13 Wealth Management Issue #10: Education & Family Support Planning

Our last 13 Wealth Management Issue concluded our special Protection Strategies 3 part sub-series. This week, we’re covering 13 Wealth Management Issue #10 Education & Family Support Planning. Taking care of one’s family is often one of the most meaningful issues for our clients. It also happens to be one of the most delicate issues. Often overlooked by clients and advisors alike is the difficult subject of the next phase of planning; namely, two items. What are your wishes as aging and potential incapacity occur, as well as how would you like your family to receive your legacy? Although difficult to discuss in some cases, having all these factors to your plan spelled out with clear understandable wishes and expectations, actually results in a significantly improved family dynamic.

Education & Family Support Planning

Number 10 out of 13 in our Wealth Management Issues Series

Let’s begin with the drivers of family support/gifting. Typically, there are four primary considerations:

Educational Planning: There are myriad options, however, the commonly known strategies include: 529 plans, Coverdale Education Funds, Prepaid Tuition Programs & Uniform Gift/Trust to Minor (UGMA/UTMA). It’s important, as with all vehicles, to discuss with your wealth strategist the appropriate vehicles for your goals.

Reduction of Estate Taxes: For some folks, they are able to accomplish two objectives at once – help support their family while also significantly reducing estate taxes. Options include cash donations during life, gifting shares of appreciable stock, land within an FLP or LLC, utilizing various gifting strategies whereby the value of assets are compressed or perhaps shares with restrictions resulting in discounted pricing are a few of many to consider.

Passing on Family Values: often clients feel a personal responsibility to make sure their values are passed on and extended to future generations. Through the wealth transfer process, by working with an attorney, clients are able to set particular parameters and expectations to future generations with respect to philanthropy, stewardship, and education.

Eldercare: There are four integrated issues to consider when planning for eldercare objectives. First, Incapacity – no decision-making ability. Powers of attorney, rights/responsibilities, revocable trusts, trustee, successors, etc. are all part of this discussion. The goal is to avoid going to court. Second, Health Care Considerations – HIPAA and disclosures are especially important when children are at college. Parents and children must have this worked out in advance. Third, Directives – bottom line, denote how care will be administered. Fourth, Medicare/LTC – A.B.C.D. What covers what and how and how much? Medi-gap potentially to bridge from A to D? Do we consider LTC (long-term care insurance) to potentially offer in-home care? In many cases, people are uncomfortable or unfamiliar with how to engage this process. Here are a number of potential questions/topics to consider in your household (all family members included):

  • What are your plans? What are you going to do? Where/how will you spend time?
  • Have you involved your children in the decision making?
  • What are your plans for your children? Parents?
  • Are there other family members to consider?
  • Are you prepared for 24/7 care with Alzheimer’s or other debilitations?
  • What would an ideal world look like for you with respect to – education funding, family values/legacy, incapacity, and estate taxes?

Our experience is the difficulty lies in engaging the initial dialogues. However, with a reasonable framework and guidance from advisors, before you know it all members of the family are on the same page and feeling secure in the plans laid out.

When considering these issues, it’s important to ask yourself, how do any of these affect you, your family, and your goals? The following installments will cover each of these Wealth Management Issues in greater detail. Our hope is this series of chapters will provide not only an educational forum but also promote thought, leading to action…in a holistic manner, of course. Learn about our other 13 Wealth Management Issues here.

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If you would like to learn more about this subject please contact us and we’ll be happy to help.

By Anthony C. Williams, CWS, ChFC, MRFC, CLU | Investment Advisor Representative | President & Founding Partner of Mosaic Financial Associates & Orthopaedist Advisory Group | Securities and advisory services offered through Cetera Advisors LLC, Member FINRA/SIPC, a broker/dealer and a Registered Investment Advisor.  Cetera is under separate ownership from any other named entity.