Leaving a Legacy – A Team Approach

Gifting is the cornerstone of a comprehensive estate plan for many families.  Planned giving can create a legacy by providing benefits to loved ones and meaningful causes, while also reaping significant tax savings.  But actually achieving those ends requires careful planning. Your needs, values, and whether you wish to retain control over gifted assets are all important considerations in a gifting plan.

As you consider gifting, keep in mind that because of the differing effects of income, capital gain and estate taxes on various types of assets, not all gifts have the same tax impact—even if the gifted assets have the same value (more on that in a future post). Your attorney, accountant, and financial advisor can help you identify appropriate assets for gifting to maximize your tax savings while preserving wealth to maintain your standard of living.  Outright gifts may be the simplest approach, but other methods such as gifting through a trust, foundation, or donor advised fund can yield significant additional tax advantages and control.  For gifts to friends and family, you may also consider making direct payments to education and medical providers or contributing to an education savings plan.  Your attorney can help you determine the appropriate gifting vehicle given your individual circumstances.

If you are unsure about a fitting charitable recipient, a private philanthropy advisor or community foundation can help you identify charitable organizations that align with your interest and intent. Such advisors can help you identify and vet charitable organizations, draw up a gift agreement, and then periodically review and assess your gift for alignment with your intent.

Depending on the kinds of gifts you make, your accountant or attorney can assist you with tax compliance by proper documentation and reporting to ensure completion of the tax planning aspect of your gifts.  Faulty documentation can reduce or eliminate the benefits a well-planned gift ought to achieve. The importance of careful and accurate tax reporting cannot be overemphasized.

There are many twists, turns, and caveats in the gifting world.  Relying on your team of professionals is a sure way to leave a lasting legacy.