Creative Ways Parents May Be Able to Protect Family Wealth for Their Kids

When you have kids, your whole world changes. You’re not just living for yourself anymore; everything you do is for the family you created, raised, and will ultimately leave behind. Whether you are enjoying hard-earned financial success or have a modest amount in savings, there is always more you can do to increase the value of your estate for your children.

How Can I Ensure the Best Possible Outcome for My Children?

The methods you use to protect your wealth will be as unique as you are. Your opportunities will ultimately depend on your specific circumstances, your holdings, and the manner in which you want to distribute your assets to your heirs.

Although we regularly implement wealth-protection strategies for our clients, none of the following concepts should be taken as financial advice. You should never adopt any new asset protection or growth opportunity without first speaking to an experienced estate planning attorney.

To create the plan that offers the most benefit to you, your attorney should examine every aspect of your estate, including:

  • Your tax bracket(s). If you are in a higher tax bracket, you may be able to move some types of assets into a lower bracket (especially if you have children over the age of 17).
  • Trust options. Moving your property into a trust can minimize or even avoid certain taxes, ultimately providing more for your children. Of course, these assets must be properly transferred into your trust in order to avoid probate.
  • Potential investments. If your holdings are mainly in cash or real property, stocks and shares can be a great way to build wealth and diversify your portfolio.
  • Insurance plans. A life insurance premium can be costly for parents, but the premium for a child is often a fraction of the cost. Some life insurance companies allow beneficiaries to borrow against the cash value of the policy, meaning your child could use the policy to secure a loan later in life—one that could even pay for their first home.
  • Property ownership. There are many different ways to hold property in Florida, including as an individual, jointly, or even as a legal entity. If your goal is to protect your home from creditors, you may qualify for “tenancy by the entirety (TBE).” Under TBE, a property is owned by a married couple as a single unit, meaning it can only be subject to creditors of both spouses to recover the spouses’ joint debt. 
  • Gift taxes. Parents may make regular cash gifts as a way of providing for children and grandchildren. However, if the amount of these gifts is more than the annual exclusion threshold, they will be subject to a gift tax.
  • Business concerns. If you have spent your life doing what you love, you should have a solid succession plan to pass down your family business with minimal fuss—and be able to transfer ownership of the company in a way that minimizes your income, gift, and estate tax liability.
  • Double-checking your retirement. The amount in your retirement fund may look like a lot, but there will be significantly less when it comes time for your children to inherit. Creating a plan ahead of time through a continuous stream of business income or structured budget can take the stress out of your golden years.
  • Preventing future disputes. Any errors or omissions in your estate planning documents can give rise to family infighting, diverting your assets to legal fees and probate battles rather than your heirs. It is best to review your documents every few years and prepare your children so that they have a chance to adjust their expectations.

At Yolofsky Law, we can help you make informed decisions and create a financial structure that best fits your assets. As your Personal Family Lawyer®, we ensure that you and your loved ones are legally and financially protected for years to come. Give us a call today to discuss your options with our trusted advisors.

Related Links:

Vital Documents All Floridians Should Have in Their Estate Plans

To Halve or to Hold: Estate Planning for Married Couples

The 5 Biggest Florida Estate Planning Mistakes