3 Reasons It’s Critical To Talk About Wealth Transfer With Your Beneficiaries

Do you, like most of us, find joy in giving to others? Whether it is our family, friends, employees, or charities, the ability to help those around us creates a great sense of pride and personal satisfaction. We find for most of our clients this holds especially true when it comes to creating a legacy that allows them to transfer their wealth to their children, grandchildren, and future generations.

The transfer of wealth, no matter how large or how small, is not an uncomplicated process. There are steps that need to be taken through your Florida estate planning to reach your goals. There is an often-misunderstood premise that the steps to take for the transfer of wealth should be reserved, or taken, only at the very end of your life or time of your death. By contrast, there are wealth transfer strategies that can be taken earlier in your lifetime, under the guidance of an experienced Florida estate planning attorney, which can benefit both you and those who are the recipients of your gift.

When we begin to contemplate this type of wealth transfer it is important to begin including your intended beneficiaries in your planning.  For most of our clients, the focus is on their adult children. Let us share some key ideas for you to consider in our blog.

1. Determine if there are any barriers or risks involved in giving money to your adult child. Although it is extremely likely you know what is going on with your adult children in their daily lives, you may not have the whole picture. Divorces, marriages, child support, adoptions, births, creditor issues, business failure, massive debt…this is just a start to the list of the challenges your adult child could be facing, and you may not know the full scope. With the guidance of your Florida estate planning attorney, have a candid discussion about whether the money you transfer to them in life or at your death may be at risk. This is before you make any concrete plans to transfer wealth to your children. This does not mean you cannot transfer to them, but your Florida estate planning attorney can work with you on your options for a structured transfer, as opposed to an outright gift, which may not be appropriate.
2. Understand the tax brackets for you and your children and discuss their financial picture. Often, children are not in the same financial situation as their parents. This means there may be achievable, positive steps you can take to avoid or minimize taxation on your assets. This can be especially advantageous when it comes to assets that have massively appreciated over time. If you are going to make a gift to a child, with the guidance of your Florida estate planning attorney, determine if this could be advantageous to you both.
3. Discuss short-term and long-term financial planning goals with your adult children. If you are considering making a transfer of wealth, it is important to talk to your adult children about their financial goals. Do they need short term access to capital, which they could repay, to accomplish a specific goal? Or, do they have long range plans such as a grandchild’s tuition for college? Or do they want to purchase a specific insurance to protect them against uncertainty? Find out how the money you would transfer to them could be used and work together with your Florida estate planning attorney to create a plan.

Before you start to discuss the transfer of wealth with your children, you will want to work with your Florida estate planning attorney to determine the correct structure for the wealth transfer. It may seem as if the simplest option is to write a check to your adult child, but this is most likely not the case. Often, there are better vehicles to use for the transfer of wealth as opposed to writing a check. Your Florida estate planning attorney will be able to give you the guidance on the pros and cons of each strategy you could use to make the transfer before it is made.

We know this article may raise more questions than it answers. Our estate planning law firm takes a very different approach from what you might have come to expect. Our goal is to create lifelong relationships with each of our clients, to guide and manage your legacy for the rest of your life. Please contact our offices in Stuart and in Palm City to learn more.