Legacy Planning 2.0: Modern Solutions for Transferring Wealth Across Generations

May 1, 2024

By cdarmody on May 1, 2024

Passing wealth to the next generation is not just about financial security; it's about creating opportunities and leaving a lasting legacy. While traditional methods like wills and trusts are common, there are unique and strategic ways to ensure your assets benefit your heirs efficiently and effectively. Be sure to consult with your financial advisor and estate attorney about how to best implement your gifting and legacy plans.

Gifting During Your Lifetime 

Gifting assets during your lifetime can be a powerful strategy for positively impacting your financial estate and those around you. When done right, strategic gifting can help you reduce or even avoid estate taxes and benefit your heirs when they need it most. Not only can you better ensure your dollars go where you want them to go, but you can do so at a time when heirs such as your children or grandchildren could most benefit from the inheritance, such as during significant life events like buying a home, starting a business, or paying for their education.

So, how can you accomplish your aims?

Annual Exclusion Gifts

You can gradually transfer wealth to your heirs while reducing the size of your taxable estate by taking advantage of the annual gift tax exclusion. The exclusion allows you to gift assets up to a certain amount per recipient each year without incurring gift taxes. As of 2024, the annual exclusion amount is $18,000 per recipient ($36,000 for married couples filing jointly). Annual exclusion gifts can also help you transfer wealth while avoiding gift tax liabilities.

Accelerated Lifetime Exemption Gifts

For larger gifts exceeding the annual exclusion limit, consider utilizing your lifetime gift tax exemption. Accelerated lifetime exemption gifts involve utilizing the lifetime gift tax exemption to make larger gifts beyond the annual exclusion amount. The Tax Cuts and Jobs Act of 2017 (TCJA) significantly expanded the gift and estate tax exclusion and the generation-skipping transfer tax limits, though the increases will sunset on December 31, 2025. In 2024, the exclusion amount is $13.61 million per person. Assuming nothing changes, starting January 1, 2026, the exclusion will decrease to $5.25 million, indexed for inflation (projected to be about $6.4 million at that time). You can read more about these upcoming changes in our article Sunset on the Horizon: Changes to the Federal Estate Tax Exemption.

Irrevocable Trusts

Irrevocable trusts offer a way to transfer assets to beneficiaries while potentially reducing estate taxes. By placing assets in an irrevocable trust, you relinquish ownership and control over the assets, thereby removing them from your taxable estate. The assets held in an irrevocable trust may appreciate outside of your estate, further reducing potential estate tax liabilities while growing the funds available to your designated beneficiaries down the line. Irrevocable trusts can be structured to achieve specific goals, such as providing for special needs care or education, supporting philanthropic causes, asset protection, holding life insurance policies, and more.

Transferring Real Estate

Transferring real estate to your heirs can be a tax-efficient strategy, especially if property values appreciate over time. Utilizing vehicles like a Qualified Personal Residence Trust (QPRT) or family limited partnerships (FLPs) can help minimize taxes while retaining control over the property. A QPRT enables the owner to transfer ownership of a personal residence to beneficiaries while retaining the right to live in it for a specified term, reducing the taxable value of the property upon transfer. On the other hand, an FLP allows a family to establish a partnership to hold and manage real estate, offering asset protection and potential estate tax reduction through valuation discounts applied to partnership interests transferred to family members. In addition to the benefit of removing assets from your taxable estate, these options may be attractive alternatives to outright gifting or selling your real estate to a family member.

UTMAs and 529 Plans

Finally, you might consider options for transferring assets specifically to minors for their future needs. The Uniform Transfers to Minors Act (UTMA) accounts offer a tax-advantaged way to transfer assets to children or grandchildren. These accounts can be used to fund education expenses or other financial needs, providing support and security for future generations. Assets placed in UTMA accounts are considered gifts to the minor and are managed by a custodian until the minor reaches the age of majority. Income generated by UTMA assets is typically taxed at the minor's tax rate, which may be lower than the donor's tax rate, resulting in potential tax savings.

Funding a 529 plan is also a strategic approach to investing in a recipient's educational future. By contributing to a 529 plan, you can take advantage of tax-advantage growth while earmarking funds for a specific beneficiary's education expenses, such as tuition, room and board, and textbooks. Contributions toward 529 plans are viewed as gifts by the IRS, though with some additional flexibility—an individual can contribute up to $90,000 to an account over a 5-year period without having to file a gift tax return or have it count against your lifetime exemption.

Transferring wealth to the next generation is a multifaceted process that requires careful planning and consideration of various strategies. By thinking creatively and leveraging innovative approaches like gifting, trusts, and tax-efficient techniques, you can ensure that your assets benefit your heirs in the most effective and impactful way possible. I encourage you to speak with your advisors to learn more about these and other options.


The opinions and analyses expressed in this newsletter are based on Curi RMB Capital, LLC’s (“Curi RMB”) research and professional experience are expressed as of the date of our mailing of this newsletter. Certain information expressed represents an assessment at a specific point in time and is not intended to be a forecast or guarantee of future results, nor is it intended to speak to any future time periods. Curi RMB makes no warranty or representation, express or implied, nor does Curi RMB accept any liability, with respect to the information and data set forth herein, and Curi RMB specifically disclaims any duty to update any of the information and data contained in this newsletter. The information and data in this newsletter does not constitute legal, tax, accounting, investment or other professional advice. Returns are presented net of fees. An investment cannot be made directly in an index. The index data assumes reinvestment of all income and does not bear fees, taxes, or transaction costs. The investment strategy and types of securities held by the comparison index may be substantially different from the investment strategy and types of securities held by your account. RMB Asset Management is a division of Curi RMB Capital.   

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