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Living Legacy: Transformative Ways to Pass Wealth to Your Children

You’ve worked hard. You’ve saved, invested, and reaped the fruits of your labor, setting yourself up for a comfortable retirement and beyond. You know that your loved ones will be well endowed when you pass. That’s great. But what if you could experience the joy of seeing your children begin to use and appreciate their inheritance now while you’re alive? Creating a living legacy by passing wealth on to your children during your lifetime can be a transformative experience. Let’s explore the strategic ways to accomplish this and discuss how it might impact your estate planning. 

Why Consider a Living Legacy?

Creating a living legacy allows you to witness the positive impact of your wealth on your children’s lives. It can provide them with financial support when they need it most — things like buying a home, starting a business, or funding education. This estate planning approach can also help your heirs fast-track their trajectory toward financial independence.

If creating a living legacy is something you are interested in pursuing, here are four things you want to consider:

1. Choose the Right Assets to Gift

First, you’ll want to decide which assets you want to pass on. Evaluate the types of assets that make the most sense to gift, considering their current value, potential for appreciation, and any associated tax implications. For example, gifting appreciated securities or property can offer significant tax advantages for both you and the recipient.

2. Communicate with Your Family

Secondly, before you make any decisions about transferring assets, a key consideration is open communication. Discuss your intentions with your children and other family members to ensure clarity and prevent misunderstandings. These conversations can also provide valuable insights into how best to tailor your gifts to each child’s needs and aspirations.

3. Consider Potential Family Dynamics

It’s also important to be mindful of how gifting can affect family dynamics. Equal distribution isn’t always the best or what’s perceived as fair. Strive for transparency and fairness based on your family’s situation to minimize potential conflicts and ensure that your legacy strengthens family bonds.

4. Consider Non-Financial Gifts

Lastly, consider non-financial gifts. Some things are infinitely worth more than money. When considering a living legacy, remember that sharing life experiences, life lessons, and instilling values can be equally significant and valuable. Also, as people often downsize in their later years, there may be family heirlooms you want to go ahead pass on to your heirs so they can enjoy them in their homes. These are a few ideas for incorporating non-financial elements into your living legacy plan.

Now that we’ve covered some of the benefits of creating a living legacy and some of the emotional family considerations let’s move on to discuss a few things you should know about estate and tax implications.

Work with Estate Planning Professionals

It’s always a good idea to consult estate planning professionals when considering a living legacy. They can help you navigate the complexities of gifting and estate taxes and structure your gifts to maximize tax benefits and align with your overall estate planning strategy.

Tax Implications and Benefits

In many jurisdictions, lifetime gifts can reduce the size of your estate and potentially lower estate taxes upon your death. However, it’s crucial to be aware of the gift tax exemption limits and strategize accordingly to avoid unnecessary tax liabilities.

Setting Conditions and Expectations

A key consideration in passing on wealth while living is to set clear conditions and expectations. One way to accomplish this is to create a trust. You can also structure gifting plans that dictate how and when the assets can be used, ensuring they are used in a manner that aligns with your values and the recipients’ needs.

Adjust and Regularly Review Your Plan

Once you’ve decided what and how you want to gift assets, adjust your estate plan to reflect the early distribution of assets. Then, regularly review and update your plan as necessary, as your financial situation and family dynamics may change over time. Reflecting any changes in your estate plan ensures that you continue to meet your legacy objectives.

Creating a living legacy by passing on wealth to your children is a rewarding process that can significantly impact their lives and your family’s future. With careful planning, clear communication, and professional guidance, you can ensure that this aspect of your estate planning enhances your family’s financial well-being and honors your legacy.

Thanks for reading our blog. Remember, we believe you can have a flexible life plan to achieve more of what you love: more financial confidence, more for your family, more freedom, and more choices.

Chris Zeches is a Certified Financial Planner® and Managing Partner at Zeches Wealth Management. Zeches Wealth Management has one singular focus: To use our financial planning and tax expertise to help multi-generational families and business owners achieve more of what they love.

Have A Question?

If you have questions that are specific to your family’s situation, feel free to contact us and we will do what we can to help.