The Five-Step Playbook for Tax-Free Asset Transfers

Here is the five-step playbook that the ultra-wealthy use each and every year to transfer billions of dollars to their children tax-free.

I'm Tyler, a former financial advisor and portfolio manager, and now I make financial content for free so that you don't have to pay for it.

Step 1: Create an Irrevocable Trust

Mrs. Richie McRichie Pants is about to create a five-year fixed-term irrevocable trust, also known as a grantor-retained annuity trust or a GRAT.

Step 2: Designate a Beneficiary

She will list her child as the beneficiary to said trust.

Step 3: Fund the Trust

She will fund that trust with whatever assets she wants. Let's say she funds it with $40 million.

Step 4: Guaranteed Payout

Mrs. Richie will now receive a guaranteed $8 million payout over the next five years, regardless of how the assets or investments behave within the trust.

Step 5: Tax-Free Graduation Gift

After that five years, she will give the original difference between the $40 million cost base of those assets and the current market value of those assets directly to her child as a graduation gift, 100% tax-free.

So if that account had increased by 10% annually, she'll be able to pass down to her daughter $25 million worth of assets while they're both still alive, 100% tax-free.

And that is why, for the ultra-wealthy, paying estate taxes, it's less of a requirement and more of a choice. If any of this is helpful, like and follow, and I'll keep trying to get you one step closer to where you need to be.

Source