Many parents eventually face an important question: Is it better to pass wealth to children during their lifetime or leave it as an inheritance? In a recent Money For Lunch article, Howard Hook, CFP®, CPA, CAP®, discusses some of the factors families should consider before making that decision.
In the article, Howard explains that lifetime gifts can be meaningful for both parents and children. Financial assistance may have a greater impact when provided at a time of need, such as helping an adult child start a business, purchase a home, or pay off student loans. Parents also have the opportunity to see firsthand how the money is used and the difference it makes.
At the same time, Howard cautions that families should carefully consider their own long-term financial needs before giving away assets. With many retirees spending decades in retirement, it is important to ensure there will be sufficient resources available to support future expenses and potential healthcare needs.
Howard also notes that gifting strategies can sometimes create family tensions if one child receives financial assistance while another does not. Open communication can help families navigate these situations and set expectations.
Finally, he discusses the tax implications of gifting and explains that lifetime gifts may help reduce the size of an estate for some high-net-worth families.
Read the original Money For Lunch article to learn more about the factors to consider before making lifetime gifts to your heirs: Should You Give Your Heirs Their Inheritance Now?
Putting It Into Perspective
Deciding whether to transfer wealth during your lifetime or through your estate is a personal decision that involves financial, family, and tax considerations. The right approach depends on your financial security, your goals, and your family’s unique circumstances.
Our family wealth planning service is designed to help families overcome conflict, protect their heirs and assets, share their values and philosophies, and ensure their wishes are carried out after they are gone.
Contact Howard Hook to learn how he helps families build long-term wealth and explore our Family Wealth Planning Articles for more tips.
