Wealth transfer planning: Strategies for a seamless transition

By Joe Dionisio | Senior Vice President, Advanced Tax and Estate Planning Advisor, Citizens Private Wealth

Laying the groundwork for a smooth transition

A little organization can go a long way toward transferring wealth. Follow these steps to lay out the initial groundwork.

Craft a comprehensive list of your assets

Although it may seem improbable, valuable property often becomes misplaced following an individual's death. To prevent any confusion, it is advisable to provide a comprehensive inventory of your assets for your heirs. When creating a personal balance sheet, make sure all your assets are titled correctly. Be sure to include the specific account numbers for bank and investment accounts, policy numbers for insurance policies and details about physical property, including real estate, vehicles, and personal belongings, such as jewelry. If you aren't comfortable sharing all this information with your family, you could leave the asset list with a trusted financial advisor.

Set up proper wealth transfer documents

Your last will and testament lays out where you want your property to go. Often this will direct assets to your revocable trust which includes more specific direction. Some assets, such as insurance policies and retirement accounts, are not subject to your will and pass to your named beneficiary(ies). You may also consider including a letter of final wishes for non-financial information, such as your desires for burial arrangements.

Check-in with your advisors

Wealth transfer planning is an ongoing process. Meet with your wealth manager, estate planner and attorneys regularly, at least every three to five years or after a major life change. Your wealth manager will help you map out your estate plan so that your assets are distributed as you intend and help you understand how your wealth will transfer after your death. That way, you ensure your estate plan is up to date, and you've accounted for the latest laws.

Have a family meeting to communicate your wishes

Naturally, emotions may be high after you pass away, which is not an ideal time for your loved ones to figure out your estate plan. Confusion and disagreements among the family are common if one member is surprised or hurt by the outcome. If you communicate your wishes beforehand, you can help mediate these issues. This approach ensures that your estate plan remains current and compliant with the latest legal requirements.

Understanding tax rules

You may need to plan around estate and inheritance taxes. These are taxes the government charges on the transfer of property at death. At the federal level, as of 2025, you can transfer up to $13.99 million during life or at death to your heirs estate tax-free. However, the IRS imposes a 40% tax on transferred assets once you have reached your lifetime exemption. Thus, if you exhaust your total exemption during life, any assets transferred at your death will be subject to the 40% tax, unless they qualify for the unlimited marital deduction and pass directly to your spouse. Your estate must pay these taxes before distributing property to your beneficiaries.¹

For example, if you die with a net worth of $15.99 million in 2025, then $13.99 million can pass tax-free, while $2 million is taxable. The total tax owed is $745,800 ($345,800 of the first million and 40% of any amount over $1 million).

Depending on where you live, you’ll also have to account for state-level estate and inheritance tax. Currently, twelve states and the District of Columbia charge an estate tax at death, and five states charge an inheritance tax. Some have much lower limits; for example, Oregon starts taxing estates at $1 million and Massachusetts taxes at $2 million.

Gifting property while alive

You can potentially minimize estate taxes by gifting property to your family before you pass. In 2025, you can give away up to $19,000 to each person tax-free, such as children, grandchildren, nieces and nephews. The gift exclusion applies every year and is adjusted for inflation.²

If you give someone more than the annual gift exclusion, the excess must be reported and will reduce your lifetime estate and gift tax exemption amount. For example, if you give a family member $1,019,000 in 2025, $19,000 would be tax-free and the other $1 million would reduce your estate tax exemption. It would decrease from $13.99 million to $12.99 million.

When gifting property, be thoughtful about who and how you transfer your assets, ensuring that these legacies are consistent with your objectives.

Other wealth transfer strategies to consider

Additional strategies are available to help you reduce taxes and ensure your assets are distributed according to your wishes. Whether you're looking to maintain control during your lifetime, support loved ones responsibly or leave a charitable legacy, these tools offer flexible options.

Irrevocable trusts

If you don't feel comfortable giving property to loved ones right now (for instance, if they're too young), an irrevocable trust is one option. Transferring property to an irrevocable trust gets it out of your taxable estate. You avoid taxes on future growth and investment earnings. You can also leave instructions on how and when your heirs receive the property after you pass. Unlike a revocable trust, by contributing assets to an irrevocable trust, you must relinquish all control and any future benefit from the asset.

Life insurance

Life insurance death benefits can provide your heirs funds to offset estate taxes paid by your estate. If you own a life insurance policy outright, the death benefit will be included in your taxable estate. To mitigate tax liabilities, you may transfer ownership of the policy to an irrevocable life insurance trust. It is important to note that this transfer is irrevocable, and you will be unable to alter the policy beneficiary once the transfer is completed. Note, you will need to survive the transfer by three years to ensure the policy is not included in your estate.

Charitable giving

Assets passing directly to charity at death will not be part of the taxable estate. You may consider structuring your plan so that any assets in excess of your exemption go to charity, thereby eliminating your estate tax liability. Donating to charity during your lifetime will reduce taxable income in the year a donation is made and may also help mitigate future estate tax exposure.

Family Limited Partnerships

Assets here may be discounted for estate tax purposes based on the lack of control and marketability.

Asset step-up in basis

A step-up in basis is a tax provision that adjusts the cost basis of an inherited asset to its fair market value at the time of the previous owner's death. This adjustment can significantly reduce capital gains taxes for the beneficiary when they eventually sell. Understanding the cost basis of assets in your estate and being thoughtful about what you may wish to sell (or not) should be part of your overall plan.

Wealth transfer planning is a marathon, not a sprint

Your wealth manager plays a pivotal role in guiding you through the estate planning process, ensuring that you identify the optimal strategies to safeguard your family's wealth. It is equally important to keep your family informed about your estate plan and any modifications you make. Initiating discussions with your advisors at the earliest opportunity will provide you with a broader range of options to effectively manage and protect your assets. For additional guidance on strategies for your wealth transfer, reach out to an experienced wealth manager from Citizens Private Wealth.