If you are an individual who is in possession of an extraordinary store of wealth, you should look beyond traditional estate planning. Under these circumstances you would be better served by legacy wealth planning.
In this post we will look at the distinctions between legacy wealth planning and traditional estate planning.
Legacy Wealth Planning
If you have assets that could last for numerous generations you should consider your financial legacy. It can be difficult for a family to retain control of its wealth over generations because of a number of different factors.
Taxation is a threat to your family wealth. There is the federal estate tax to contend with, and it can be imposed over multiple generations.
At the time of this writing in 2013 the amount of the federal estate tax exclusion is $5.25 million. Under currently existing laws an adjustment for inflation may be applied next year, so the amount may be slightly higher.
The top rate of the federal estate tax, gift tax, and the generation-skipping transfer tax stands at 40 percent since the passage of the American Taxpayer Relief Act of 2012.
If the federal estate tax was the only death tax that you had to worry about you would have some considerable concerns. However, as a resident of the state of Connecticut you also have to concern yourself with the state level estate tax.
A legacy wealth plan will include estate tax efficiency strategies. Your assets will be positioned in a way that mitigates your estate tax exposure.
Those who have been able to accumulate wealth must also think about asset protection. You want to protect your assets from creditors and claimants seeking redress. It is also important to protect inheritances that you are leaving to others.
Philanthropy can also be a part of a legacy wealth plan. In addition to the personal rewards that are gained by acts of charitable giving, philanthropic efforts can yield tax advantages.
Incapacity planning is also an important part of a legacy wealth plan. You need to put decision-makers in place to act in your behalf in the event of your incapacitation.
Traditional Estate Planning
To compare traditional estate planning to legacy wealth planning, first and perhaps foremost the traditional estate plan will not include tax efficiency strategies. Most people do not have assets that exceed $5.25 million in value.
While anyone can be sued, asset protection would be less of a priority.
Thirdly, many people who are planning ahead to provide something for loved ones are just not in a position to give anything to charity.
One similarity between the two types of planning is that you should empower decision-makers to act in the event of your incapacity regardless of your financial status.
Mr. Horowitz was awarded his Juris Doctor degree with honors from the University of Connecticut School of Law. While attending law school, Mr. Horowitz received the American Jurisprudence Award in Legal Ethics and the Nathan Burkan Award.
After graduation from law school, Mr. Horowitz continued his legal education at New York University School of Law where he received a Post Doctorate Law Degree in Taxation. He has also recently received a national achievement award.
Mr. Horowitz is admitted to practice before all the state courts in the State of Connecticut and the United States District Court.
Mr. Horowitz was selected for Super Lawyers in 2021.
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