Your Family's Goals Are

our priority.
  1. Home
  2.  » 
  3. Wealth Preservation
  4.  » Avoid these common wealth preservation pitfalls

Avoid these common wealth preservation pitfalls

On Behalf of | Nov 4, 2021 | Wealth Preservation

Maintaining your wealth requires holistic planning. Not only do you need to create a sound estate plan, but you also need to take into consideration any tax implications that may arise. This is especially true if you have a large estate, as failing to adequately prepare your estate and tax plan can end up costing your loved ones and your estate a significant amount of money. Therefore, you should be aware of some common pitfalls that many high-net worth individuals fall into when they engage in wealth preservation. Let’s look at a couple of them.

Gifting assets that have appreciated

A lot of individuals think that they can simplify the estate planning process and save on taxes by simply gifting large assets, such as houses or stocks, to their loved ones without utilizing any estate planning vehicles. This can be a dangerous proposition. This is because gifted assets that fall outside of an estate plan are oftentimes considered to be given at their original value. If that asset is then sold, the individual who received the asset would taxed on the difference. An inherited asset, on the other hand, would typically be received at its current value, meaning that an immediate sale would not result in taxation. When you’re talking about hundreds of thousands of dollars in value, the taxes can be significant.

Mishandling valuable pieces of personal property

A lot of wealth can be held in personal property, such as jewelry and art. Some people try to sidestep taxation of these items by simply leaving them out of their estate plan with the expectation that their loved ones will figure out who will take physical possession. Doing this, though, can lead to enormous tax penalties and probate costs.

Know how to fully protect your wealth

You’ve worked hard to build and maintain your wealth. You shouldn’t let it be squandered away through tax payments and probate costs. That’s why it might be wise for you to work closely with a skilled legal professional who can assist you in creating the holistic plan that may be necessary to protect your wealth and the future of your estate and your loved ones.