The reality of how the pandemic affects the areas of health and finances has increased focus on wealth management basics, especially in light of the likelihood of tax increases. Simple planning provides greater assurance you will have what you need for protecting and growing assets over the long haul. planning success financial TAX-SAVVY TIPS TO ENHANCE YOUR
A NEAR CERTAINTY: TAX INCREASES There is a high probability of tax changes by the end of 2022 now that there is one-party control across the executive and legislative branches. The tax changes are highly likely to involve a repeal of the transfer tax laws created under the Tax Cuts and Jobs Act of 2017. While it’s impossible to predict just how much taxes will go up and how your tax situation will be affected, there are three tax efficiency opportunities to consider now:
unlimited marital deduction. Gift assets in the SLAT can appreciate (e.g., a business, securities, art and collectibles) to maximize the wealth transfer potential. RETIREMENT AND LEGACY PLANNING Now more than ever is the right time to look at what you have in place for retirement and legacy planning. As a steward for your beneficiaries, the planning you do now allows you to determine what you want to achieve with your legacy. THE FUTURE OF YOUR BUSINESS The day-to-day effort of maintaining and growing a business leaves little time for thoughts about succession planning. With a plan in place, you can reduce potential negative consequences for your business, employees, shareholders and family members. THE STEPS YOU TAKE TODAY MAKE ALL THE DIFFERENCE Think of wealth planning as eating healthy and exercising. On a given day, it may not feel like healthy habits matter. Instead, you experience the positive outcomes of good health in the long term. Similarly, setting a wealth plan in motion to manage what you created may not feel as important today. However, with a plan in place, you gain confidence that you can achieve your goals.
1
Convert to a Roth IRA Because we are currently in a lower tax
situation, consider converting a traditional IRA to a Roth IRA to incur the income tax at the current rates instead of potentially higher rates in the future. You can then make Roth IRA withdrawals tax free.
2
Maximize contributions to retirement plans
Contribute the maximum amount to retirement plans you can afford or are allowed to secure the highest tax benefits.
3
Consider a Spousal Lifetime Access Trust (SLAT)
A SLAT is an irrevocable trust, created by one spouse for the benefit of the other, intentionally structured so that it does not qualify for the
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IN YOUR CORNER ISSUE 7 | 2021
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