INDIVIDUAL SERVICES

Wealth Transfer Planning

Whether planning for future generations, charitable giving, or business succession, Evans Sternau CPA provides expert guidance to preserve your legacy and maximize the benefits for your beneficiaries, ensuring long-term financial security and peace of mind.

Key Reasons Wealth Transfer Planning is Important

Wealth transfer planning with a CPA ensures that your assets are efficiently passed on to future generations, with minimal tax burdens, legal complications, or conflicts. This personalized, expert approach safeguards your legacy and ensures your financial goals are met.

How We Can Help

Setting Up A Trust

It is increasingly common as individuals seek to manage their assets effectively and ensure a smooth transfer of wealth to their heirs. Trusts offer numerous benefits, including:

Asset protection
Tax advantages
The ability to dictate how and when assets are distributed.

Collaborating with a CPA when establishing a trust can enhance these benefits significantly. A CPA brings a deep understanding of tax implications and financial planning, ensuring that the trust is structured optimally for both current and future tax considerations. They can help navigate complex regulations, identify potential deductions, and align the trust with the individual’s overall financial strategy, ultimately providing peace of mind and securing a legacy for future generations.

Large Gifts of Assets

Gifting large quantities of money has become increasingly common, especially as individuals look to:

Provide financial support to family members.
Contribute to charitable causes.
Reduce their taxable estate.

This practice not only allows donors to witness the impact of their generosity but also offers significant tax advantages, such as reducing potential estate taxes. Working with a CPA when making substantial gifts can greatly enhance the gifting process. A CPA can provide guidance on tax implications, ensure compliance with IRS regulations, and help strategize gifting amounts to maximize benefits while minimizing tax burdens. Their expertise allows individuals to structure gifts thoughtfully, taking advantage of annual exclusions and lifetime exemptions, ultimately making the most of their financial contributions.

Donor Advised Fund Contribution
A donor-advised fund (DAF) is a philanthropic vehicle that allows individuals to make charitable contributions to a dedicated account managed by a sponsoring organization, typically a brokerage house. Donors can then recommend how the funds should be distributed to various nonprofit organizations over time. While the donation to the DAF is irrevocable, the flexibility lies in deciding when and where to allocate the funds. This approach provides tax advantages as contributions are tax-deductible when made, even if the distribution to nonprofits occurs later. DAFs offer donors simplicity, strategic giving, and potential for long-term impact on charitable causes.

Revocable Trusts
Tax planning for revocable trusts, also known as living trusts, involves structuring the trust to efficiently manage and potentially minimize estate taxes and income taxes. While revocable trusts do not provide immediate tax benefits, they offer the advantage of avoiding probate, potentially simplifying estate administration. Effective tax planning within revocable trusts may include provisions to minimize capital gains taxes upon asset transfer or incorporating strategies to maximize the use of estate tax exemptions. It's essential to consider the interplay of trust provisions, individual circumstances, and changing tax laws to create a plan that aligns with the goals of preserving wealth and reducing tax liabilities.

Bunching Itemized Deductions
Bunching itemized deductions involves timing and grouping deductible expenses within a single tax year to surpass the standard deduction threshold. By concentrating these expenses, like charitable donations or medical costs, into specific years, taxpayers can optimize their deductions. This approach allows them to alternate between taking the standard deduction in one year and itemizing deductions in the next. Bunching leverages fluctuations in expenses, enabling individuals to achieve higher tax savings by itemizing when it's most beneficial and utilizing the standard deduction in other years.

Sales to Grantor Trusts
A sale to a grantor trust is a financial transaction in which an individual (the grantor) sells assets, such as real estate or investments, to an irrevocable trust in which they are considered the grantor for tax purposes. The trust is designed to be disregarded for income tax purposes, meaning the grantor is still personally responsible for the income and taxes generated by the trust's assets. This technique can be used as part of estate planning to transfer assets to heirs while utilizing the grantor's lifetime gift tax exemption and retaining some control over the assets.

Qualified Charitable Distribution
A qualified charitable distribution (QCD) is a tax-efficient strategy available to individuals aged 70½ or older who hold individual retirement accounts (IRAs). Instead of taking mandatory distributions and including them as taxable income, these individuals can directly transfer funds from their IRAs to eligible charitable organizations. The transferred amount satisfies the required minimum distribution (RMD) while being excluded from the taxpayer's taxable income. QCDs offer a double benefit: meeting the RMD obligation while supporting charities without incurring additional taxes. This enables retirees to effectively contribute to causes they care about while minimizing their tax liability.

Gift Trusts
Tax planning for gift trusts involves creating and managing trusts to optimize the gifting of assets while minimizing gift and estate taxes. These trusts, like Crummey trusts or irrevocable life insurance trusts (ILITs), allow individuals to transfer assets to beneficiaries while retaining some level of control. By properly structuring these trusts and adhering to gifting rules, individuals can potentially remove assets from their taxable estate, utilize annual gift tax exclusions, and maximize the benefits of the lifetime estate and gift tax exemptions. Gift trusts demand careful consideration of tax implications, trust terms, and individual objectives to create an effective tax-efficient gifting strategy.

Gift Stock to Children for Tuition
Gifting stock to children involves transferring ownership of shares or securities from a parent or guardian to their children. This can have tax implications, as any capital gains on the stock may be subject to capital gains tax when the children eventually sell the stock. However, gifting stock can be a tax-efficient way to transfer wealth, especially if the children are in a lower tax bracket, as they may pay a lower capital gains tax rate compared to the parent.

Annual Gift Exclusions
The tax planning for annual exclusion refers to the IRS provision that allows individuals to gift a certain amount of money or assets to another person each year without triggering gift tax consequences. As of 2023, the annual exclusion amount was $17,000 per recipient. By leveraging this exclusion, individuals can transfer wealth to family members, friends, or other beneficiaries without utilizing their lifetime gift tax exemption or incurring taxes. This strategy is a fundamental element of estate planning, enabling individuals to reduce their taxable estate over time while providing financial support to loved ones.

More About Evans Sternau CPA

Our core values are proactiveness, responsiveness, and support – they help us ensure that we continue to serve each and every one of our clients to the highest level possible

Proactiveness: Tax, accounting, and advisory isn’t just about solving problems when they arise – Evans Sternau CPA implements better solutions and performs routine checks year-round.
Responsiveness: Keeping all parties informed, always, means everyone is operating with full awareness and to the fullest extent.
Support: Whatever your tax, advisory, and accounting needs are, Evans Sternau CPA guarantees that we make each and every one of our clients feel supported when they work with us.

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