Smart Way #1: Pass inheritances to your chosen loved ones through trusts rather than as outright gifts. This can create substantial tax advantages as well as protect your beneficiary from having the assets taken away from them.
Smart Way #2: Create a Revocable Living Trust (RLT) in addition to a Power of Attorney. The RLT allows your loved ones to take actions on your behalf without involving the court system when you become disabled or die.
Smart Way #3: Title your assets to your Revocable Living Trust while you are still healthy and able. If you wait until you are disabled or die, then your family will have to pay extra to have it done.
Smart Way #4: Put a copy of all your estate planning documents into an Estate Planning Portfolio that is easy to find, transport and update. Be sure to include a master inventory of all your assets and a photocopy of the paperwork that shows how you own each asset (or who has been designated as the beneficiary for that asset).
Smart Way #5: Use your gifting exemption by making strategic gifts. If you don’t use it, you lose it.
Smart Way #6: While you are still healthy, train your loved ones what they need to do to carry out your wishes when you become disabled or die.
Smart Way #7: Search out and work with an experienced asset protection and estate planning attorney that you can trust, and understand, and is willing to give you practical advice
Smart Way #8: Put together a team of advisors and insist that they work together. If you enjoy and want to fill the role of one of the team members, do so, but also have a replacement in line to take over when you no longer want to or can serve in that role.
Smart Way #9: Commit your important health care decisions to writing and give your loved ones a copy. This should cover topics including burial vs. cremation, whether you want to be an organ donor, and what medical treatments you want or prefer to decline if you should become disabled.
Smart Way #10: Avoid capital gains on the sale of your highly appreciated investment property by doing a 1031 exchange, if you are going to be purchasing a similar type asset with the proceeds. Or use a Charitable Remainder Trust, which allows you to create an income stream for yourself and your spouse for your lifetimes, and also gives you a current deduction on your income taxes for a charitable gift.
Smart Way #11: Keep the family vacation property in the family by transferring it to subsequent generations through a QPRT (Qualified Personal Residence Trust). Not only will this protect the property against creditors claims, but it is also a great way to gift assets for a reduced gift value, while you maintain the use of the property for a pre-selected term.
Smart Way #12: Purchase adequate liability insurance. If you drive frequently, own rental property, or operate a business, buy an umbrella liability policy.
Smart Way #13: Have an annual checkup with your financial advisor, insurance agent, accountant and attorney. Remember: An ounce of prevention is worth a pound of cure.
Smart Way #14: Commit to your plan for funding your care if you become disabled, whether that is to purchase long-term care insurance, pay for the care out of your own assets, or deplete your assets to qualify for governmental assistance.
Smart Way #15: Test your chosen succession team while you are still healthy so you can make corrections or provide additional help or training, if necessary.
Smart Way #16: Put all liability producing assets, like rental properties, boats, and airplanes into LLC’s (limited liability companies).
Smart Way #17: Put your most valuable assets, particularly operating businesses, inside a Family Limited Partnership (FLP). Creditors cannot get to the assets inside the FLP; they are limited to getting a charging order against the income that is actually distributed from the FLP. This serves as a great tool to protect the family wealth from creditors, former spouses and wrongful lawsuits. When used properly, an FLP can also lower your income tax liability.
Smart Way #18: Put your life insurance into an Irrevocable Life Insurance Trust to eliminate the taxes and protect it from creditors, yet keep the proceeds available to your spouse and other chosen loved ones.