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Best Ways to Transfer Wealth to the Next Generation

As we enter the second half of 2024, an election year with all types of volatility, we should continue to think about where we desire our wealth to go, while we are still alive or post-death. Planning here is always advantageous, or we may be giving the state and federal governments a large bulk of our assets.

We work with clients every day on these issues, and when you own a family business or a large amount of assets, including real estate and equities, it can be quite an ordeal to transfer these assets and still keep your wealth and family intact and communicating forever. So much ill-will is created surrounding death and money and probably tears more families apart than any other issue or occurrence.

Let’s call this The Millionaire’s Guide to a Successful Wealth Transfer. Here are just a few advanced tools that we use, in conjunction with your Tax Accountant and Estate/Trust Attorney.

Trust-Based Wealth Transfer Strategies

Retirement Couple
GRAT – Grantor Annuity Trust

A GRAT is a trust created to transfer wealth and barely touch the lifetime federal gift and estate-tax exclusion. This allows assets to pay out the Grantor (you) for a period. When the trust expires, the beneficiaries receive the assets with little or no taxes.

Defective GRAT/IDGT

This is a trust technique designed to freeze the current value of an estate. It involves a loan along with annual payments and is used primarily to transfer stock in a business.

SLAT – Spousal Lifetime Access Trust

An irrevocable trust that allows you to transfer more than $12 million to your spouse, taking it out of the estate tax calculation.

ILIT – Irrevocable Life Insurance Trust

Using life insurance, you can leverage assets, sometimes up to 10x, to the next generation, tax-free.

Qualified Personal Residence Trust

Utilize your gift tax exclusion to transfer your house to a trust, locking in the value of your estate today.

Life Insurance Policy Paper With Pen
Multigenerational Family Hugging At Event
Generation Skipping Trust

Each generation can leave $1,000,000 to grandchildren, skipping their own children, who may not need the money, thereby removing these funds from your estate.

Dynasty Trust

A Generation Skipping Trust that can last more than two generations, often using the $1,000,000 exemption for premium payments on life insurance.

Business and Asset Management Strategies

Creation of a Family Holding Company

Designed to manage diversified family assets and investments, this strategy transfers ownership at a discounted price to the next generation.

Family Limited Partnership LLC

This approach is used to transfer the ownership of your company to the next generation while maintaining control until you wish to give it up.

Multigenerational Family Savings
Family Llc For Estate Planning

Financial Instruments and Loans for Wealth Transfer

SCIN – Self Cancelling Installment Note

A loan from wealthy parents to children where the children pay interest or a lump sum, with the principal canceled upon death.

Interfamily Loans

Using this with a SCIN can allow some portion of your estate to be transferred tax-free.

Charitable Giving Strategies

Charitable Remainder Trust

Instead of leaving assets in a personal trust or will, transfer assets to this trust. Set up ways for the next generation to receive income or for the charity to receive assets or income, ideal for real estate or highly appreciated stock.

Donating to Charity

Combine donations with an ILIT to leverage your donation, give property outright, share income from property, or use Donor Advised Funds to give to your chosen charities while taking the deductions now.

Creation of a Private Foundation

Help the next generation be charitable by creating a private foundation. This allows them to be involved in giving away 5% annually from this foundation, fostering a culture of Philanthropy and participation in charitable events.

Education, Lifetime Giving, and Customizing Your Estate

New College Graduate Hugging Family Member
Fully Funding Your Grandchildren’s 529

You can one-time fund over $500,000 per grandchild into their 529 college savings plan. There is no tax deduction here, but the cash is now out of your estate, making a significant impact on their future education.

Lifetime Giving

You can give up to $13.61 million in assets or property to the next generation over your lifetime. Should you exceed the annual gifting maximum, Filing a form and applying this to your lifetime exemption can be very effective.

Personal and Customized Estate Planning

Customized Estate Planning

Work with your Tax Accountant and Estate/Trust Attorney to create a plan that fits your specific financial, charitable, and legacy desires. This personalized approach ensures your unique needs and goals are met.

Couple Is Family Estate Planning With A Financial Advisor


Transferring wealth to the next generation can be complex, but with the right planning, we can make it smooth and effective. By using trusts, financial instruments, and charitable giving, we can minimize taxes and avoid family disputes.

Let’s work together to create a plan that fits your financial goals and legacy wishes. We’ll tailor our approach to your unique needs, ensuring your wealth is preserved and your values are honored.

I’m excited to help you secure your legacy and achieve your financial goals. Contact us today to start planning for a bright future for you and your family.

The post Best Ways to Transfer Wealth to the Next Generation appeared first on Prosperity Financial Group | San Ramon, CA.

Elliot Kallen Wealth Manager | Registered Principal

For more than three decades, Elliot has provided customized wealth management solutions for entrepreneurs, business owners, retirees, and millennials.

Elliot and his wife, Tammy, are passionate about giving back to the community through their 501(c)(3) foundation, A Brighter Day. Through his partnership with A Brighter Day Charity, the Kallen family has helped local teens and young adults recognize and access resources to cope with the risks of stress and depression.

He enjoys spending his free time with his family. Some of his hobbies include cooking, wine, golf, travel, and studying history.

He lives in Lafayette, California with his wife, step-daughter, and grandson.

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