Ultimate Gift Guide

Gifting It All Away

Research indicates that approximately one-third of participants in The Great Wealth Transfer have not engaged in robust estate planning, often neglecting to create a will or trust for directing their wealth transfer. Even those who have completed their planning might need to revisit their documents as family dynamics and tax legislation are continually evolving. While this planning can seem overwhelming, framing the establishment and maintenance of an estate plan as the ultimate gift to family members can help motivate action. Advisors have the opportunity to position themselves as gift guides, assisting clients in turning their Wish Book into reality.

Some clients postpone their estate planning, because their circumstances will change as their wealth fluctuates and they will just need to address it all over again. However, a delay in planning can be dangerous, and estate planning can transform with the client. For instance, a well-structured life insurance portfolio is designed to be adaptable to align with a client’s current circumstances. As families accumulate wealth, increasing life insurance coverage can help safeguard their net worth. For older clients who have gifted a significant portion of their wealth away, the estate tax implications may differ from when they were actively building assets. Consequently, it is essential to reassess life insurance and consider exit strategies after transferring wealth to heirs.

In the fabricated example below, the client effectively utilized life insurance while growing their estate and accessed exit strategies once the death benefit was no longer needed for estate taxes after gifting to heirs. The small personally owned policy could be gifted to charity. The client would continue to make donations to the charity via premium payments to the policy and the charity would receive the death benefit at the client’s mortality. The large policy could serve as a living benefit for supplemental income. Since the policy is trust-owned, tax-free withdrawals and policy loans would benefit the client’s children through the trust.

Creating a life insurance solution to satisfy one snapshot of a client’s life is just the initial step in building a comprehensive portfolio. It is essential to review life insurance policies regularly to ensure alignment with the client’s evolving goals. Ambitions, cash flow, health, and net worth typically change throughout a client’s life, so their life insurance portfolio should be structured to adapt and meet their objectives at every stage. Regular assessments can help ensure that the coverage remains relevant and effective in supporting the client's financial aspirations.

Contact us with any questions or opportunities to help you or your clients achieve identified goals. This is what we enjoy doing for only a select number of families, businesses, and charitable institutions each year, and we look forward to hearing from you.