Danny J. Young of Adel, GA has worked in the financial services industry for over 40 years. He is currently working as president and CEO of Independent Retirement Professionals, and is an investment advisor representative with Kovack Advisors. In the following article, Danny J. Young discusses managing wealth, the importance of estate planning, and some of the regulations of wealth transferring that people should be aware of.
Within the next 10 years, all Baby Boomers — around 70 million people — will be 65 or older.
That means an estimated $68 trillion may soon end up being passed onto their children in what’s being called the largest wealth transfer in history.
However, Danny J. Young of Adel, GA explains that thoughtful estate planning and other financial strategies are essential for Baby Boomers to effectively ensure that their financial legacy will stay intact. Below, Danny J. Young discusses more on how to get started planning for a seamless capital shift for the next generation.
What is Wealth Transferring
Wealth transfer is when money is passed from one generation to the next. The transfer, typically upon death to beneficiaries through a will, may include a range of assets, including investments, real estate holdings, and personal property.
Danny J. Young says that a majority of estate planning is guided by wealth transfer, often prioritized when someone wants to preserve and extend financial growth within a family. Transferring wealth may also occur through gifts during a person’s life, a trust, or through life insurance payouts.
There are a variety of factors that dictate wealth transfer planning. It is often done to shield beneficiaries from capital gains, gifts, and estate taxes while considering interest rates.
Wealth Transfer Rules
In 2023, Danny J. Young of Adel, GA says that anyone during their lifetime can transfer up to $12.92 million and still avoid estate and all federal gift taxes in what is called a lifetime exemption. Another approach to avoiding tax liability is giving monetary gifts of up to $17,000 on a yearly basis. This route is also a workaround for the lifetime exemption. Those who give a child $40,000 would see $17,000 of that amount go to the yearly exclusion and the rest would be applied to the lifetime exemption.
Similarly, Danny J. Young of Adel, GA notes that any gifts provided during one’s life that are above the annual exclusion will not be available upon their death. That means that if a person gives $5 million in gifts over their life, $7.92 million can be excluded from estate taxes upon their death.
There are also specific rules tied to the beneficiary. A generation-skipper transfer tax applies to wealth transfers made to grandchildren and great-grandchildren. The amount that is exempt is the same as the amount tied to estate and lifetime taxes, but the total is lowered only if the lifetime gifts are awarded to a beneficiary who is a minimum of 37 ½ years younger than the benefactor.
Getting Started
Danny J. Young of Adel, GA explains that a financial professional can discuss wealth transfer rules in greater detail with their clients. If an estate is large or a wealth transfer plan is complicated and involves numerous beneficiaries, having a financial advisor can make the process both easier to understand and faster to execute. This is a good first step for wealth transferring.
There are several financial firms that exclusively practice financial and estate planning, though they are more specialized for singular projects. Within wealth transferring, investment advisors are better equipped to help with singular projects.
Danny J. Young of Adel, GA explains that if a person has a high net worth, a wealth manager or wealth advisor may be their best bet. These financial professionals monitor a client’s fortune as it grows and offer guidelines on how it should be managed.
Wealth advisors often begin by examining someone’s financial situation and choosing a goal to aim for. Advisors do everything from retirement and estate planning to investment and charitable contribution management.
Effective Estate Planning
Before consulting a wealth manager or advisor, though, Danny J. Young of Adel, GA explains that individuals should make sure they have a solid understanding of their current financial status and that they have pinpointed their goals for the future.
Wealth transferring is most commonly done through estate planning, which may be challenging without help. An estate may include property, valuables, life insurance, bonds, stocks, and retirement savings.
There are often many steps to take beyond outlining the wealth transfer plan in a will. It is often important to declare a power of attorney and add beneficiaries to retirement and life insurance accounts. Danny J. Young says that estate planning can take several years to complete.
Such variables include gaining more assets, changes to estate tax laws, and life events such as medical care needs. In general, wealth advisors recommend reevaluating the wealth transfer plan within an estate plan every few years.
The larger the estate, the more complicated wealth transfers tend to be.
Danny J. Young of Adel, GA says that the chance of family squabbling over inherited wealth can also complicate matters. That makes considering comprehensive planning even more essential.
By outlining a person’s exact wishes and making every part of a will or trust as clear as possible, wealth transfers won’t be delayed due to vague wording or misinterpretations that could lead to family conflicts or legal action.
Danny Young is registered with and securities are offered through Kovack Securities, Inc. Member FINRA/SIPC. 6451 North Federal Hwy, Suite 1201, Ft. Lauderdale, FL 33308, (954) 782-4771 Investment Advisory services are offered through Kovack Advisors, Inc. Independent Retirement Professionals, Inc. is not affiliated with Kovack Securities, Inc. or Kovack Advisors, Inc. The information in this material is not intended as tax or legal advice. Please consult legal or tax advisors for specific information regarding your individual situation.
