Transferring Wealth: Are you Financially Prepared?

Transferring wealth to our families and to causes we care about fosters connection with others and a sense of gratitude, but how do we know we are financially secure enough to give? It can be difficult to move from intention to action when we are uncertain of our own financial futures. Creating a financial plan with clear implementation goals removes ambiguity and allows us to see how much we can reasonably give while still taking care of ourselves. 

Creating a Plan 

A financial plan is a roadmap that helps you identify your goals, set priorities, and create a plan of action to achieve them. It involves taking a comprehensive look at your current financial situation, evaluating your assets and liabilities, analyzing your income and expenses, and projecting your financial needs for the future. Having a plan in place allows you to make decisions based on evidence and gives you a baseline to revisit as your life changes. When our clients approach us with new ideas or aspirations, our initial question is always, "How does this affect your existing plan?" 

The beauty of financial planning lies in its ability to reveal what is possible. A good financial plan can show us how much you can give without jeopardizing your financial security, allowing you to give with confidence. 

Sticking to your Plan

Adhering to your plan is paramount to achieving your goals. If a financial plan is a roadmap, we are your guides. A good advisor will help you not only determine the next steps but support you in implementing them. Each individual leads a distinct life, but there are several recurring scenarios we have encountered with clients over the years, enabling us to provide expertise during your different life stages and help you be prepared for unexpected life events. By sharing the wisdom we have gained from our clients, we can help make your journey smoother.

Sticking to your plan is much easier when it is reviewed regularly and adjusted to reflect changes in your life and priorities. A financial plan is not a stack of documents that gathers dust on a bookshelf, but rather a dynamic narrative that portrays the story of your life. It must be revisited to continue showing you the way forward. 

Start Small 

Through the financial planning process, we can determine how much wealth you can transfer in your lifetime, but how do you start giving? There are myriad strategies to consider based on tax and investment implications, but becoming comfortable with transferring wealth is foundational. To build confidence, we suggest starting small. If you want to support your grandchildren with their educations, setting aside funds in a separate account (either a taxable brokerage account or a 529 college savings account) on a regular basis to incorporate this spending into your budget is a great way to move forward. Similarly, completing annual gifts to your children is an excellent way to initiate the transfer of wealth while you're still alive to witness your family's enjoyment of the gift.

In case you want to donate to charity but are uncertain of where to direct your contributions, creating a Donor Advised Fund can be a useful way to obtain a tax benefit while accumulating a charitable fund for future use. After some time, you may feel confident enough to make a more significant donation to a charity but may still be apprehensive about parting with the money. Fortunately, there are various types of trusts that enable you to transfer wealth to a charity while still receiving an income throughout your lifetime. The exact approach that will work best for you can be determined as part of the financial planning process.

Creating and sticking to a financial plan can provide peace of mind and help us share our wealth with those we care about. With a clear plan in place, we can make informed decisions about how much we can give without jeopardizing our own financial security. It's important to review and adjust the plan regularly to reflect changes in our lives and priorities. Starting small with our giving can build confidence and enable us to see the impact of our generosity.

Ultimately, working with a financial advisor to determine the best approach to transferring wealth can help us achieve our goals and make a meaningful difference in the world.

If you are interested in learning more about how GW Financial, Inc. can help you transfer wealth strategically, click here to schedule a Getting Acquainted Call today.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by GW Financial, Inc. to provide information on a topic that may be of interest. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2023 GW Financial, Inc.