Strategic Wealth Transfer: Minimizing Inheritance Taxes for Future Generations

With an estimated $5 trillion set to be transferred between generations over the next 30 years, families and high-net-worth individuals face significant challenges in preserving their wealth. Without strategic planning, a substantial portion of these assets could be lost to inheritance taxes. At Infinitus Wealth Management, we specialize in guiding clients through the complexities of wealth transfer, ensuring that their legacy is preserved for future generations while minimizing tax liabilities.  Top Nashville Financial Advisor Nashville Wealth Management Investment Advisor Nashville

Understanding Inheritance Tax (IHT)

Inheritance Tax (IHT) is a levy on the estate of a deceased person, including assets such as property, investments, and cash. In the U.S., estate tax rates can reach up to 40% on estates exceeding the federal exemption threshold (currently $13.61 million per individual in 2024). While certain exemptions and reliefs exist, failing to plan ahead can lead to significant tax burdens for heirs.

Key Strategies to Reduce Inheritance Tax Liability

1. Establishing Trusts  Top Nashville Financial Advisor Nashville Wealth Management Investment Advisor Nashville

Trusts are a powerful tool for managing wealth transfer while reducing IHT exposure. By placing assets into a trust, you can retain control over how they are distributed while keeping them outside your taxable estate. Popular options include:

• Revocable Trusts: Allow flexibility and control while avoiding probate.

• Irrevocable Trusts: Remove assets from the taxable estate, offering significant tax advantages.

• Grantor Retained Annuity Trusts (GRATs): Enable wealth transfer at a reduced tax cost.

2. Lifetime Gifting Top Nashville Financial Advisor Nashville Wealth Management Investment Advisor Nashville

Gifting assets during your lifetime can be an effective way to reduce IHT liabilities. Several tax-efficient gifting strategies include:

• Annual Gift Exclusion: Individuals can gift up to $18,000 per year per recipient tax-free.

• Lifetime Gift Exemption: Larger gifts count toward the federal lifetime gift exemption (currently $13.61 million in 2024).

• Charitable Donations: Gifts to qualified charities reduce taxable estate values while supporting meaningful causes.

By implementing a structured gifting strategy, we help clients gradually transfer wealth while ensuring compliance with IRS regulations.

3. Leveraging Tax-Efficient Investment Vehicles

Investing in tax-efficient products can also help mitigate IHT exposure. Options include:

• 529 College Savings Plans: Provide tax-free growth for educational expenses while reducing taxable estate value.

• Qualified Small Business Stock (QSBS): Offers capital gains tax exemptions for eligible investments.

• Roth IRAs: Grow tax-free and pass to heirs without mandatory required minimum distributions (RMDs).

At Infinitus Wealth Management, we construct bespoke investment portfolios that align with clients' wealth preservation goals and tax efficiency needs.

4. Utilizing Life Insurance to Cover IHT Costs

Life insurance policies, placed in an irrevocable life insurance trust (ILIT), can provide liquidity to cover IHT liabilities without forcing beneficiaries to sell valuable assets. By setting up an appropriate policy, families can ensure that heirs receive their intended inheritance without unnecessary financial strain.

The Importance of Early Planning

Wealth transfer planning is most effective when started early. With changing tax laws and evolving family dynamics, ongoing reviews and adjustments are essential.

Take Action Today

Ensuring that your wealth is passed down efficiently requires expert guidance. Contact Infinitus Wealth Management today to schedule a consultation and begin developing a strategic plan that preserves your legacy while minimizing tax exposure. Top Nashville Financial Advisor Nashville Wealth Management Investment Advisor Nashville

Investment Disclosures

​This material is not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.

The views expressed are the views of Infinitus Wealth Management, LLC. These views are subject to change at any time and may not represent the views of all portfolio management teams, Wealth Advisors, or other Investment Professionals. These views should not be interpreted as a guarantee of the future performance of the markets, any security, or any funds managed by Infinitus Wealth Management, LLC. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities. Investment Advice will be given to individual clients based on risk tolerance, time horizon, investment objectives, and other considerations.

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