Handing down your wealth is not as simple as writing a check or naming a beneficiary; you want to make the best decisions to preserve your financial legacy. Thomas Brockley, senior vice president and branch director at RBC Wealth Management, shares some tips on how to maximize your giving and ensure your wishes are followed.<\/p>\n
When donating to charity, structure your gift carefully to help your recipient receive the most from your bequest, Brockley advised. If you\u2019re donating highly appreciated assets, such as stocks, you may wish to work with the charity and your financial advisor to set up a charitable remainder trust.<\/p>\n
With a charitable remainder trust, the stock is removed from your taxable estate and held in a trust while you\u2019re alive, then transferred to the charity when you pass away, he said. During your lifetime, you\u2019ll get an income stream and receive an income-tax deduction for the value of the gift in the year it was given.<\/p>\n
While a charitable remainder trust is ideal for highly appreciated assets such as stocks and real estate, you also can fund the trust with cash.<\/p>\n
If you\u2019re passing a family business to the next generation, you may want to consider a life insurance trust, Brockley said. Whether your estate includes prime Manhattan real estate, a family dairy farm or a chain of retail stores, a number of taxes and fees will need to be paid\u2014such as insurance premiums, mortgage payments, property taxes, utilities and accounting fees\u2014while your estate is still being settled. A life insurance trust will provide the funds for your heirs to pay those bills.<\/p>\n
For real estate bequests (if you are passing down a family vacation home, for example), consider establishing an irrevocable personal residence trust. Assets placed in such a trust count against the federal $5.43 million gift tax exclusion. The value of the property increases outside your estate and estate taxes are based on the value of the property at the time it was placed in the trust. Adding life insurance in the trust will ensure your heirs receive funds to pay the immediate bills and taxes on the property.<\/p>\n
An old accounting maxim says, \u201cTrust, but verify.\u201d In this case, the wording could be changed to, \u201cCreate a trust, but specify.\u201d<\/p>\n
To set guidelines on how and when an inheritance will be spent, you can set up trusts for your children and grandchildren\u2014as opposed to making direct monetary bequests. Careful wording in the trust will help further ensure your heirs don\u2019t fritter away the estate you spent years building. Language in the trust can clearly spell out what the money can be spent on (college) and cannot be spent on (a new Porsche, Botox or trip to Tahiti), Brockley said.<\/p>\n
\u201cYou probably don\u2019t want a grandchild at age 19 to get a million dollars to spend however they want to,\u201d he warned.<\/p>\n
He\u2019s seen it happen. One young client spent $50,000 of a quarter-million dollar inheritance in just a couple of weeks, he said. The client bought a car, wrecked it the next day and then bought another one.<\/p>\n
Choosing the right trustee is also key. A family member may be your best option for a smaller estate, but if the estate is larger than $500,000, you might be better off hiring a corporate trust manager, Brockley advised. That corporate trust manager will ensure that requests for funds are only approved if they fit within the trust parameters.<\/p>\n
\u201cYou could have nieces and nephews going to their uncle and saying \u2018I know I was only supposed to get Finally, it may sound basic, but periodically check the beneficiaries on your accounts to make sure your estate goes to the right people, said Brockley. That\u2019s an easy step that people often ignore.<\/p>\n \u201cA young person\u2019s first insurance policy might name their mother as beneficiary,\u201d he said. \u201cNow they\u2019re married and have two kids. You have $100,000 of insurance going to the mother. The mother can\u2019t give all the proceeds to the daughter-in-law because of gifting limits.\u201d<\/p>\n With the right plan in place, your estate will be passed along according to your wishes, and your loved ones and favorite causes will all benefit.<\/p>\n","protected":false},"excerpt":{"rendered":" You’ve spent a lifetime building your estate. Now it’s time to decide how it will be distributed.<\/p>\n","protected":false},"author":0,"featured_media":9046,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"rbcwm_post_date":"","editor_notices":[],"rbc_url_alias":"","rbcwm_featured_desktop_image_position":"","rbcwm_featured_mobile_image_position":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[130],"tags":[221,43,65,64,114,410,403,348,306,90,54,189,53,197,247,169,66],"rbcwm_content_owner":[],"rbcwm_need":[463],"rbcwm_segment":[460],"rbcwm_solution":[482,465],"rbcwm_topic":[457,464],"rbcwm_channel":[],"rbcwm_format":[],"class_list":["post-3737","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wealth-transfer","tag-business-succession","tag-charitable-giving","tag-estate-planning","tag-family-finances","tag-family-wealth-transfer","tag-fiduciary-services","tag-personal-insurance","tag-private-banking","tag-private-wealth","tag-real-estate","tag-retirement","tag-retirement-income","tag-retirement-planning","tag-retirement-security","tag-tax-strategies","tag-trusts","tag-wealth-transfer","rbcwm_need-protect","rbcwm_segment-individuals-and-families","rbcwm_solution-investments","rbcwm_solution-wealth-planning","rbcwm_topic-education","rbcwm_topic-your-wealth"],"acf":{"rbcwm_subtitle":"You\u2019ve spent a lifetime building your estate. Now it\u2019s time to decide how it will be distributed.","rbcwm_post_author":[],"rbcwm_custom_breadcrumb_text":"","rbcwm_custom_breadcrumb_link_url":"","rbcwm_disclaimers":{"add_disclosures":["No"],"perspective_disclaimer":["No"],"expandable":[],"omit_from_pages":[],"disclaimer_footnote":" This article was originally published on Forbes WealthVoice.<\/em><\/p>"},"rbcwm_insight_cta_id":8484,"rbcwm_pagination":{"next_link":"","next_link_text":"","previous_link":"","previous_link_text":""},"rbcwm_video_duration":"","article_time":"","rbcwm_enable_toc":false,"rbcwm_toc_selector":"h2"},"yoast_head":"\n5. Check names<\/h4>\n