estate plans

Identity Crisis

There is no one-size fits all strategy for gifting or transferring assets. Make sure your advisors know your unique needs and motivations

 

  • Before you can ask your advisors for help, take some time to think about what’s most important to you and your family about giving back.

  • Sometimes volunteering time is more fulfilling than donating money. Make sure you and your advisors are in sync when it comes to mapping out your philanthropic and life goals.

  • There is no magic formula for deciding how much to donate vs. how much to pass on to your heirs. A skilled advisor can help you set the appropriate criteria.

 

Giving time and money to causes you support is one of the most powerful freedoms that wealth provides. But, just showing up to volunteer without a plan or just writing checks when the pleas flood into your mailbox, can leave you feeling unfulfilled with a trail of missed tax-saving opportunities in your wake.

Giving can be done effectively at any age, but as Boomers age out of careers, many are finding fulfillment in giving back to their community by volunteering. Also, with children typically grown and out of the house, Boomers generally have more capacity to give. If that sounds like you, use this period to begin to convert dormant assets into planned gifts and also to help increase community involvement.

One of the key findings in the latest U. S. Trust study is that affluent Boomers want to give more than they currently do, but they need help discovering what they are passionate about. A good advisor knows how to tap into your passions and values by asking the right questions about your financial and life goals—on an ongoing basis.

No two people (or families) have the same motivation to give. It’s important that your financial advisors don’t apply a one-size-fits-all approach to your philanthropic goals.

What research says about how and why we give

Both Fidelity Charitable and U. S. Trust conducted extensive national surveys about charitable giving trends among the affluent and soon-to-be affluent. Here are just a few of the ways that successful people differ when it comes to giving back:

Fidelity found that women tend to be more committed and strategic in their giving. They tend to volunteer more time, ask more questions about the financial aspects of their gifts and generally feel that giving to charity is a very satisfying aspect of having wealth. According to Fidelity, women tend to be more spontaneous; captured by a cause, a movement, or an empathetic response.

Parsing even further, Fidelity research indicated that Millennials seemed particularly motivated to give more than just money to the causes they believe in. Why these reactions occur is not entirely understood, but industry observers see both Millennial men and women wanting to see results and to measure the impact of their giving. The younger age cohort also seems to desire hands-on experiences and involvement, more so than other groups, sometimes even leading their own efforts ala Zuckerberg/Chan of Facebook fame.

Much has been written about how Millennials are re-shaping giving and our firm works very hard to understand the different populations we serve.

Further, different gifts make sense at different ages. In fact, some younger donors may not even qualify to implement a Charitable Remainder Trust (CRT)—a common tax-advantaged way to give to charities and beneficiaries--because the trust won’t qualify under the 10 percent remainder test.

The 10-percent minimum remainder value test says that all CRTs must have a remainder value that is equal to, or greater, than 10 percent of the funding amount.  If a CRT fails the 10 percent test, it does not qualify as a charitable trust and loses all the favorable tax treatment that a qualified CRT enjoys.

In terms of giving their time, U.S. Trust found that HNW volunteers are highly motivated to respond to needs (51% agree) and by the belief that their service makes a difference (49% agree). Other important motivations include: Personal values or beliefs (39% agree), concern for a particular cause or group (32% agree), and concern for the less fortunate (28% agree). Researchers found that women were significantly more likely than men to indicate that “responding to a need” is a top motivation for volunteering

Researchers also found that women and younger individuals were significantly more likely than other cohorts to say that education was a top public policy concern of theirs and they were more likely to express confidence in a nonprofit organizations’ ability to solve societal or global problems. According to U.S. Trust, African Americans were also more likely than other groups to give to religious organizations and both women and African Americans of both genders were more likely than other groups to give to women and girls’ causes and/or organizations. U.S. Trust also found that women and younger donors were more likely to give to causes that support animals and K-12 education. Younger individuals were significantly more likely to make giving decisions independently of their partners/spouses.  Finally, younger donors were significantly more likely than other groups to donate online or through crowdfunding.


If you don’t agree with all of the generalizations about giving patterns above, that’s okay. Just make sure your advisors do NOT assume you want to give along the lines of the findings in these widely cited reports about philanthropy and volunteering.

Conclusion

If philanthropy is truly one of America’s great freedoms, then it is incumbent upon your advisors to help you best enjoy that freedom. Make sure your advisors have a deep understanding of your life goals, family values and causes you support so they can help you structure the smartest way for you to give with the maximum impact. Contact us any time if you or someone close to you has questions about planned giving or legacy building ideas.

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Health Care Decisions Factor into Comprehensive Wealth Planning

What you need to know about advanced medical directives, guardianships and durable powers of attorney


Key Takeaways:

  • Age, accidents or illness can prevent even the most well-organized and financially astute people from handling their own finances or health care decisions.

  • Thanks to advances in medicine, health and longevity, many people are living 30 to 40 years after their prime wealth accumulation years have ended.

  • Advanced medical directives deal with personal care and medical issues, including surgery, placement, medication, assisted living, full skilled-care living and end-of-life decisions.

  • If you don’t have the necessary documents in place, unfortunately these decisions will have to be made under a court-supervised process. 

Many people are diligent about planning for and protecting themselves against personal, legal, tax and financial problems. But health care, or the ability to make important decisions about long-term care, often gets overlooked.

Life insurance statistics show that a 50-year-old now has at least a 50/50 chance of living to 110. That’s right a century, PLUS another decade!

With an average U.S. retirement age between ages 60 and 65, you could realistically expect to live for 30 to 40 years after your prime wealth accumulation years have ended. In estate planning, we often talk about preserving wealth and passing it on to the next generation. But given the demographics of aging, inflation, health care needs, etc., it is quite possible that your wealth will run out before you do.

That’s why it’s so critical to appropriate estate planning documents in place, including wills, trusts, appropriate beneficiary designations and designations of guardians.

Unfortunately, because of age, accident or illness, many people may face the prospect of being unable to take care of their own finances or to make their own health care decisions. Therefore, proper documents need to be put in place to allow someone else to make appropriate decisions on your behalf.

Long-term health care costs
Because of health and aging, everyone faces the prospect of financing long-term health care needs, including the possibility of assisted living and full skilled-care living. If these costs are not planned for, they can be financially devastating.

We can’t fight the aging process or prevent unexpected events that impact our quality of life. However, proper planning and documentation can go a long way toward creating peace of mind. It’s very comforting to know we have put in place appropriate planning to eliminate, to the extent possible, financial, legal, tax, health care and other problems that, one way or the other, are bound to occur during our lifetime.

Appropriate lifetime powers of attorney
Regardless of age, health, assets and income, everyone needs to have in place a well-drafted “financial durable power of attorney” and appropriate advanced medical directives.

An advanced health care (or medical) directive is a set of written instructions that people use to specify the actions they want to be taken for their health in the event they are no longer able to make their own decisions due to illness or incapacity. The instructions appoint someone (an “agent”) make such decisions on the person’s behalf.

Advanced medical directives normally include health care powers of attorney, living wills and more. If you are unable to attend to your financial, personal care, or health care matters because of age, accident or illness, no one can make these decisions for you unless the decision-making authority has been specifically designated in writing.

Financial durable powers of attorney concern assets, income, other financial matters and dealings with government agencies. Advanced medical directives deal with personal care and medical issues, including surgery, placement, medication, assisted living, full skilled-care living and end-of-life decisions. If you do not have these documents in place, unfortunately these decisions will have to be made under a court-supervised process known as a “guardian of the person” (for personal care and medical issue decisions) or a “guardian of the estate” (for financial matters). Guardianships are expensive, personally intrusive and perhaps the worst way to manage any of the decision-making processes.

The proceedings can be very traumatic and expensive. Guardianships of the estate or person are easy to avoid if the appropriate documents are put in place. A final word of caution: Be careful about using simple forms! Simple forms often ignore many of the decisions that will have to be made throughout the course of a lifetime; the decisions that may be critically important to the family need to be specifically addressed in the documents.

Conclusion
You have six major types of estate planning needs—health care is one and avoiding guardianships another. We’ll discuss the other four in a future article. You need to be aware of these issues and of the significant dangers caused by insufficient planning. Nobody enjoys discussing the possibility of one’s demise or deterioration. But, the sooner you do, the sooner you can get on with the business of enjoying all that life has to offer, especially with those closest to you.

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

 

Diversified Asset Management, Inc. – 2018 1st Quarter Newsletter

This quarter’s newsletter is filled with lots of great information. Here is a list of topics included in this newsletter.

 

Seven Steps To Protect Yourself After Data Breach

On September 7, 2017, one of the "big three" credit reporting agencies in the country dropped a bombshell. Equifax had been hacked, and almost 150 million Americans may have had their credit histories exposed. It was one   of the largest cyber-breaches in history, and while it's difficult to get a handle on exact numbers, suffice to say that it's quite likely your information was compromised.

The myRa Is Cut Short, But Other Options Abound

The myRA is going the way of the VCR. Citing unsustainable costs, the Treasury Department has announced it is closing down the program for this retirement savings vehicle. Participants will be notified about their options for moving funds into other investments.

Four Smart Tools For College Savings

The cost of a college education isn't getting any cheaper.

According to the College Board, average annual tuition and fees for a four-year public college for the 2016- 17 school year was $24,930 for out-of- staters and a year at a private college cost $34,480. And those sobering price tags are increasing much faster than the overall cost of living.

Five Steps When You Inherit Assets

During the next 30 years or so, an estimated $30 trillion is expected to change hands, and many offspring of older Baby Boomers may inherit a small fortune. Here are five practical suggestions for handling the windfall:

Key Components Of A Post-Divorce Estate Plan

Even the best-laid plans can go astray if you get divorced from a long-time spouse. Especially if you go your separate ways after raising children and acquiring property together, your estate plan may need to be revised, and pronto.

 

To read the newsletter click on the link below:

Diversified Asset Management, Inc. – 2018 1st Quarter Newsletter

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.