There Are Benefits to Estate Planning, No Matter Your Wealth

Joshua Dobi |

When you think about estate planning you probably think about legacy-style families like the Kennedy’s or people who are “wealthy”. However, each of us have an estate according to the Internal Revenue Service (IRS) and each state we live in has a different set of regulations. No matter your worth, we recommend having an estate strategy to align with your future wishes after you pass away. This is one of the things we focus on at North Main Financial, helping our clients to prioritize their goals and then helping them coordinate a plan for how to ensure their goals are met.


What does estate planning entail? For some, a written will is all the estate planning there is. For others, it can include a multitude of things to meet your wishes such as gifting to family, friends, charity, planning for medical care, etc. There are a few things to consider and this is where a financial planner or tax accountant can be extremely helpful. In this blog, our three-point sermon will touch on a few things to provide you some food for thought when contemplating your estate planning. While this is a broad overview, it’s worth noting that estate planning can go from simple to complex in short order.


At North Main Financial, when we work with our clients on estate planning, here are the type of things we think about:


How Can You Gift?

If you are looking to give assets, investments or other appreciated items to family members or friends, how do you do that? There are several ways to do this but the easiest is to simply gift cash. However, there are some taxes involved with that if you exceed $15,000 (in 2019) in cash as a gift. There is a gift tax which may or may not come into play. It is worth noting that if you are married, both you and your spouse may gift $15,000 to the same individual for a total of $30,000 without having to worry about gift tax issues. If it’s over $15,000 from one person to another you may have to be concerned with gift taxes.


If you are charitably inclined there are several ways by which you can give appreciated assets to charities and potentially receive a double tax benefit for doing that. There are things like charitable remainder trusts, Q-TIP trusts, and charitable lead trusts to name a few. It is also possible to gift assets to a charity without paying estate tax if the charity is a qualified 501(c)3 organization.


Again, there are a lot of layers to gifting so it’s best to consult a financial planner and/or tax advisor to assist with your planning.


Life Insurance

If you want to enhance assets or replace assets that you may spend down, one of the easiest and tax efficient ways to do that is to look at life insurance or estate insurance. If you want to give a certain number of dollars to a beneficiary but know you need to use your assets during retirement years, one of the things you can do is purchase a life insurance policy. In effect this replaces the assets you used in your retirement years so when you pass away, your beneficiary would receive whatever is left in your portfolio. They would receive whatever sits in that insurance policy.


Sometimes you need to use your assets for long-term care or nursing home care, which can spend money quickly, this is known as replacing assets. If you require this, one of the things that will happen is you will need to get a life insurance policy behind you so when you pass away, your beneficiaries can receive your assets in tax efficient ways. Life insurance can be both income tax and estate tax free if structured correctly.


There are a couple things to keep in mind if you are thinking about this. Frist, the premium cost. There are several different structures of policy with many variables and each has its pros and cons. Estate enhancement insurance is for people who want to give a larger number of assets, beyond what your portfolio might have, to your children, grandchildren, charities, or other beneficiaries. Sometimes when people want to give a larger dollar amount to a charity, $200,000, $500,000, instead of using their own assets which they want to give to their beneficiaries, they may use that life insurance policy to go to a charity or educational institution. This approach uses pennies on the dollars to achieve your goals.


Business Succession Planning

The third and final point has to do with business succession planning. Every business structure is unique whether it’s a S-Corp, C-Corp, LLC, and many other acronyms to describe various business structures. When you are focused on business successions it’s important to understand what the value of your business is. From an objective perspective, what is your business worth. If it’s larger than $11,000,400 in 2019 - which happens to be the total personal exemption amount – then you will be subject to some Federal estate tax. Getting an evaluation is very important so you can navigate the waters correctly.


The second thing is understanding how you’re going to sell your business. There are significant tax ramifications for how you’re going to sell your business whether you are living or deceased. There is income tax and estate tax ramifications and it’s different if you get a lump sum up front versus payments over several years. How does your business look when you no longer are involved with it? You should involve professionals that know how to value business and understand income tax and estate tax preparation.



These are just a few thoughts to keep in mind. While a will is extremely important to have in place to carry out your wishes upon your death, estate planning should also be a part of your overall plan. When thinking about things like gifting assets, life insurance and business succession, there could potentially be significant tax ramifications that may be avoidable with a plan and some help from professionals like a financial planner or tax accountant.


Interested in hearing more about this topic? You can listen to the full episode of the North Main Financial radio show on WSIC by clicking here: North Main Estate Strategist (3/23/19)


If you have questions about your financial goals, or would like to talk with us further about our services, give us a call at (704) 987-1425 or visit us at If you wish to schedule an introductory meeting, we would be happy to meet with you at no cost or obligation to you.


These Blogs are provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of SagePoint Financial.