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Your wealth is more than just money. It’s your legacy. It’s what you’ve worked so hard for your entire life, and it’s what will provide for your loved ones when you’ve gone. Perhaps that’s why so many of our clients are no longer looking simply to increase their wealth but, more importantly, to preserve it for the people and the causes they care about. They want to be able to provide for their spouses. They want to be able to buy their children their first homes and establish college funds for their grandchildren. They want to be able to donate to their favorite charity. And sometimes, they even opt to leave it to man’s best friend.
The trust officers and financial planners at Cambridge Trust have heard it all. One thing that we never hear: “I want to leave it all to taxes.” Yet without strategic financial planning, that’s exactly what can happen. The estate that high-net-worth individuals and their families spend a lifetime or even generations accumulating can be significantly reduced in a matter of moments. Of course, some of this loss is inevitable; no one is exempt from certain costs, like taxes. But there are some strategies that help ensure that more of their hard-earned money is preserved for their designated beneficiaries.


Be prudent in your investments. As you approach the end of your career, it may be tempting to make a last-minute play for aggressive growth to maximize your investment account. In volatile times this can put your principal at risk.  On the other hand, getting out of the market completely exposes you to purchasing power risk given that you are likely to live for many years beyond retirement. You certainly don’t want to outlive your money.  A prudent approach to capital preservation while maintaining purchasing power is necessary to balance these objectives. This can be achieved using appropriate asset allocation and diversification strategies.

Limit your exposure to taxes. Estate taxes. Income taxes. Gift taxes. While some taxes are unavoidable, there may be certain opportunities in your financial situation that you can take advantage of — such as tax deductions — to limit your exposure to taxes you’d otherwise have to pay.

Contribute generously to your retirement accounts. Even if you do not plan on retiring for another few years, there’s still plenty of time to grow your retirement accounts. Continue to contribute as much as you possibly can to your 401(k), your IRA, or other employer plans. You’ll grow the nest egg you have to live off once you retire. And because these contributions are tax deductible, you’ll also reduce the amount of income that would otherwise be subject to tax withholding.

Consider gifting during life.There’s a common misconception that you must wait to distribute your wealth until after you’re deceased. But this is not necessarily the case. Gifting during one’s lifetime offers two major benefits. On the one hand, you’re gradually letting go of the assets you no longer need, leaving you with less wealth to be taxed once you die. And on the other hand, you get to help out your heirs more immediately, while you’re still alive and able to witness the joy it brings. It’s a win-win. But before you start gifting your estate away, it’s important to meet with a financial planner who can tell you exactly how much of it is expendable and how much of it you will need for retirement. They can also advise you on how much you can gift each year and throughout your lifetime before you start incurring gift taxes. 

This article is for informational purposes only and should not be construed as investment or legal advice.