By Neil Stalter, CFP®, ChFC®, RICP®, CBEC®, CDFA®, Associate Partner and Wealth Manager, James Baker Jr., CFP®, ChFC®, Senior Associate and Wealth Manager, & Allison Oberembt, CFP®, Financial Advisor with Diamond State Financial Group.
Protecting Your Legacy: Essential Estate Planning Strategies
Estate planning isn’t just about distributing wealth—it’s about preserving your legacy and ensuring your life’s work benefits future generations. Without proper planning, families may face tax burdens, legal complications, or the unintended dissipation of wealth. Fortunately, strategic estate planning can protect your assets, honor your wishes, and help your heirs receive the full benefits of your success.
Why Estate Planning Matters
A well-structured estate plan safeguards your wealth and ensures it benefits the people and causes most important to you. Without it, changing tax laws and regulations can erode your estate, leading to:
- Heirs being forced to sell valuable assets, such as a family business or real estate, to cover estate taxes.
- Family disputes over inheritances.
- Missed opportunities to minimize taxes and maximize wealth transfer.
The current federal estate tax exemption of $13.99 million per individual in 2025 is expected to drop significantly after 2026—potentially to around $7 million. If that happens, more estates could become subject to taxation, making proactive planning essential. Leveraging the current gift tax exemption before it drops can preserve more wealth for your heirs.
If you’re unsure how upcoming tax law changes may affect your estate, we’re here to help. Schedule a consultation to learn more.
Key Strategies to Preserve Your Wealth
A comprehensive estate plan not only protects your assets but also adapts to changing circumstances. Here are three essential strategies to consider:
- Trusts and Estate Planning
Trusts are a powerful way to ensure your wealth is distributed according to your wishes while avoiding probate and minimizing taxes. Depending on your goals, different types of trusts can provide unique advantages:
- Revocable Living Trusts: Avoid probate, ensuring a smooth asset transition.
- Irrevocable Trusts: Remove assets from your taxable estate, reducing estate tax exposure.
- Charitable Trusts: Support philanthropic goals while offering tax advantages.
Keeping estate documents like wills and powers of attorney up to date is equally important. Want to explore which type of trust suits your goals? Schedule a meeting with us today.
- Tax Planning for Generational Wealth Transfer
Effective tax planning ensures that more of your wealth passes to your heirs. Some key strategies include:
- Roth Conversions: Converting traditional retirement accounts to Roth IRAs allows for tax-free withdrawals for heirs.
- Gifting Strategies: Leveraging the annual gift tax exclusion ($18,000 per recipient in 2024) for tax-efficient wealth transfer.
- Step-Up in Basis Optimization: Real estate, privately held businesses, and non-retirement investments can benefit from a step-up in basis upon the owner’s passing, minimizing capital gains taxes for heirs.
Without proper planning, heirs may inherit large sums of pre-tax money, often while they’re in higher tax brackets, diminishing the estate’s overall benefit. Want to learn how tax planning can protect your legacy? Contact us for personalized guidance.
- Life Insurance as a Legacy Tool
While estate planning isn’t solely about life insurance, it can be a critical tool in preserving family wealth. A well-structured life insurance policy can:
- Provide liquidity for estate tax obligations, preventing forced asset sales.
- Enhance generational wealth by offering a tax-free death benefit.
- Support philanthropic goals through legacy giving.
A Second-to-Die Life Insurance Policy (Survivorship Life Insurance), often placed in an Irrevocable Life Insurance Trust (ILIT), can ensure life insurance proceeds remain outside of your taxable estate, maximizing the inheritance for your beneficiaries. Want to explore if life insurance fits your estate plan? Let’s discuss your options.
Collaborating for a Stronger Plan
Effective estate planning requires a coordinated approach between financial advisors, estate attorneys, and tax professionals. Our team works closely with CPAs and estate attorneys to tailor strategies that align with your unique goals. If you’d like us to coordinate with your advisor or CPA, reach out to get started.
Take Control of Your Legacy Today
Estate planning is more than just preparing for the future—it’s about protecting what you’ve built and ensuring your loved ones benefit from your hard work. By incorporating trust strategies, optimizing tax planning, and considering life insurance where appropriate, you can safeguard your wealth for generations to come.
With estate tax exemptions at historically high levels, now is the best time to take action. Schedule a complimentary consultation to explore personalized strategies that align with your goals or call our office at 302-366-0366 ext. 132.
Diamond State Financial Group
900 Prides Crossing,
Newark, DE 19713
Neil Stalter CFP®, ChFC®, RICP®, CBEC®, CDFA® Associate Partner / Wealth Manager
James Baker CFP®, ChFC® Senior Associate / Wealth Manager
Allison Oberembt, CFP® Financial Advisor
Disclosures
Registered Representatives offering securities through Cetera Advisor Networks LLC, member FINRA/SIPC. Advisory Services offered through Cetera Investment Advisers LLC, a registered investment adviser. Cetera is under separate ownership from any other named entity. 900 Prides Crossing, Newark, DE 19713.
Cetera Advisor Networks LLC exclusively provides investment products and services through its representatives. Although Cetera does not provide tax or legal advice, or supervise tax, accounting or legal services, Cetera representatives may offer these services through their independent outside business. This information is not intended as tax or legal advice. Converting from a traditional IRA to a Roth IRA is a taxable event.
