From Instagram influencers boasting of another exotic vacation to the Joneses around the block (you know, the ones you should be keeping up with) building a massive addition to their already luxurious home, many people consider wealth an accomplishment in itself. However, really smart, high-income people know that wealth is not meant to be shown off – it is meant to grow and be shared between generations.
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Certified financial planners work with these high-income people to help them turn their initial seed of wealth into a flourishing garden that will nurture their heirs and even descendants they will never meet. As these planners build relationships with their high-income clients, they refine the smoothest, most efficient wealth-transfer strategies.
To better understand these strategies, we spoke to Scott Sturgeon, its founder and senior wealth advisor Ored Wealth PartnersAbout how high-income individuals can ensure that their wealth is transferred according to their wishes.
1. Make strategic gifts
If you already love gift giving, you’re in luck. Sturgeon says one of the easiest ways to transfer wealth is to give cash or other assets to family members each year. However, you need to be careful that the amount of gifts remain within the annual gift tax exclusion, which is $19,000 per recipient in 2026.
“The annual exclusion can be a good way to transfer wealth tax-free because this limitation actually applies from one person to another,” he said.
In short, if a wealthy married couple wanted to give their daughter and her partner a significant gift, they could give each daughter and partner $19,000, for a total of $76,000. If they have multiple children, they can continue giving gifts up to the exclusion limit for each recipient.
2. Fund a college savings account
Education is a worthy investment – one that deepens the mind while expanding job opportunities and earning potential. It’s also a smart, and fairly common, money-transfer tool, especially through funding a 529 college savings plan.
“Most states offer a state-level tax deduction up to a certain amount for funds transferred into a 529,” Sturgeon said. “Assets can grow tax-free in the account, and as long as they are withdrawn to cover certain educational expenses, it is also tax-free.”
Since the cost of college is a major expense for most families, using tax-advantaged strategies to reduce the financial burden can have a lasting impact – especially in terms of reducing the amount. student loan A young person may have to move out, allowing them to graduate with less debt and more financial freedom.
Sturgeon says that in addition to reducing financial stress, access to higher education can help future generations build and share their wealth.
“Going to college also provides a certain amount of knowledge and social capital that is often underestimated and that certainly contributes to wealth building for the next generation of family members,” he said.
3. Create a Family Limited Partnership
While Sturgeon says her previous insights are relatively simple and easy to implement for most high-income families looking to save taxes and transfer assets, there is a more complex approach that could be beneficial for significantly higher net worth families.
Very high-income individuals may consider using family limited partnerships, or FLPs, to tax-efficiently transfer assets such as businesses, large real estate holdings, or other high-value assets that can keep their net worth above the current estate tax exemption – approximately $14 million per individual or $28 million per married couple.
“This can get complicated quickly, but you’re basically trying to transfer ownership interests in the partnership to the next generation while keeping those transfers under the annual gift exclusion,” Sturgeon said. “(There are) a lot of moving parts that will require the involvement of an attorney to establish the necessary legal entities and a third party to determine the valuation of the property.”
However, if structured correctly, an FLP can be a powerful tool for potentially reducing – or even avoiding – estate tax liabilities while transferring portions of the estate to the next generation.
This article was provided by MoneyLion.com For informational purposes only and should not be construed as financial, legal or tax advice.
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