July 17, 2015

What to Leave When You’re Gone: Estates & Families

In Financial Planning

In estate planning, there are some common stumbling blocks to completing a plan. Who will care for your children? At what point do you end life-sustaining care? How much should you leave to your children? Perhaps the most challenging of these is the last. Picking a number that provides a leg-up for your heirs while protecting them from leading uninspired, unmotivated lives can seem like the work of a magician. Luckily, our wealth planning experts have put together three ways you can find your magic number.


For each family, the amount left to children is different and is influenced by a range of life experiences and values. For most people though, the hope is to provide enough to enhance – not impair – the lives of their heirs. One mechanism for doing so is to leave wealth in a trust wrapper with provisions to ensure use of the funds is in line with your values. Using a trust allows you to pass on capital to your heirs while also having the opportunity to focus on family dreams and to encourage particular values. Furthermore, by including a trustee, we can protect your children if they wander off-course and where such an infusion of capital might be detrimental to their safety.


One opportunity to keep in mind when thinking through how much to leave your children is the desire to also create a legacy for your grandchildren and great-grandchildren. The Federal government allows you to shelter up to $5.43 million dollars from generation-skipping transfer tax (GST tax), which is separate from estate tax. Thus, a person is able to structure a trust in which they hold assets for multiple generations, allowing their grandchildren and grandchildren’s children to have their health and education needs met. With proper drafting and management, descendants in the fourth and fifth generation could have college tuition paid for as a result of your generosity and foresight. As healthcare and tuition costs continue to rise, a generous legacy could be created simply by setting up this type of trust.


Leaving assets to a charity will not be of interest to every person, but for those that have causes about which they are passionate, leaving funds to a charity can benefit you and your children in surprising ways. The most obvious, direct benefit is the ability to save on estate taxes and to provide a gift that helps further certain causes. However, some families that have a pattern of generous charitable giving often want their children to be involved as well. To have your children involved in the philanthropic process, you can form a family foundation or donor-advised fund with a seed gift either during life or at death. The children may serve in some official capacity for the foundation to decide where funds should be directed. This participation helps encourage empathy, contribute to their worldview, and often gives them a global perspective by exposing them to the needs of others.

In a perfect world, a formula would exist to calculate how much you should leave to your children. Unfortunately, reality is not so simple. That said, by considering your lifestyle, your family’s values, and your charitable aspirations, you can start to find your magic number.

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