Leaving a lasting legacy through estate planning in Texas

Many Texans prefer to pass along values to their grown children rather than large inheritances.

Most Texans understand the importance of establishing estate plans and do some hard thinking as they decide which of their heirs will receive family heirlooms, various properties and their life-long savings. For some, the decision is easy; they divide their estate evenly between their adult children. However, many are rethinking the way their parents traditionally passed along family wealth and coming up with options that concentrate more on values than money.

A number of wealth management groups are finding that most baby boomers - those Americans born between 1946 and 1964 - and those of older generations are more concerned about passing on core values and life lessons than they are about transferring wealth to the next generations. The reasons for this change in estate planning tactics vary.

Many wealthy parents in Texas have concerns about their grown children and grandchildren squandering inherited money. Surveys of older couples reveal that a majority believe that their children are ill equipped to handle large influxes of inherited wealth and many have concerns that siblings will fight over money once they are gone.

There are other reasons as well. Some people desire to leave a legacy that will endure for generations rather than giving everything to just a few relatives. Parents may feel their children have enough of their own money, and individuals or couples who did not have children may have no close family members.

Some estate planning options

Whichever may be your concern or desire there are many estate planning options available for those who want to provide for more than immediate family members. Many of these various options have the added benefits of providing significant tax savings and well as allowing guidance of philanthropic giving from beyond the grave.

  • Private foundations: A private or family foundation is a good option for a family who wishes to extend charitable giving for multiple generations. Non-profit foundations allow successive generations to oversee charitable contributions funded by assets amassed by parents, grandparents or others. These vehicles also allow invaluable learning opportunities for children who may not have any prior experience handling large sums of money.
  • Charitable trusts: Others may choose to form trusts, annuities or donor-advised funds to ensure that favorite charities receive donations. Charitable remainder trusts and charitable lead annuity trusts are examples of tools used by Texas individuals desiring to give lifetime or after-death support to charities.
  • Lifetime giving: Another common way of giving children an education about handling money is through lifetime gifts. Rather than leaving a lump sum to their heirs, some parents are gifting money and assets to their children each year. Care must be taken, however, to avoid gift tax consequences.

Consult a lawyer

If you do not have an estate plan, have not recently updated your plan or have questions about how you can leave a legacy, consult an experienced estate planning attorney. A Texas lawyer knowledgeable about various ways of providing for your heirs and charities can help.

Keywords: estate planning, trusts, private foundations