🤝 The Art of the transfer 🤝

“An estimated $84 trillion is expected to transfer from baby boomers to younger generations by 2045.” – U.S. Federal Reserve 👀

Often referred to by financial professionals as the Great Wealth Transfer, this historic shift is on track to make Millennials the richest generation on record. While a substantial portion of this transfer will take the form of cash and real estate, it's important to note that Baby Boomers also own 60% of all small businesses—many of which will be sold, liquidated, or passed down.

Without a thoughtful and well-structured succession plan, these transitions—whether in cash, property, or business—can be risky, inefficient, and emotionally taxing.

So, how do you ensure that your legacy is: protected, transferred according to your wishes, and as tax-efficient and seamless as possible? Here are a few asset protection strategies that can help.

General Asset Protection Strategies

Here is where smart estate planning comes in. Here are four key tools to consider:

1. Revocable / Irrevocable Trust
   A revocable trust lets you retain control of your assets during your lifetime and can be changed at any time. It's ideal for probate avoidance and organization but doesn't protect against creditors.
   An irrevocable trust offers stronger asset protection and potential tax benefits by removing assets from your estate, but it limits your ability to make changes later.

2. Qualified Terminable Interest Property (QTIP) Trust
   A QTIP trust is designed to provide income to a surviving spouse during their lifetime while ensuring that the remaining assets pass to designated beneficiaries after the spouse’s death. It’s especially useful in blended family situations.

3. Domestic Asset Protection Trust (DAPT)
   A DAPT is a powerful option for safeguarding assets from future liabilities, including lawsuits and divorces. It allows the trust creator to remain a beneficiary, under specific conditions, while keeping assets protected from creditors.

4. Corporate Trustee
   Using a disinterested corporate trustee like HootOwl's Nest Trust Services ensures your estate is managed with professionalism and neutrality—free from family bias or personal interests. This structure offers stronger protection for your assets and helps safeguard inheritances from creditors, disputes, and bad parties.
   

Business Asset Protection Strategies

If your estate includes a closely held business, it's crucial to plan for continuity and protection. Here are some commonly used instruments to ensure a smooth transition:

1. Buy-Sell Agreements
   These agreements define what happens if an owner leaves the business—whether due to retirement, death, or disability. Typically funded by life insurance, buy-sell agreements help avoid disputes and ensure a smooth transition.

2. Trust Structures
   As noted above, trusts can hold business interests to avoid probate, reduce taxes, and ensure those interests are passed to the right people. This is especially important for family-run businesses or partnerships.

3. Key Man Insurance
   This insurance provides liquidity to the business in the event a key owner or employee dies. It ensures the business can continue operating smoothly and covers potential losses or buyouts during a critical transition.

4. Regular Business Valuations
   Knowing the value of your business is essential for succession planning, buy-sell agreements, and tax planning. A current valuation supports accurate decision-making and fair outcomes for all stakeholders.

Now What?

Proactive estate and succession planning isn’t just about documents—it’s about preserving your family’s future and ensuring your business or personal legacy lives on. At HootOwl, whether you're starting from scratch or refining your existing plan, we’ll guide you every step of the way.