For those who have the level of assets to fall under Wealth Management, there are many areas (see in the circle chart above) that will need alignment. Whether your assets are in Real Estate, or traditional equities and fixed income instruments, distribution is important. In this case, distribution involves more than allocation upon death. Distribution during life is also a major factor.

Creating a financial plan that ensures minimal taxation during your retirement with taxation should take into consideration taxes on retirement assets left to your heirs. If your heirs include charities, you may want to utilize certain tax provisions on qualified (IRA, etc.) assets to reduce taxation. Furthermore, under proposed estate tax changes, your estate may be subject to estate taxes. Having a proper estate plan is critical to the management process.

Estate Taxes are due in 9 Months!

Payment of estate taxes can be reduced with the proper use of life insurance and trust planning. The concept is very simple. Estate taxes are due within 9 months of date of death. Depending on your assets, the estate may not have the cash available to pay the tax. This is common in an estate with a high value of real estate holdings or business. Real estate assets and a business may take longer to liquidate than marketable securities. In addition to the transaction time frame to liquidate, it may simply be a bad time to sell in the real estate or business market. Yet taxes will be due. One solution is to purchase a life insurance policy inside an irrevocable trust.

When a policy is inside a trust agreement, that asset is outside the estate. One problem many people face is personally owning life insurance. The death benefit is in the estate calculation. In other words, if your estate owes 40% in taxes, and you have a $1,000,000 life insurance policy, you effectively reduce the net proceeds by 40%. Owning a policy inside a trust agreement mitigates this problem. Upon death, the trust is paid the death benefit proceeds and the funds are used to pay the taxes. Coordination with a qualified estate attorney is important when designing these type of estate plans.

Collaboration is the key

One area of strength with Catalano Financial is the coordination of outside subject matter experts. It is important to your planning that all experts are “on the same page” communicating with each other. Peter has systems and procedures in place to properly collaborate with the experts.

If your net worth exceeds 10 million dollars and growing quickly, having a conversation with Peter is a good start. The Financial Roadmap experience will help you and your spouse determine if wealth management services are right for you. Schedule a call to get started on your journey.