Certified Safe Money Admin


Certified Safe Money Admin


Retirement Planning with Safe Money – Asset Transfer, Legacy, Estate Planning

While most people don’t like to think about it, we will all exit this earth at some point in time – and if you’ve built up a nice-sized nest egg, you have more control than you might think regarding what happens to your wealth after you’ve passed on.

Regardless of whether or not you have a good retirement plan in place, assets and property will eventually be transferred. Where they go and how heavily they are taxed, though, will often depend on whether or not you have specified your wishes through an estate plan.

Estate planning entails creating a written document that sets out an asset or property owner’s instructions for disposition and administration of his or her assets and property at death, as well as information on how their affairs should be handled in the case of total disability or incapacity.

Without an estate plan in place, you could run the risk of having assets and property go to someone you don’t intend for them to or subject your loved ones and survivors to unnecessary taxation, which can reduce the amount of inheritance that they receive.

 Do You Really Need an Estate Plan?

Contrary to what many people believe, estate planning is not just for the ultra-wealthy. Many individuals and families can benefit from having an estate plan, as it can provide a great deal of control – both during and after your lifetime.

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Your taxable estate is defined as “the portion of your net worth that is taxable upon your death.” This refers to the total value of your assets that are subject to taxation when you pass away, minus liabilities, and also minus the tax-deductible portion of your estate.

Typically, a taxable estate will encompass some or all of the following assets:

  •   Cash
  •   CDs
  •   Stocks, bonds, and mutual funds (including retirement accounts such as IRAs and 401(k)s)
  •   Real estate
  •   Personal property
  •   Life insurance
  •   Business(es) owned
  •   Autos and other vehicles
  •   Jewelry
  •   Art and other collectibles

There will also usually be at least some liabilities present when determining an estate’s overall value. These may include a(n):

  •   Mortgage balance
  •   Home equity loan balance
  •   Auto loan(s)
  •   Student loan(s)
  •   Other loans (s)
  •   Credit card balance(s)

After death, your assets and property may be subject to estate taxes based on the estate’s total value. This is determined by adding up the total amount of the estate’s assets and then subtracting the total amount of the estate’s liabilities.

The following items are also allowed to be deducted to determine the taxable portion of an estate:

  •   Funeral expenses that are paid out of the estate
  •   Debts that the decedent owes at the time of his or her death
  •   Value of the assets that are passed on to the decedent’s spouse

The federal estate tax is levied on the assets and property of those who die with estates that exceed a certain dollar amount unless the decedent is married and his or her assets pass directly to their spouse under a provision that is known as the “unlimited marital deduction.” (At the passing of the surviving spouse, though, the assets could then be subject to estate taxation.) 

The amount of an estate exempt from federal estate taxes has grown significantly throughout the years – from $600,000 in 1997 to its present amount of $11.7 million. The top federal estate tax rate has been over 50% for much of the past few decades.


Historical Estate Tax Exemption Amounts and Top Tax Rates (Per Person)

Year Estate Tax Exemption Top Federal Estate Tax Rate
1997 $600,000 55%
1998 $625,000 55%
1999 $650,000 55%
2000 $675,000 55%
2001 $675,000 55%
2002 $1,000,000 50%
2003 $1,000,000 49%
2004 $1,500,000 48%
2005 $1,500,000 47%
2006 $2,000,000 46%
2007 $2,000,000 45%
2008 $2,000,000 45%
2009 $3,500,000 45%
2010 $5,000,000 or $0 35% or 0%
2011 $5,000,000 35%
2012 $5,120,000 35%
2013 $5,250,000 40%
2014 $5,340,000 40%
2015 $5,430,000 40%
2016 $5,450,000 40%
2017 $5,490,000 40%
2018 $11,180,000 40%
2019 $11,400,000 40%
2020 $11,580,000 40%
2021 $11,700,000 40%
2025 – ? ?

Source: IRS.gov


The increase in the federal estate tax exemption has allowed more people to avoid this type of tax on a deceased loved one’s assets. That, however, is likely to change in the future, as many wealth planners believe that taxes will be raised in the year 2025 when the provisions of the Tax Cuts and Jobs Act expire (or “sunset”).

In some cases, the federal estate tax is just the tip of the iceberg regarding the death taxes that an individual’s survivors may incur.  For instance, as of January 1, 2020, the District of Columbia and the following states had estate or inheritance taxes:

  •   Connecticut
  •   Hawaii
  •   Illinois
  •   Iowa
  •   Kentucky
  •   Maine
  •   Maryland
  •   Massachusetts
  •   Minnesota
  •   Nebraska
  •   New Jersey
  •   New York
  •   Oregon
  •   Pennsylvania
  •   Rhode Island
  •   Vermont
  •   Washington


These states have differing exclusion amounts, too, that can range anywhere from $1 million to $5.74 million. So, when both federal and state estate tax is combined, a significant portion of an estate could end up in the hands of Uncle Sam. But a good estate plan can help to avoid this.

Asset-Protection Strategies That are Used in Estate Planning

One of the key components of estate planning involves the use of trusts. These vehicles can protect the financial interests of your loved ones. They can also allow you to be more selective with regard to the distribution of your assets after you have passed away.

Trusts are typically composed of four key components. These include the following:

  • Grantor – The grantor is the individual who sets up the trust.
  • Trustee and Successor Trustee – This is the person(s) or the entity that will follow your wishes as per the trust document, and that will manage the trust following your passing.
  • Beneficiary (or Beneficiaries) – These are the individuals or entities that will benefit from the trust’s assets.
  • Property / Assets – There is also property or assets that are placed inside of the trust. These properties or assets are the items such as money and investments or physical property like real estate that will make up the trust.

In many cases, life insurance may be used as a funding mechanism for the payment of estate taxes – but the full benefit of this strategy can only be gained if the plan is appropriately set up, so speak with our income for life advisors to get started. For instance, an irrevocable life insurance trust, or ILIT, can be created to purchase a new policy or hold and own an existing one.

By removing the life insurance proceeds from the insured’s name, the amount of the death benefit will not be included in the total value of his or her taxable estate, which reduces the amount of taxes that are due.

Because the death benefit of the life insurance policy will pass directly to trust beneficiaries outside of the deceased person’s taxable estate, the money can essentially replace the wealth that would otherwise have been lost to the taxes on the estate.

Like any other type of financial planning strategy, though, there is no particular type of trust right for everyone across the board. In addition, estate planning can be a somewhat complex endeavor, so it is recommended that you work with an experienced estate planning team before you move forward with any type of plan.

In addition to a financial or insurance advisor, the ideal estate planning team should include the following professionals:

  • Attorney
  • CPA / Accountant
  • Trust Company

Depending on your objectives – as well as the type of assets that you own – there may be other professionals that are needed on your estate planning team, too. For instance, if you own collectibles, such as art, an expert in this area can be beneficial. Likewise, if you own a great deal of real estate, having a real estate specialist on board is recommended.

In addition to the secure money advisors that you select for your estate planning team, it is also beneficial to involve family members in the process. That way, loved ones will know what they can anticipate, and there will be no surprises for your survivors down the road.

Gifting to Reduce Estate Taxes

Another key component of estate planning involves gifting. This process can allow you to reduce the size of your overall estate and, in turn, lessen the amount of estate tax owed by your survivors.

There are many different ways to gift your assets to others. One of the simplest methods is giving direct gifts of cash to others. For instance, in 2021, the annual gift tax exclusion is $15,000. This means that you may gift up to $15,000 to as many individuals as you wish without incurring gift taxes.

If you are married, you and your spouse may cumulatively gift up to $30,000 to as many individuals as you choose – regardless of whether or not they are related to you by blood or marriage.

By reducing your estate’s overall size through gifts, the amount of estate tax due on your assets can also be lessened, which can leave much more for those you love and care about. (If you gift more than $15,000 to an individual, you are required to report the gift(s) to the IRS.)

What to do After Your Estate Plan is Complete

Once your estate plan has been created, it is not a “set it and forget it” situation. Rather, your plan should ideally be reviewed at least once each year – and even more often if you have had any type of life-changing events take place, such as marriage or divorce, the death of a spouse or partner, birth or adoption of a child or grandchild, purchase or sale of a home or business, or retirement.

Conducting a regular review of your estate plan can help to ensure that no one is unintentionally disinherited. It can also prevent unintended beneficiaries (such as an ex-spouse or partner) from inheriting assets you no longer want them to have.

What Type of Legacy do You Want to Leave?

When you think about leaving a legacy, you may refer to financial assets or other items of value that are left behind after you pass away. These could include investments, real estate, and collectibles, and an ongoing stream of lifetime income that lasts for many years in the future.

But material wealth is actually just one component. Your legacy may also include sharing what you have learned with the next generation. So, what type of legacy do you want to leave for your loved ones?

With the right estate plan in place, you may be able to leave a myriad of physical, financial, and emotional items to be remembered for multiple generations. This will oftentimes begin by asking yourself some important questions, such as:

  • Twenty years after your passing, what will your future generations remember you for?
  • If you had to give everything you own to a cause (versus to an individual), what would that cause be?
  • What “story” would you like to leave behind that best summarizes your life, your goals, and your achievements?

While these questions might seem trivial, they can help to spark ideas about the type of legacy you would like to leave.

Is Your Estate Protected From Probate, Taxation, and Other Risks?

Ensuring that your property and assets are safe should be done sooner rather than later because nobody knows what will happen in the future. If you would like to discuss ways to keep your assets protected and maintain control over how they are transferred, feel free to contact us and schedule a time to talk with one of our safe money advisors.

You can reach us directly at [email protected]  We look forward to assisting you with your asset protection and transfer needs.


Find the most credible, highest-rated Safe Money advisors in your area.

If you are nearing retirement or already retired, you should consider safe money because your future is too bright to risk.

Are you a safe money expert?

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