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  • Writer's pictureJustin Oxford

Understanding the Wealth Transfer Tax Impact: What You Need to Know

How much money is the government going to take from your family?

A man from the 1960s dressed like a government crony, symbolizing the tax impact on wealth transfer

Viewed from a more long-term horizon, one of the most significant financial planning challenges for any family may be transferring wealth to the next generation. In the coming 25 years, Cerulli estimates that almost $68 trillion will transfer from baby boomers to their beneficiaries. That's precisely why during this phenomenal passage, often categorized as the Great Wealth Transfer, planning and preparation to reduce the tax hit on your family is so tremendously important.

Understanding Wealth Transfer Tax Implications

Transferring wealth is an integral part of a sound financial plan, ensuring what you strive in hard work to earn goes to the next generation in the finest way possible. You can also have peace of mind by knowing your family's financial future is guaranteed through proper planning. Barry Oxford, from BD Oxford Financial, has it open that before touching any money, you have especially to get in touch with good financial advisors, not forgetting the IRAs. "Get in touch with qualified advisors as soon as possible before touching any money, especially an IRA." Estates handled poorly can cost your family up to 37% of the value of your transfers," explains Barry Oxford.

The Changing World of Estate Taxes

Estate tax legislation has morphed from a simple exemption of $325,000 back in the days to over $10 million nowadays. There's, however, a storm in Washington over-reducing that exemption. That move would heap a string of fresh taxes onto inherited wealth. It's also worth asking yourself, "Where will it be in ten, twenty, or thirty years?"

Tax Impact Minimization Strategies

BD Oxford Financial can help you with strategies to minimize potential taxes - often with little to no out-of-pocket cost:

  • Grantor Trusts: These are very popular for their tax efficiency when transferring wealth.

  • Principle Protected Roth IRA Conversion: Convert your IRA to a Roth IRA with principle protection to shield your retirement savings from market volatility and future tax liabilities.

  • Charitable Donations: By donating part of your estate to charity, the amount that will be taxed will be lessened.

  • Insurance Solutions: A life insurance policy can quickly obtain cash to pay estate taxes and save other assets that will be transferred by your intentions.

Future Proofing

It's essential to keep an eye on the horizon for changes in tax legislation and adapt planning accordingly. Managing a large estate may not only be highly complex but also involved, and advisors who are up-to-date with the most current of regulations may be invaluable. Regular family meetings help keep things transparent and ensure everybody is aware and involved in the plan.

The process of this transfer is always filled with challenges and opportunities. Working with BD Oxford Financial can help preserve and transfer your family's wealth in the easiest way possible. For more info and free consultation, visit BD Oxford Financial.


Cerulli Associates, Wealth Transfer Report

Use these strategies and stay proactive to help protect your family from significant tax exposure going forward.

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