Transferring the Wealth
Refresher reading access
Introduction
Estate planning is a critical component of wealth management for private clients. Translating the goals of an individual or family into effective legal and tax-efficient solutions can be a challenging task, which requires an intimate knowledge of, among other things, the tax and inheritance laws in a particular jurisdiction. The challenge is often magnified when a client has family members, assets, or income in multiple jurisdictions. Increasingly, high-net-worth individuals and families have these types of international interests that require careful consideration by the private wealth advisor in deriving effective and tax-efficient wealth management solutions.
Learning Outcomes
The candidate should be able to:
- discuss and recommend appropriate wealth management planning approaches for transferring wealth during the lifetime of the giver through gifts;
- discuss and recommend appropriate wealth management planning approaches for transferring wealth at death through bequests and inheritance;
- discuss and recommend appropriate wealth management planning approaches for the preservation of wealth across multiple generations through charitable giving and philanthropy.
Summary
- Lifetime gifts are typically used to minimize taxes on the transfer of wealth by reducing the value of a wealthy person’s estate.
- Several strategies are available to maximize the transfer tax savings of lifetime gifts including the use of valuation discounts, trust structures, and charities.
- The goals of planning for wealth transfer at death are to maximize the benefits to the beneficiaries, minimize taxes, and minimize conflict among family members.
- The legal framework of a person’s domicile may dictate the wealth transfer strategies that are available for the disposition of their estate upon death.
- The positive impact of the giving, tax advantages for both donors and charities, and wealth transfer/estate planning are key factors for deciding on a charitable giving program.
- Many vehicles exist in the United States for philanthropic giving, like donor-advised funds, charitable remainder trusts, and charitable lead trusts, all with specific features. Other countries and regions have their own structures for philanthropic giving, like stiftung, fondations, and f ideicomisos, among others.
2 PL Credit
If you are a CFA Institute member don’t forget to record Professional Learning (PL) credit from reading this article.