Your legacy is something that persists even after you pass away. People who are in a position to cast a long shadow as it were should consider legacy planning.
The legacy that you leave behind does not have to conclude without direction. You can carefully shape your own legacy if you take the correct steps in advance.
When you talk about legacies there are things that transcend dollars and cents. Each individual has a very profound impact on others.
Now that we are entering into the holiday season, a lot of people will watch the classic film It’s a Wonderful Life. This movie demonstrates the ways that you may be touching others and impacting the world around you without ever recognizing it.
When it comes to the financial side of things, if you have been extraordinarily successful your legacy can pave the way for succeeding generations of your family. However, to preserve your legacy you must take steps to mitigate your federal estate tax exposure.
Estate Tax: Some of the Details
The federal estate tax carries a 40 percent maximum rate. The amount of the federal estate tax exclusion is $5.34 million in 2014. This is the dividing line that separates those who are exempt from the tax from those who are potentially exposed.
If you want to transfer more than $5.34 million in assets to your heirs you are faced with the prospect of paying the death tax. If your estate is valued at less than this amount, you won’t have to worry about the federal estate tax.
The prospect of your family parting with 40 percent of your financial legacy is probably not a very appealing one. Unfortunately, it doesn’t stop there. Let’s say that you leave a particular sum of money to your children, and the estate tax is applicable. They build on that family wealth throughout their lives.
Once again, the estate tax will be a factor when your children are passing along this financial legacy to your grandchildren. This can take place over, and over, and over again. This is one of the reasons why many family fortunes are slowly (or not so slowly) lost.
Estate Tax Efficiency Strategies
It is possible to take steps in advance to preserve your wealth. There are a number of different tax efficiency strategies that can be implemented that can mitigate your estate tax exposure.
The optimal course of action will vary on a case-by-case basis. If you retain the services of a licensed estate planning attorney, you can receive personalized attention.
Your attorney will gain an understanding of your unique situation, become apprised of your legacy goals, and advise you accordingly.
Parman & Easterday