Preserving and managing family wealth requires addressing a number of major issues.
These include saving for your children's education and funding your own retirement.
Juggling these competing demands is no trick. Rather, it requires a carefully devised
and maintained family wealth management plan.
Start with the basics
First, a good estate plan can help ensure that, in the event of your death, your
children will be taken care of and, if your estate is large, that they won't lose a
substantial portion of their inheritances to estate taxes. It can also guarantee that
your assets will be passed along to your heirs according to your wishes.
Second, life insurance is essential. The right coverage can provide the liquidity
needed to repay debts, support your children and others who depend on you
financially, and pay estate taxes.
Prepare for the challenge
Most families face two long-term wealth management challenges: funding retirement and
paying for college education. While both issues can be daunting, don't sacrifice
saving for your own retirement to finance your child's education. Scholarships,
grants, loans and work-study may help pay for college - but only you can fund your
Uncle Sam has provided several education incentives that are worth checking out,
including tax credits and deductions for qualifying expenses and tax-advantaged
savings opportunities such as 529 plans and Education Savings Accounts (ESAs).
Because of income limits and phaseouts, many higher-income families won't benefit
from some of these tax breaks. But, your children (or your parents, in the case of
contributing to an ESA) may be able to take advantage of them.
Give assets wisely
Giving money, investments or other assets to your children or other family members can
save future income tax and be a sound estate planning strategy as well. You can
currently give up to $14,000 per year per individual ($28,000 if married) without
incurring gift tax or using your lifetime gift tax exemption. Depending on the number
of children and grandchildren you have, and how many years you continue this gifting
program, it can really add up.
By gifting assets that produce income or that you expect to appreciate, you not only
remove assets from your taxable estate, but also shift income and future appreciation
to people who may be in lower tax brackets.
Also consider using trusts to facilitate your gifting plan. The benefit of trusts is
that they can ensure funds are used in the manner you intended and can protect the
assets from your loved ones' creditors.
Overcome the complexities
Creating a comprehensive plan for family wealth management and following through with
it may not be simple - but you owe it to yourself and your family. We can help you
overcome the complexities and manage your tax burden.
Sidebar: Charitable giving's place in family wealth management
Do charitable gifts have a place in family wealth management? Absolutely. Properly
made gifts can avoid gift and estate taxes, while possibly qualifying for an income
tax deduction. Consider a charitable trust that allows you to give income-producing
assets to charity, but keep the income for life - or for the charity to receive the
earnings and the assets to later pass to your heirs. These are just two examples;
there are more ways to use trusts to accomplish your charitable goals.
This publication is distributed with the understanding that the author, publisher and
distributor are not rendering legal, accounting or other professional advice or
opinions on specific facts or matters, and, accordingly, assume no liability
whatsoever in connection with its use. The information contained in this newsletter
was not intended or written to be used and cannot be used for the purpose of (1)
avoiding tax-related penalties prescribed by the Internal Revenue Code or (2)
promoting or marketing any tax-related matter addressed herein. © 2016