Understanding the nuances of income and estate tax laws may help avoid
costly consequences later
ATLANTA, May 15, 2014 /PRNewswire/ - For those approaching retirement age, it's
crucial to understand the effects of income and estate tax laws and
begin planning well in advance to ensure a comfortable retirement and
pass along assets to loved ones, according to the experts at Atlantic Trust, the U.S. private wealth management division of CIBC (NYSE: CM) (TSX:
CM).
While individual "wants" in estate-planning may seem simple, a number of
complicating factors add layers of complexity to the planning process.
Income and estate taxes (both of which may change over time) can eat
away up to 65 per cent of a family's retirement benefits inheritance,
while questions about the order in which to spend your taxable and
tax-deferred assets and who to designate as beneficiaries have their
own short- and long-term implications.
To navigate through all of these options and their potential issues,
Atlantic Trust recommends meeting with an advisor early on to develop
an integrated approach toward making withdrawal decisions and estate
planning. It's also important to revisit that plan regularly to factor
in life events, such as the birth of grandchildren.
"We want to start painting the picture of what the assets and the cash
flow will look like over time, including how it will look subject to
income and estate taxes," says Art Graper, managing director and senior
wealth strategist for Atlantic Trust. "That's why it's important to get
the total picture on assets and the asset mix, your health, the family
and its dynamics, your desired lifestyle years down the road and cash
flow needs, as well as gifting plans and any philanthropic intentions."
As a very general rule of thumb, Atlantic Trust recommends spending taxable assets first.
However, there are always exceptions. For example, if you have a very
large individual retirement account (IRA) or tax-deferred account, it
could be advantageous to withdraw from that IRA first before reaching
the RMD threshold, especially if you think tax rates will rise in the
future or you are concerned about estate taxes, Atlantic Trust says.
Just as important as deciding how to spend your assets is selecting who
inherits them after you die. In general, beneficiaries are better off
if they can stretch out the period they receive distributions from
retirement accounts. Because an IRA inheritor can take withdrawals
based on his or her life expectancy, the younger the beneficiary, the
longer the stretch-out and deferral of income tax
"No matter what your retirement and legacy goals are, having an in-depth
discussion with a trusted financial advisor is the first step in
protecting your assets and passing them on to future generations," says
Graper.
To learn more about retirement planning, read "Planning With Retirement Assets" on Atlantic Trust's Online Resource Center.
About Atlantic Trust
Atlantic Trust is one of the nation's leading private wealth management
firms, offering integrated wealth management for high-net-worth
individuals, families, foundations and endowments. The firm considers
clients' financial, trust, estate planning and philanthropic needs in
developing customized asset allocation and investment management
solutions. Experienced professionals deliver a broad range of
solutions, including proprietary investment offerings and a robust open
architecture platform of traditional and alternative managers. Atlantic
Trust operates in 12 full-service locations throughout the U.S. with
$24.0 billion in assets under management (as of December 31, 2013). For
more information, visit www.atlantictrust.com.
About CIBC
CIBC is a leading Canadian-based global financial institution. Through
our Retail and Business Banking, Wealth Management and Wholesale
Banking businesses, CIBC provides a full range of financial products to
individual, small business, commercial, corporate and institutional
clients in Canada and around the world.
CIBC Wealth Management provides relationship-based advisory services and
an extensive suite of leading investment solutions to meet the needs of
personal, institutional and high-net-worth clients through an extensive
distribution network, that includes CIBC Private Wealth Management,
CIBC Wood Gundy and CIBC Investor's Edge. Our asset management, retail
brokerage and private wealth management businesses combine to create an
integrated offer, delivered through nearly 1,500 advisors across
Canada. In addition, CIBC Asset Management provides global money
manager services to institutional and high-net-worth clients and
industry-leading retail investment solutions through our two mutual
fund families - CIBC and Renaissance - and the CIBC family of managed
portfolio solutions.
SOURCE Atlantic Trust Private Wealth Management