28 Feb Estate Planning in Your Sixties: A Senior’s Guide

For seniors like you with large financial portfolios, you’ll need to take a few steps to protect your hard-earned wealth. Careful estate planning will not only ensure the smooth transfer of your assets after you pass, it will also help your heirs avoid unnecessary costs like probate fees and extraneous taxes. Let’s go over some of the basic steps you can take to protect your assets when you have a large portfolio.

Estate Planning for Large Portfolios

In general, the goal of estate planning is to protect high-value assets or those that are difficult to transfer. The best way to do this is to set up a trust and fund it with assets like your real estate holdings, business interests, or investments. Only some assets can pass directly to their named beneficiaries, such as life insurance policies and retirement accounts. So if you want to keep your other assets out of probate, setting up a trust is an important first step. 

Step 1: Set Up a Trust

How to do it: Trusts are estate planning tools that you can use to manage your wealth during and after your lifetime and preserve it after you pass away. An estate planning attorney can help you choose the right type of trust and draft the legal documents you’ll need. 

These are several types of trusts, each with different advantages:

• With a revocable living trust you retain full control over the assets, and you can modify, revoke, or make changes to the trust at any time. 
• An irrevocable trust provides benefits like asset protection and tax savings. However, once you cannot change, modify, or dissolve the trust without the consent of its beneficiaries. 
• Charitable trusts like a charitable remainder trust can help you reduce the size of your taxable estate while also supporting causes that are close to your heart. You can also use this strategy to reduce your income taxes during your lifetime.
• Dynasty trusts are designed to last for multiple generations, allowing wealth to be passed down with minimal estate taxes.
• If you have beneficiaries with special needs, placing assets in a special needs trust ensures they can receive support without jeopardizing their eligibility for government assistance programs.

Why trusts are important: Placing funds in a trust separates you from the money by removing it from your personal estate. Because the trust is a distinct legal entity, it now owns the assets inside. This can greatly relieve the tax burden on your beneficiaries after you pass. Trusts allow you more control over how your assets are distributed, and placing your assets in a trust will also keep them out of probate. 

Step 2: Decide on the Terms

How to do it: Make decisions on who will inherit your assets, how many people will be included (or excluded) and why, how they should receive their inheritance, and when the transfer of assets should happen. 

For example, you may have several grandchildren you want to include as beneficiaries, but each one could require different treatment. One grandchild who is established in their career could benefit from a cash gift, however another grandchild who is in middle school would benefit from having a college plan set up for them. 

Why it’s important: Thoughtful planning will protect your legacy. It’s important to carefully choose your beneficiaries and the terms around how they receive assets. Without careful consideration, heirs may not handle your estate in the way you’d want, potentially leading to mismanagement, misuse, and potential disputes. 

Step 3: Fund the Trust 

How to do it: Funding a trust means legally transferring ownership of those assets over to the trust. Not every asset belongs in a trust. For example, retirement accounts should typically be kept out because they already have designated beneficiaries. 

Common types of assets people use to fund a trust are: 

• Real estate 
• Titled personal property like (boats, vehicles, and planes)
• Bank accounts
• Business interests (shares in a corporation) 
• Investment accounts 

Why it’s important: This step protects your property in case you are ever unable to manage your estate. You will name a successor trustee who is responsible for managing your assets in the event of your disability or death. Because of the importance of this responsibility, it’s best to choose a trusted third party with no vested interest in the estate. 

Step 4: Make Charitable Gifts

How to do it: To leave a charity as a beneficiary in your will or trust, you’ll need to specify the charity’s legal name, address, and any details about the donation. Details include: specific amount, percentage, and purpose of the gift. It’s also a good idea to check with the charity to ensure they can accept the donation. Consult with an attorney to ensure the gift is properly structured and legally valid. 

Here are some examples of ways to give:

• Annual Gift Exclusions: You can give up to $17,000 per person in 2025 without incurring gift taxes. Consider gifting appreciated assets, like stocks, to family members in lower tax brackets. This can reduce your taxable estate and allow the recipient to benefit from lower capital gains taxes when they sell. 
• 529 College Savings Plans: You can contribute to a 529 plan for your children or grandchildren to help with educational expenses. These contributions grow tax-deferred and are typically withdrawn tax-free if used for qualified education expenses.
• Charitable Donations: Donations to qualified charitable organizations can reduce your taxable income. They’re exempt from estate taxes if structured properly through a donor-advised fund or a charitable remainder trust.

Why it’s important: As an estate planning strategy, giving gifts helps reduce the size of your taxable estate. It allows you to pass wealth to your loved ones and charities near your heart while taking advantage of tax exemptions.

Step 5: Use Tax-Efficient Investment Strategies

How to do it: 

• Maximize contributions to tax-deferred accounts like 401(k)s and IRAs. These accounts allow your investments to grow without being taxed until withdrawal.
• Invest in tax-efficient assets. Municipal bonds are often tax-exempt, and index funds or (exchange-traded funds) typically generate fewer taxable events compared to actively managed funds. 
• If you can, hold on to your assets for more than one year to take advantage of the long-term capital gains tax rate, which is generally lower than ordinary income tax rates. 

Why it’s important: If you’re careful to use tax-efficient investment strategies through your senior years, your estate will be left with even more assets. 

Step 6: Create a Business Succession Plan

How to do it: For family businesses, a buy-sell agreement can specify how your shares will be transferred to your heirs or if they should be sold to a third party. Family Limited Partnerships (FLPs) can help protect your business assets while offering income tax benefits and gifting opportunities. They can also provide a structured way for heirs to become involved in the business over time.

Why it’s important: When you own a business, having a plan in place for how it will transition to the next generation or to a third party will protect the business, its reputation, and its interests. 

Step 7: Optimize Your Tax-Deferred or Tax-Free Growth Options

How to do it: If you’re eligible, contribute to a Roth IRA or Roth 401(k), where qualified withdrawals are tax-free. This can help reduce your future taxable income. Consider using other tools like deferred annuities. While they’re not for everyone, a deferred annuity can help you grow your wealth tax-deferred and can provide a stable income stream in retirement.

Why it’s important: You’ll end up paying less in taxes and preserving more of your wealth. 

Step 8: Review Your Tax Position Regularly

How to do it: Work with an accountant or tax planner who specializes in high-net-worth estates. Regularly reviewing your tax position can help you find opportunities to minimize taxes through strategic moves like shifting investments, utilizing tax credits, and rebalancing your portfolio.

Why it’s important: Estate plans should evolve. Changes in tax laws, family dynamics, and market conditions can mean having to make adjustments to your strategy over time. Review your plan regularly to ensure that it’s still aligned with your wishes and goals. 

Get Personalized Advice from a Legal Professional

Given the complexity of managing a large portfolio and setting future generations up for success, it’s important to seek professional guidance. The team at Phelps LaClair is happy to help you through all the intricacies of estate planning with a large portfolio. We’ll be there with you and your family the entire way. From drafting wills, trusts, and other legal documents to helping you design a comprehensive tax strategy, to acting as estate administrators, we’re a firm who is with you for the long haul. Call our Arizona office nearest you to set up a consultation. 

Images used under creative commons license – commercial use (02.13.2025). Photo by pixabay from picryl.com in the public domain.