Trust & wealth planning
June 13, 2022

Planning for your wealth: Essential US wealth planning strategies

June 13, 2022
Citi Private Bank
SUMMARY

Your wealth and family, as well as the tax, legal, and economic environment are constantly evolving. As such, your wealth planning needs to be dynamic too.


In our recent whitepaper we explore a number of strategies to help you preserve your legacy, protect your life’s achievements and ease the transition to the future generations.

Lasting success seldom happens by chance.

Behind visionary individuals, businesses, champion sports teams and thriving community projects, there is almost invariably a thoughtful plan.

While the critical nature of planning is widely acknowledged, it often gets neglected in practice. This can be especially true when it comes to wealth.

Having successfully planned to create meaningful wealth through entrepreneurship or investment, wealth creators and recipients often fail to plan for its preservation.

Others create a wealth plan but then do not adapt it as circumstances change.

There can be many different reasons for failing to create and update wealth plans. The consequences, however, are typically all too predictable.

Improper planning may result in lack of protection of assets during your lifetime and afterwards, inheritance disputes, slow administrative procedures, asset depletion and unnecessary taxes.

Ideally, you should create a plan at the earliest opportunity. Thereafter, you should revisit it regularly or whenever there’s an important change in circumstances. These might include developments within your family, around your wealth or in the economic, legal, and tax environment.

By acting sooner rather than later, you may be able to create tax savings, see that appropriate personnel are in place and ensure assets are distributed to desired beneficiaries.

Exemption amounts for federal gift and estate tax, for 2022, are still at all-time highs of $12.06 million per individual and $24.12 million per married couple, up from $11.7 million and $23.4 million respectively in 2021.

These annually adjusted exemption amounts are scheduled roughly to halve at the beginning of 2026. However, the reduction could conceivably be greater and occur sooner, depending on whether new tax legislation is enacted.

With the executive and legislative branches currently under the control of the same party, federal tax legislation to reduce the exemption amounts might be enacted this year.

Other proposed changes have included higher scrutiny of valuation discounts, reining in the advantages of grantor retained annuity trusts (GRATs), curtailing the benefits of grantor trusts, and modifying the availability of annual gifting.

The large-scale economic stimulus packages in 2020 and 2021 have intensified the debate about raising taxes to reduce the deficit.

Of course, no one can predict which, if any, of these proposals might eventually be enacted.

What we do know is that current law enables transfers of wealth to future generations in tax-efficient ways. However, those laws could be changed.

To explore the possibilities, please see our new whitepaper.

Insights

See our wealth planning insights and the issues that matter for your wealth.

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Insights

See our wealth planning insights and the issues that matter for your wealth.

View all insights

Information as of December 2021 and is subject to change.
Neither Citigroup or its affiliates provide tax or legal advice. Please consult with your independent tax advisor.