Also many tax implications come with these accounts. Make sure your IRAs are titled properly to be transferred to the person(s) of your choosing when the time comes and also that they are aware of how to access the money and what the tax rules are. Taking out money from an IRA too early can trigger major tax bills. If you are worried about the maturity of any of your beneficiaries, you can set these accounts to be placed in a trust for their benefit with certain stipulations in which they can access the money. 


Current laws are a little more lenient on the transfer of property due to the “step-up” in basis rule, which leaves a lower tax bill on inherited properties. But with proposed tax law changes on the horizon, it’s hard to predict what the case may be when it comes time for your property to be left to an heir. Since we can’t plan based on proposed changes and can only plan based on what the current laws are, it’s best to have your property in a trust with direct instructions of who would be the beneficiary. This will avoid the probate process and ensure the property would go to whom you wish and avoid as many taxes as possible.

Gifting Cash

There is a difference between gifting cash during your lifetime and leaving your money to loved ones once you pass away. During your lifetime there are different ways to avoid taxes while giving large amounts of money. Currently you can give a gift of $15,000 per individual or $30,000 per married couple, without tax implications and this can be done for as many people as you like. The size of your estate after you pass away will determine the amount of taxes also. If your estate is worth $11.7 million or $23.4 million for married couples, then you could leave these amounts to your heirs without any federal taxes. There are new laws currently being proposed to lessen this amount, however. 

Talking to Your Heirs

We work hard to build our nest eggs so having the right plan for what happens to your assets once you’re gone is so important for your loved ones. It’s not easy to think about or talk about, but having a conversation with your heirs about what they can expect can help guide everyone through a really difficult time. If your children know who to turn to and what to look out for, they can have some peace of mind that they are taken care of in the way that you wished them to be. 

Not sure what the best plan is for your family? Contact us with questions or to learn how to get started. We offer risk free consultations so we can assess your situation and provide the guidance you need. 

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Disclaimer: This article is intended to serve as a general summary of the issues outlined therein. While this article may include general guidance, it is not intended as, nor is a substitute for, qualified legal advice. Your review or receipt of this article by Lexern Law Offices, Ltd. (the “LLG”) or any of its attorneys does not create an attorney-client relationship between you and the LLG. The opinions expressed in this article are those of the authors of the article and does not reflect the opinion of the LLG.