How much is too much? That’s a question many parents ask as they structure lifetime gifts and bequests to children in their financial and estate plans. Wealthy clients are sometimes concerned that leaving money to their children could backfire and hinder their kids’ ability and motivation to achieve financial independence.
Here are some strategies that may help your clients:
- Establish a philanthropic components of an estate plan so that children receive only the amount that can pass to them free of estate tax, with the rest passing to a charity, such as a donor-advised fund at the Wayne County Foundation.
- Set up a donor-advised fund at the Foundation to allow your clients to support favorite charities during their lifetimes, with the terms of the donor-advised fund providing that the children step in as successor advisors following the clients’ deaths. As successor advisors to the donor-advised fund, the children can recommend grants to favorite charities, support interest areas pre-selected by their parents, or both.
Many clients are attracted to this type of structure because not only could it avoid estate tax, but it also allows their children to stay involved with the family’s wealth, work together and keep sibling bonds strong, and get involved in the community.