Leaving a lasting legacy for future generations with estate planning

Estate Planning & Wills Colorado

Leaving a lasting legacy for future generations with estate planning

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May 11, 2015
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There are many estate planning options for those who do not wish to give their assets outright to family. If you wonder whether your children will be able to handle a large inheritance once you are gone, you are not alone. According to a study by U.S. Trust, over 50 percent of parents believe their adult children are ill equipped to handle a sudden influx of financial resources. Concerns about family members quickly squandering their inheritances have many parents searching for alternative estate planning choices.

Estate planning alternatives

As the Baby Boomer generation ages, many are shifting their focus from leaving all of their assets to a few close family members to creating plans that focus on their core values; giving back to organizations that touched their lives and guiding their heirs to live lives of philanthropy and charitable significance. Through the use of various types of trusts, parents may choose to split their assets between various heirs and charities, leave their wealth to a number of charitable organizations or set up a private foundation that is overseen by their children and grandchildren.

Whether you decide to leave assets to a few select charities, outright to your children or in trust for future generations, following are some options you may wish to consider as you decide how to want to leave a legacy:

  • Dynasty trusts: Multi-generational trusts – also referred to as dynasty trusts – are a way to provide for multiple generations of your family after you are gone. The trust removes your assets from your estate, preserving them in order to provide long-term, tax-free financial resources to your children, grandchildren, great-grandchildren and beyond. Laws in Colorado allow a dynasty trust to exist until the trust resources are exhausted or until your last living descendent passes on, without a limitation on the number of years it endures.
  • Private Foundations: A family foundation may be a trust or non-profit corporation established to provide contributions to charitable organizations or individuals. Family members appointed to the foundation’s board make distributions and help further the philanthropic efforts of the person who created the foundation.
  • Charitable trusts: Charitable remainder trusts (CRT) and charitable lead trusts (CLT) are effective ways of protecting assets from taxation and providing financial resources to favorite charities while still providing financial resources to family members. The two types of trusts operate differently. A CRT provides income to designated heirs or the creator of the trust, giving the remaining trust principle to a charity of the creator’s choosing after termination of the trust. A CLT provides cash to a charity or charities for a predetermined number of years, after which the remainder is given to family.

Consult an attorney

The sky is the limit when it comes to available options for those establishing estate plans. However, giving to a favorite organization or charity is more than changing the name of a beneficiary in your will or setting up a simple trust. Complicated issues of probate and tax avoidance, trust administration and asset protection must be addressed by a legal professional.

If you do not have an estate plan or wish to update or discuss changes to your existing plan, consult an experienced estate planning attorney. A lawyer knowledgeable about issues of advanced estate planning and wealth transfers can help ensure that your wishes are carried out.

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