The term estate planning has a financial connotation attached to it, and of course this is not unfounded. But the person whose assets need to be prepared for distribution and the estate planning attorney who is assisting are both human beings. Those who will be receiving inheritances are human as well, so there’s more to the exercise than moving around numbers on a spreadsheet. When you are planning your estate you are taking stock of your legacy and preparing to pass it along to your loved ones. This is a huge financial task but there is also a significant emotional component to it.
There are some things you can do to personalize your inheritance plan and add some heart and soul to it. These efforts can enrich the lives of your family members going forward and interject a bit of your own personal depth of character. One of the first things that comes to mind is charitable giving.
Donor advised funds have become very popular charitable giving vehicles. These funds are a very good way to give to multiple worthy causes efficiently by making a single contribution. There are also tax advantages, and perhaps the most valuable among them is the fact that no capital gains taxes are levied on appreciated securities donated into the fund.
Another thing to think about is the possibility of creating incentive trusts. The short definition of incentive trusts would be a trust that requires the beneficiary to perform certain actions as a condition of receiving distributions. If you wanted to make a statement to an heir or heirs you could require public service as a condition of trust distributions.
The exact type of service could be selected carefully in an effort to send a particular message of value to the loved one in question. If this is done in the right spirit, the recipient of your bequest may actually appreciate his or her inheritance on a level that they never could have had you passed along the assets directly with no subtle or direct message attached.
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- IRS Confirms Grantor Trust Status Alone Does Not Cause a Step-Up in Basis - October 26, 2023
- Understanding the Importance of the Simultaneous Death Act - October 19, 2023