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ATI Insights: Mastering Legacy Transfers with Tax-Savvy Strategies


ATI employees who prioritize tax-efficient wealth transfer strategies, such as irrevocable trusts, below-market loans, and life insurance, can help ensure their legacy is passed on with minimal tax exposure, but it requires careful planning and adherence to IRS guidelines.' – Kevin Landis, a representative of The Retirement Group, a division of Wealth Enhancement Group.

'ATI employees looking to optimize their estate planning should consider leveraging strategies like direct tuition payments, family LLCs, and life insurance to preserve wealth while minimizing tax implications, but these strategies require meticulous execution to comply with tax regulations.' – Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement Group.

In this article, we will discuss:

  1. Trusts and Estate Planning: How irrevocable trusts and structured financial transfers can help reduce estate taxes.

  2. Tax-Advantaged Gifting Strategies: Using below-market loans, direct tuition and medical payments, and innovative real estate approaches to legally transfer wealth.

  3. Integrating Family into Financial Planning: Exploring business integration, authorized credit card use, and life insurance as tools for legacy preservation.

Managing complex tax laws to optimize financial gifts to children is a challenging task in asset management. Some very affluent people want to leave as much as possible to the next generation without paying the 40% postmortem estate tax on assets over USD 13.99 million, which is levied on ATI employees. The IRS caps annual gifts for individuals at USD 19,000 to offset those tax consequences. If this sum is exceeded, the giver is drawing from their USD 13.99 million lifetime exemption and must file Form 709.

Trust Funds: Transferring Strategic Assets

As an important tool in estate planning, trusts allow the transfer of money within set limits. And for ATI professionals, implementing a trust might mean establishing annual spending limits or age limits at which funds may be distributed via a spendthrift or age-terminating clause. Only an irrevocable trust can remove assets from an estate and limit estate taxes, says Kitty Ritchie of Drucker Wealth, so long as the trust contents do not exceed the lifetime exemption threshold.

Below-Market Loans: A Helpful Tax Option

Gift taxes may be reduced by structuring financial support as a loan when parents help with big purchases like real estate. Some ATI team members have found that structuring these loans - with a promissory note and interest at the applicable federal rate - usually lower than the commercial rates - can provide significant tax benefits. When these conditions fail to apply, the IRS could consider the loan a gift and tax it upon review.

Innovative Mortgage Options

A different approach involves a parent buying an apartment outright and then refinancing the loan with a home-equity line of credit (HELOC) - making the child the homeowner without a direct cash transfer - financial journalist Farnoosh Torabi writes.

Gift Tax Exemptions for Medical & Educational Payments.

This annual gift tax cap is not applicable to payments directly to medical or educational institutions on behalf of a child. Some ATI staff have taken this exemption to pay tuition or healthcare directly. In fact, educational analyst Roxana Reid says in recent decades grandparents have begun covering private education tuition.

Pied-a-Terre: Alternative Residential Investments

The acquisition of a second home in which a child lives is effectively giving away its rental value. Without documentation and reporting, this method may be reclassified as a gift. ATI employees considering such alternative investments should check with a tax professional about compliance.

Payments with Credit Cards

Covering expenses without directly gifting money is possible by designating a child as an authorized user on a credit card. But annual charges over USD 19,000 must still be recorded as gifts - and could be flagged during an IRS audit. Many ATI employees have considered this strategy for their expense management.

Using Family Members in Business Integration.

Income may be transferred indirectly through family LLCs when family members are incorporated into business operations or real estate interests. Such arrangements must involve legitimate work relationships with the IRS, said Andrew Crowell of DA Davidson 1 and 1 Co. ATI team members sometimes use such strategies to facilitate wealth transfer while remaining regulatory compliant.

Cash Presents Below Reporting Limit.

Peter Anastasian of Wealth Enhancement Group says although legally ambiguous, financial gifts under USD 10,000 are exempt from IRS reporting. Some ATI professionals have used it legally.

In Conclusion

For those focused on preserving and passing on their financial legacy, following wealth transfer techniques that comply with gift and estate tax regulations is imperative. All strategies need planning, from trusts to new financing models. ATI employees and other professionals can use these methods to help move wealth along.

Wealthy parents who are considering how to pass wealth are turning to life insurance coverage. Designating their children as beneficiaries allows parents to leave a substantial tax-free benefit upon their death. This avoids probate and avoids gift and estate taxes and is a useful strategy for wealth transfer. Life insurance proceeds generally are deductible from federal income taxes (2021), making it a practical and affordable way to leave a legacy. Perhaps ATI employees will find life insurance strengthens their legacy strategy.

Examine efficient wealth transfer techniques to reduce estate and gift taxes. For more custom legacy planning, explore direct tuition payments, below-market loans, irrevocable trusts and real estate investments. Learn how to give to your family - tax efficiently - by using life insurance and involving children in business legally. Structure your financial legacy so beneficiaries can receive assets with low tax - an ideal strategy for those familiar with IRS requirements.

A professional gardener tending to a rare, valuable orchid is like navigating financial gifts. Parents use trusts, below-market loans and direct tuition payments much like the gardener uses precise watering, optimal sunlight and the right fertilizer to encourage the orchid's growth without overwhelming it. As such, they help children develop while addressing gift and estate tax issues. ATI employees understand, like gardeners, that sound financial planning creates a legacy for future generations.

Articles you may find interesting:

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Sourced

1. “ Irrevocable Trusts: What Beneficiaries Need to Know to Optimize Their Resources .”  J.P. Morgan Private Bank , Dec. 2024, privatebank.jpmorgan.com. Accessed Apr. 2025.

2. United States Congress. “ 26 U.S. Code § 7872 - Treatment of Loans with Below-Market Interest Rates .”  Legal Information Institute , Cornell Law School, current through 2025, law.cornell.edu. Accessed Apr. 2025.

3. Carter, Jean Gordon, and Toni Ann Kruse. “ Direct Payment of Medical Expenses and Tuition as an Exception to the Gift Tax .”  American College of Trust and Estate Counsel (ACTEC) , 2023, actec.org. Accessed Apr. 2025.

4. “ Using Intra-Family Loans to Transfer Your Wealth .”  City National Bank , 2024, cnb.com. Accessed Apr. 2025.

5. “ Irrevocable Life Insurance Trusts: An Effective Estate Tax Reduction Tool .”  American Bar Association , Summer 2013, americanbar.org. Accessed Apr. 2025.

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The primary purpose of ATI's 401(k) plan is to help employees save for retirement by providing a tax-advantaged savings option.

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ATI employees can enroll in the 401(k) plan by completing the enrollment process through the company’s HR portal or by contacting the HR department for assistance.

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Yes, ATI offers a company match on 401(k) contributions, which helps employees increase their retirement savings.

What is the maximum contribution limit for ATI's 401(k) plan?

The maximum contribution limit for ATI's 401(k) plan is set according to IRS guidelines, which may change annually. Employees should check the latest limits for the current year.

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ATI employees can start contributing to the 401(k) plan after they have completed their eligibility period, which is typically outlined in the employee handbook.

Are there any fees associated with ATI's 401(k) plan?

Yes, there may be fees associated with ATI's 401(k) plan, including administrative fees and investment fees. Employees can review the plan documents for detailed information.

Can ATI employees take loans against their 401(k) savings?

Yes, ATI allows employees to take loans against their 401(k) savings, subject to certain conditions and limits outlined in the plan.

What investment options are available in ATI's 401(k) plan?

ATI's 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles to suit different risk tolerances.

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ATI employees can change their contribution amounts at specified intervals, typically during open enrollment or at any time as permitted by the plan.

What happens to an ATI employee's 401(k) account if they leave the company?

If an ATI employee leaves the company, they have several options for their 401(k) account, including rolling it over to another retirement account, cashing it out, or leaving it with ATI if allowed.

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