6 Tips For Passing Tax-free Money to Loved Ones!

(don’t forget to checkout the video of this blog too)

If you’ve done a great job saving for retirement than you likely have more money than you can spend.

If that’s the case, you want to start strategizing about how to perform a tax-free wealth transfer (so your family gets more money, not the government).

Here are 6 ways you can transfer money tax-free to loved ones

✅ Start Gifting Annually

You can gift your loved ones a significant amount of money every year that they won’t have to pay ANY taxes on (up to the annual limit per spouse).

This doesn’t just mean your kids…

This could be nieces, nephews, grandchildren, and really anybody that you want.

This is a great way to give your loved ones money at a time in their life where they are most likely to need it!

You can also gift stock and shift the tax liability into a lower tax bracket like I talk about in this blog!

✅ Spend Taxable Money in Retirement & Leave Roth IRA Money

Roth IRA’s are a great source of tax-free income in retirement…

They are also an asset that transfers completely tax-free to loved ones.

That’s why if you have Roth IRA money that you don’t need for retirement, you should let it grow, and give it to your loved ones completely tax-free.

Also, if you don’t need your Roth IRA for retirement income, or for strategic tax management in retirement, you can invest it more aggressively and allow the long-term growth potential of the market to do what it does best…. grow your wealth (in a tax-free environment).

✅ Create an Annuity Income Stream

Most annuities do have a death benefit, but that is subject to income tax.

What’s often better is using an annuity to create a guaranteed income stream for your loved ones that will fly below the taxable thresholds….

That means that they can collect a taxable, annual income, without owing taxes (using their deductions to offset the income) rather than owing a large tax bill by inheriting a large, lump-sum.

✅ Transfer Heavily Appreciated Real Estate

Real estate is wonderful asset to transfer because of what’s called a “step-up-in-basis”.

This means that all of the capital gains of a property are eliminated when you pass away so they inherit the asset without taxes.

This makes real estate and incredibly effective way to transfer wealth without leaving a huge tax liability for your loved ones.

✅ Transfer Non-Retirement Investment Accounts

Just like real estate, stocks and many other investments receive a step-up in basis…

Meaning capital gains taxes are eliminated upon transfer (making them much more efficient to leave to your loved ones than traditional retirement accounts).

✅ Reposition Taxable Retirement Money Into a Tax-free Life Insurance Contract

Life insurance is still one of the most under-utilized IRS loopholes around.

Every single dollar that accumulates inside of a life insurance contract transfers 100% tax-free.

So it’s like doing a Roth Conversion for your loved one’s benefit (moving money out of a taxable retirement or IRA account, into an account that transfers completely tax-free with tons of leveraged growth).

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