Wealth isn’t only measured in numbers. For many professionals, executives, and families, true wealth means knowing that income will last, loved ones will be protected, and a legacy will continue long after the work is done. Achieving that outcome requires more than dedication, saving or investing, it requires planning for what may come next.
Tax-aware legacy planning is the process of designing income streams and asset structures that endure beyond a single lifetime. Done well, it preserves capital, reduces unnecessary taxation, and creates clarity for the next generation.
Why Legacy Planning Matters Now
Higher tax rates, longer lifespans, and rising living costs make the challenge of sustaining wealth more complex than ever. Even well-prepared investors can see plans eroded by capital gains, estate taxes, or inefficient income structures. The result is often less security for retirement and fewer resources passed on to heirs or charitable causes.
The solution is not guesswork. It’s about building systems that create predictable income and protect wealth, regardless of economic cycles.
Tools to Keep Income Flowing
Charitable Trusts
Charitable Remainder Trusts allow contributions of appreciated assets while offering an immediate tax deduction. These trusts can provide an income stream to the donor or heirs for life or a defined period. The remainder supports chosen charitable causes. This approach blends purpose, planning, and long-term structure.
Delaware Statutory Trusts (DSTs)
Real estate owners who no longer want direct management responsibilities often look to DSTs for passive ownership of institutional-grade properties. When used with a 1031 exchange, gains may be deferred and income can continue into retirement years. The DST structure also provides professional oversight, which can be helpful during later-life planning.
Roth Conversions
Converting traditional retirement accounts into Roth status can create a future source of tax-free income. Although conversions generate a tax obligation in the year of the change, they may support more predictable planning later, especially if tax rates increase.
Captive Insurance Companies
Some entrepreneurs use captive insurance structures to self-insure specific business risks. Premiums can be deductible, and assets held in the captive may create a future source of income or serve as part of a broader legacy plan.
Cost Segregation
Owners of commercial property may accelerate depreciation through cost segregation studies. This can increase deductions early, strengthen near-term cash flow, and support income needs without requiring the sale of assets.
Planning Beyond Income
Tools like irrevocable trusts, qualified retirement plans, and private placement life insurance (PPLI) create structures where assets are shielded, distributed according to intent, and optimized for tax efficiency.
These strategies prevent confusion among heirs, reduce the risk of disputes, and ensure the story of your wealth reflects your values.
Risks and Considerations
Legacy planning tools can be sophisticated. Each comes with specific risks and conditions that should be reviewed carefully:
- Illiquidity: DSTs, charitable trusts, and alternative investments may require long-term commitments and may lack exit options.
- Limited control: Structured strategies, such as DSTs or charitable trusts, shift management decisions to trustees or sponsors.
- Market and economic risk: Real estate values, business conditions, or investment markets can affect income and principal.
- Sponsor or manager risk: Outcomes depend on the skill and integrity of the sponsor, trustee, or managing entity.
- Loss of principal: All investments involve risk. Investors may lose some or all of the capital they contribute.
- Complexity and suitability: Many of these strategies are intended for accredited investors who understand their structure and risks.
- Tax or legislative change: Future changes in regulation may alter expected tax treatment or strategic benefits.
Each approach should be reviewed with a CPA, attorney, and financial advisor to ensure it fits with your goals, liquidity needs, and tolerance for risk.
Key Takeaway
Income that endures doesn’t happen by accident. It comes from tax-aware structures and strategies designed to balance today’s needs with tomorrow’s goals. For executives, entrepreneurs, and families alike, legacy planning ensures that the work of a lifetime becomes a foundation for generations.
Plan for income and legacy with confidence. Download our free eBook: The 1031 DST Advantage: A Strategic Tax Deferral Guide for Financial Professionals → Get the eBook.
If you or someone you know needs guidance on tax-efficient investing strategies, 1031 DST Group is here to help. Get a free consultation or learn more at https://www.1031dstgroup.com/free-consultation
Disclosure:
Portions of the written content in this article were assisted by artificial intelligence (AI) technology tools and reviewed by 1031 DST Group for quality and compliance. This material is provided for educational and informational purposes only and is not intended as investment advice or a recommendation to buy or sell any security. A 1031 exchange may not be suitable for all investors and may involve risks, including the potential for loss of principal. Always consult with a qualified tax advisor or financial professional. Some investments such as Alternative investments and DSTs involve significant risks and may be illiquid, speculative, and suitable only for accredited investors*.
*Accredited investors are defined under SEC Rule 506 of Regulation D. Generally, an investor is deemed accredited if their net worth is greater than $1,000,000 exclusive of their primary residence and/or their annual income exceeds $200,000 for the current and past two years. Click here to learn more.
Ray DeWitt is a Registered Representative of Realta Equities, Inc. and an Investment Advisory Representative of Realta Investment Advisors, Inc. Investment Advisory Services are offered through Realta Investment Advisors Inc., an SEC registered investment advisor. Securities are offered through Realta Equities, Inc., Member FINRA/SIPC. Neither Realta Equities, Inc. nor Realta Investment Advisors Inc. is affiliated with C-Suite Network Or 1031 DST Group. Realta Wealth is the trade name for the Realta Wealth Companies. The Realta Wealth Companies are Realta Equities, Inc., Realta Investment Advisors, Inc., and Realta Insurance Services, which consist of several affiliated insurance agencies.
