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Crafting a Strategic Inheritance Plan

Crafting a Strategic Inheritance Plan

December 01, 2023

Navigating Gifting and the Medicaid Lookback.

You have worked, saved and invested.  You may have family, friends or a non-profit you want to leave a legacy to.  Do you Gift now so you can see the impact?  Do you build an inheritance plan for your assets at death?  The answer is not always an easy one.   There is no clear right answer, but to find a good fit for your situation, you will want to carefully think through your options.  Here are a few of the considerations you will need to keep in mind.


What are your goals?

Would you like to help your grandchildren with college?  Do you have a nonprofit that is near and dear to your heart?  Are you trying to lessen the value of your estate to avoid federal inheritance tax?  Before crafting a plan, it is important to think through the impact you want to have.  Be as specific as you can be.


Have you thought through your family dynamics?

If you plan on gifting now, how will this gift affect the family as a whole?  What might happen if you gift more to one family member and not another?  What about if you were to leave an inheritance to a family member who is in a bad marriage, has an addition issue, or is going through something that could cause this gift to be squandered or even cause harm?  There are ways to give to your loved ones and protect the family as well as the asset.


Have you really looked at your financial situation?

Look at your financials.  Map out your guaranteed income, your spending and assets; making sure you have built in contingencies for the unforeseen before you start gifting.  Think through how inflation can impact your situation.  Most people don’t fully plan for the erosive nature of inflation, healthcare, the possibility of having a 30-year retirement with the risk of you or your spouse needing a nursing home at some point.  You are not being selfish by making sure you are taken care of first.


Do you understand all of the tax implications?

Things here can get complicated quickly.  Federal Inheritance Tax, State Estate Tax, and Annual Gifting Limits for a start.  Different states each have different rules.  Are you aware that some appreciated assets can be left as inheritance with the beneficiary not having to pay taxes on your gains?  However, those same assets, if gifted, may not have that benefit.  Additionally, there are different rules for taxation of certain gifts depending who the beneficiary is.  Have you built liquidity into your estate plan to help your beneficiaries pay these possible taxes?  Are you educated on how creating certain gifting strategies to a charity can offer tax benefits? 


What about the Medicaid Lookback?

After the considerations above, if you are still planning on gifting or leaving a large legacy, you mostly are not expecting to need Medicaid should a long-term care need arise.  However, if you have not planned properly, the 5-year Medicaid lookback can cause much pain.  Again, many of the rules around what is considered a countable asset and income limits vary by state.


Have you sought help?

This is not a space for DIY.  Your best bet is to have an Estate Attorney draft proper legal documents in conjunction with a Financial Advisor and CPA.  Each professional brings their expertise to the table in a way the other two cannot and brings valuable insight to the planning.  When working with a Financial Advisor, it may be best to find one that is licensed in both the insurance and investment areas of finance.  There are strategies that can benefit a plan in both areas and a well-educated holistic advisor can be an asset.


While there is no cookie cutter answer for how build your plan.  It will be best to start with your goals and then reach out to a team of professionals to help give you any education you may need, ask the pertinent questions to help you think through to a proper plan and provide guidance, legal documents and any financial vehicles to help build efficiency to your plan.


Note:  At Empowered Financial, we Listen to Learn and Educate to Empower.  Our specialty is helping pre-retirees with a child with Special Needs.  We aim to build a plan to provide for their loved one’s care and quality of life long-term, while simultaneously building a plan for their own retirement income and legacy.  We understand how important it is to have your retirement plan to have built in safety valves so that your legacy to your loved one will be sustained.


At EFS, we understand how important it is to have a good foundation of basic financial knowledge.  We offer educational workshops in areas of insurance and investing with this end in mind.  If you have a group or association and would like us to speak, please reach out to us at  Contact (   

About the author:

Carolyn Humphrey is a Financial Advisor, with licenses in areas of Life, disability, health and Long-Term Care Insurances as well as a number of Finra licenses allowing her to work in various areas of Wealth Management.  She has earned the RICP®, (Retirement Income Certified Professional), from the American College.  This designation helps Financial Advisors learn about how to guard against the 18 risks that clients face in retirement.  She has also earned the WMPC®, (Wealth Management Certified Professional), which is designed to help Financial Advisors build efficient portfolios for goals-based investing.  Carolyn has also earned the CLF®, Certified Leadership Fellow, which has helped her in various leadership positions such as being a national trainer as well as a manager of a team of advisors.  She has been married and caring for rescue pups since the early 1990’s and has been an avid Buffalo Bills fan forever.

The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security or insurance product.  Empowered Financial Strategies does not offer Tax or Legal Advice. 6127000RG_Nov25