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 fideicomisos, 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.