Financial advisors play a crucial role in helping individuals and families plan and manage the transfer of wealth, whether it’s during their lifetime or as part of an estate plan. Here’s how they can assist:
1. Lifetime Wealth Transfers (Giving While Living)
Financial advisors can help structure tax-efficient ways to transfer wealth during your lifetime, such as:
- Annual gift tax exclusion: In 2025, you can give up to $18,000 per recipient per year without incurring federal gift taxes (or $36,000 per couple).
- 529 Plans: Contributions to college savings plans can be front-loaded using a 5-year election, potentially allowing a $90,000 gift (or $180,000 for couples) without gift tax consequences.
- Trusts: Advisors may recommend irrevocable trusts to protect assets and control distribution, while reducing taxable estate size.
- Charitable giving: Donor-advised funds, charitable trusts, or direct donations can offer tax deductions while supporting causes.
2. Legacy and Estate Planning
For wealth transfers after death, advisors collaborate with estate attorneys and tax professionals to ensure your wishes are met:
- Estate tax planning: As of 2025, the federal estate tax exemption is expected to decrease to around $6.4 million per individual unless new laws are enacted. Advisors help plan accordingly.
- Will and trust coordination: They ensure assets are titled properly and aligned with wills or trusts.
- Beneficiary designations: Reviewing retirement accounts, life insurance, and TOD/POD accounts to avoid probate.
- Business succession planning: Helping business owners transition or sell companies in a tax-efficient manner.
3. Family Education and Communication
Financial advisors can help bridge the gap between generations:
- Educating heirs on wealth management and responsibilities.
- Facilitating family meetings to clarify intentions and avoid future conflict.
- Preparing the next generation to inherit and sustain family wealth.
