Utilizing Asset Location While Estate Planning

Estate planning is a critical process in planning for your eventual death or incapacity. Unfortunately, however, too many people neglect estate planning or do the bare minimum. In reality, however, to make sure that your goals are achieved, it’s critical to treat estate planning seriously. This means engaging in activities like routinely updating your estate plan and speaking with an estate planning attorney if you have concerns about your estate. To make the most of your estate plan, it’s also a good idea to consider the various wise asset location strategies that you might utilize to make the most of your estate. 


What Qualifies As “Smart” Can Change


To a degree, smart asset location is subjective. While one person might decide that their assets should only pass on to charity, another individual might decide to pass on their life savings to their children. Often, it’s not the question of how much is left behind but instead what is left after a person’s death or incapacity and who receives what. 


What Are Asset Locations


Asset location refers to where a person strategically keeps the money that they invest between tax-free and taxable accounts to maximize after-tax returns. This concept differs from asset allocation, which involves what type of investment a person decides to place his or her assets in. 


Charitable Contributions


Not only should you determine how much you’ll donate to charity, but you should also decide what assets you will pass on. If you pass on assets to an estate, it will likely meet the Internal Revenue Service’s exemption requirements and the charity will not be required to pay any taxes. Some clients decide that the best strategy is to make a yearly distribution to the charity, which makes the most of tax efficiencies and allows individuals to support causes that they hold close. 




While many clients think they must provide equal assets to their children out of fairness, in reality, unequal distributions sometimes make the most sense. Other parents decide to pass on assets in a way that beneficiaries end up eventually receiving similar inheritances. Countless factors should be taken into consideration when deciding what degree of assets should be passed on to adult children including how much the child makes and the tax implications of what such a transfer would be. 


High-Earning Beneficiaries


Some clients only have high-earning heirs. In these situations, people who engage in estate planning might decide to pursue creative ways to push clients to the limit of their current tax bracket and alleviate concerns involving taxes. For example, a client might decide to surpass their required monthly distributions and use this additional money to purchase non-qualified investments or life insurance. This way, after passing these assets on, the beneficiary will receive a step-up basis and minimize taxes. 


Contact a Knowledgeable Estate Planning Attorney Today


While the estate planning process is often complex, an experienced attorney can help you create documents that achieve each of your goals. Contact Ettinger Estate Planning today to schedule a free case evaluation.

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