There are only two ways of voluntarily transferring wealth during a person's lifetime: by sale, and by gift. It may not seem that the sale of an asset constitutes the true transfer of wealth, since the seller has merely exchanged one form of wealth for another. For example, if a person sells an asset and takes a promissory note from the buyer for the unpaid purchase price, he has not diminished his wealth (assuming that the asset was purchased at fair market value). If the asset sold was rapidly appreciating in value, however, the seller has removed this "future wealth" from his gross estate.

There are many variations to the common sale and gift transactions that accomplish estate planning goals. This module will discuss these two methods of lifetime transfer in the context of three planning areas. These planning areas are intrafamily estate transfer planning, closely held business planning, and insurance planning.

The primary focus of the material in this module will be on the nontax characteristics of techniques used in these planning areas, along with the tax implications related to these techniques. No attempt is made to discuss the tax implications in detail, so it is therefore helpful you have a basic knowledge of the three federal transfer taxes and the federal income tax.

About the Author

David Mannaioni, CFP®, MPASSM is a professor at the College for Financial Planning. Utilizing his 30+ years of experience in the financial services industry, David also maintains a financial planning practice where he works with his clients in all areas of financial planning. In addition to his certifications, David holds life and health insurance licenses in several states, as well as the Series 6, Series 7, and Series 63 registrations with FINRA. You can contact David at david.mannaioni@cffp.edu.

Complexity Level: Advanced