An estate plan is a set of legal documents and administrative details that must agree with one another. Giving with intention means deciding what to support, how, and when, so that generosity is deliberate rather than incidental.
What estate planning is
Estate planning addresses two things: the transfer of property at death, and the making of decisions during life if a person becomes unable to make them. The documents involved are legal instruments prepared by an attorney. They commonly include a will, which directs the distribution of property that passes through the estate; one or more trusts, which hold property under terms set by the person who creates them; powers of attorney, which authorize someone to act in financial matters; and health-care directives, which record wishes about medical treatment and name someone to make health decisions.
Which documents are appropriate, and what they should say, depends on family circumstances, the nature and location of assets, and the laws of the relevant state. These are legal questions. A financial adviser may help a client understand how the estate plan interacts with the rest of the financial picture, but the plan itself is the work of the client's attorney.
Beneficiary designations and titling
A great deal of property does not pass under a will at all. Retirement accounts, life insurance, and certain financial accounts pass to the beneficiaries named on the account, and jointly titled property passes according to the form of title. These designations generally take precedence over the will, so a carefully drafted will can be undone by an account form completed years earlier and forgotten.
It is worth reviewing beneficiary designations and the titling of accounts periodically and after any major life event: a marriage or divorce, a birth or death in the family, a move to another state, or a change in the estate plan itself. The aim is simply that all of the pieces agree with one another and with current intentions.
Charitable giving with intention
Many families give, and many give more effectively when they have thought about what they want their giving to achieve, over what period, and in what form. Giving can be made outright, during life or at death, or through structures that separate the decision to give from the decision about which organizations to support and when. In general terms these include:
- Direct gifts of cash or of appreciated assets to an organization.
- Donor-advised funds, in which a contribution is made to a sponsoring organization and grants are recommended to charities over time.
- Private foundations, which offer the greatest control and carry the most administrative and regulatory obligations.
- Charitable trusts and bequests, which can combine giving with provision for family members or with the transfer of property at death.
The tax treatment of a gift depends on what is given, to whom, how, and when, and on the donor's overall tax position, and the rules change. Any gift of significance should be considered with a qualified tax professional and, where a structure is involved, with an attorney.
Coordinating the pieces
Estate and charitable planning touch nearly every other part of a financial picture: how assets are titled, which accounts are drawn first in retirement, how a business interest is to be handled, what insurance is in place, and how much can prudently be given during life without compromising the giver's own security. The value of coordination is that these questions are considered together rather than separately, and that the attorney, the tax professional, and the financial adviser are working from the same facts.
A well-coordinated plan is also a well-documented one. Family members and fiduciaries should be able to find the documents, know who the professionals are, and understand in broad terms what the plan intends. Clarity in advance spares a great deal of difficulty later.
- Do I have current estate documents, and do they reflect my present circumstances and wishes?
- When did I last check the beneficiary designations on my retirement accounts and insurance, and do they agree with my estate plan?
- What do I want my giving to achieve, and does the way I give serve that?
- How much could I give during my lifetime without affecting my own long-term security?
- Would the people who will have to act on my plan know where to find it and whom to call?
Estate and charitable-giving planning support is among the services the firm's wealth management and family office engagements may include, together with cash-flow and net-worth reporting, income tax planning and coordination of tax preparation, insurance and risk-management review, and recordkeeping and administrative support. The specific services provided to each client are established in that client's advisory agreement. The firm does not provide legal or tax advice, and does not prepare estate documents; depending on the client's needs, it may coordinate the work of tax, legal, and other professionals. The firm's services, fees, and conflicts of interest are described in its Form ADV; see also the Wealth Management page.
This note is provided by Swiss Finance Private Wealth Management LLC for educational and informational purposes only. It is general in nature, does not take into account the objectives, financial situation, or needs of any particular person, and should not be relied upon as investment, legal, tax, or accounting advice, as a recommendation of any security, strategy, or course of action, or as an offer of advisory services. Advisory services are provided only under a written advisory agreement. Investing in securities involves risk of loss that clients should be prepared to bear; no method of analysis or investment strategy can eliminate the risk of loss or assure a profit, and diversification does not guarantee against loss. The firm does not provide legal or tax advice; readers should consult their own attorney and tax professional about their circumstances. Laws and regulations change, and the firm undertakes no obligation to update this note. The firm's services, fees, methods of analysis, risks, and conflicts of interest are described in its Form ADV, available through the SEC's Investment Adviser Public Disclosure website.