Giving while living
Sharing your financial legacy with family while you’re alive has advantages.
Test drive your legacy
“Another reason to give to your loved ones while you’re alive is to test if they will be responsible stewards of your wealth,” says Erin Gilmore Smith, a director of estate planning at Edelman Financial Engines.
Example: Before leaving your grandchild $200,000 after you pass, you may want to give him or her $20,000 while you’re alive. Will they fritter it away on clothing and parties or will they invest it? You can also test a charity in the same way to determine whether they use your donations in the way you intended.
There are estate planning vehicles that enable you to control the wealth you transfer while you’re alive just as when you pass. The money you give to a minor can be held in a custodial account until the child becomes a legal adult. You can also establish an irrevocable trust that distributes your money to loved ones for specific uses and times during your lifetime.
A third reason to share your financial legacy while you’re still alive is an intangible but equally important one: to experience the joy of doing so. You may want to treat your family to an all-expenses paid, first-class tour of Europe or maybe it’s a weekend at Disneyland.
“You want to experience the joy of sharing your financial legacy,” says wealth planner Michelle Muhammed. “But you also want to make sure you can do so without putting your retirement at risk. Longevity risk – the risk of outliving your savings – is real.”
The information regarding estate planning should not be construed as tax or legal advice and is for general informational purposes only.
Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to include your qualified tax and/or legal professionals in these discussions and decisions to help determine the best options for your particular circumstances.