If you own assets like a home or car, you need to make sure that they are protected appropriately. Asset protection is a major part of your financial plan, especially your estate plan. An estate and trust plan gives you the ability to determine who will receive your assets when you can no longer make financial decisions. Without an estate plan with asset protection in place, the assets you worked hard for may not go where you want. 

If you are a high earner, the taxes you owe increase according to your income. This means that the taxes you owe can quickly eat away at your assets’ value. As a result, appropriate tax planning can play a significant role in your asset protection plan. If you plan your taxes well, you can further preserve and protect the value of your assets down the line.

There are many ways you can protect your assets while minimizing your tax burden. The method you use depends on your financial goals and the structure of your overall estate plan.

How can you minimize your taxes while protecting your assets?

You can minimize taxes associated with your assets through various tax planning strategies. The following tips are just a few you can use to maximize your asset protection while minimizing the federal taxes you owe: 

  • Establish donor-advised funds — A donor-advised fund gives you the ability to protect your assets while donating portions of those assets to charity, without being taxed on your donations. At the end of the year, you will receive a tax benefit according to the amount of money you placed in the fund. If you are a donor-advised fundholder, you can enjoy a federal income tax deduction of up to 60% of adjusted gross income for cash contributions, as well as other tax benefits. However, any contributions to the fund will eventually have to go to charity.
  • Create a charitable trust — A charitable trust is an irrevocable trust established for charitable purposes. This kind of trust allows you to set aside high-value assets that you need in retirement. A charitable trust offers many tax incentives and financial benefits; by moving your assets into a charitable trust, you can avoid paying capital gains on real estate or stocks, and receive income from the trust for your lifetime before the trust balance passes to charity.
  • Establish an asset protection trust — An asset protection trust holds your assets and protects them from creditors or lawsuits. An asset protection trust offers income tax savings if you are in a no-income-tax state, so you can plan your taxes accordingly.
  • Speak to a CERTIFIED FINANCIAL PLANNER™ professional — If you are unsure which asset protection plan may best support your tax and estate plan, speak to a CERTIFIED FINANCIAL PLANNER™ professional. A CFP® professional can evaluate your assets and financial situation and recommend a strategy that works for you. 

Talk to a ProVise CFP® professional about protecting your assets and planning your taxes

There is no question that you need to protect your assets. But how can you do so while using a smart tax planning strategy? At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop an asset protection and tax plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.

Are you ready to talk to a professional about asset protection and tax planning? Contact ProVise today to schedule a complimentary consultation.