Preserving Your Bottom Line

It has been said that it's 10 times harder to preserve one's wealth than it is to make it in the first place. Protecting your assets can be a very complex task but, generally, it comes down to just three initiatives: reducing your taxes, reducing your liabilities, and transferring your wealth to your heirs.

Consider adding one or more of these practical wealth management strategies to your asset protection plan to help achieve your preservation—and growth—objectives.

Reduce your taxes

  • Increase your investment income; it's generally taxed at a lower rate than employment income. US Treasuries, for example, are exempt from state and local income taxes. Some municipal securities offer interest exempt from federal, state and local income tax, and long-term capital gains may entitle you to special rates well below the marginal income tax rates you'll pay as your employment income increases.
  • Make charitable donations up to 50% of your adjusted gross income (AGI). You can reduce your taxable income by carrying over donations for five years as long as they don’t exceed 50% of your AGI in any given year.
  • Maximize tax-advantaged, employer-sponsored retirement plan contributions to reduce your current-year taxable income. Because your money isn’t taxed until withdrawal, you can avoid paying state taxes on it if you live in a tax-friendly state upon retirement.
  • Get a custom, defined-benefit pension plan that allows very large contributions, and deduct the cost of fully funding a fixed pension for you.
  • Use a SEP IRA to contribute up to 20%, pretax, of your net earnings (after Social Security and Medicare taxes) to save taxes on income generated last year. And contributions made within your limits ($51,000 for 2013) are tax deductible on your business return.
  • Employ a Solo 401(k) to take advantage of flexible annual contributions. You can contribute less in lean years and increase your contributions and tax savings in more profitable years. The amount you can contribute typically outweighs any amount you can shelter in a SIMPLE IRA.

Reduce your liabilities

  • Consider insurance as your first line of defense. Buy a personal umbrella insurance policy. You can get $1 million of coverage for as little as $200 to $500 a year.
  • Set up trusts and other instruments for your heirs. Properly drafted documents can protect your assets against lawsuits or unfavorable divorce settlements.
  • Protect your assets from personal injury attorneys. Transfer assets out of your name and into a well-structured private trust. An asset protection strategy works only if it’s put in place long before incidents occur.

Transfer your wealth

  • Maximize your estate and ensure that your assets are conveyed to your heirs as you intend. Strategic estate planning can help you limit estate taxes, establish medical directives, set up charitable giving and protect your estate from lawsuits and creditors. What’s more, performance-based trusts and specialized other instruments can inspire your heirs to live well by helping them make sound financial decisions.

Ready to Take Action?

If your goals include preserving your personal assets by reducing your taxes and liabilities, and leaving significant wealth to your heirs and charitable organizations, a BB&T advisor can work with your legal, tax and other advisors to ensure that you have the right asset protection plan to fit your needs and goals.

Email an advisor or call us at 800-228-9798.

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