One of the key functions of estate planning in the minds of many is manipulate assets in such a way as to leave a sizable inheritance for the next generation. But an emerging trend is to manage an estate in manner that will allow financial security until death but provide a minimal bequest to heirs. This philosophy, knows as gifting with warm hands, calls for giving while alive to family members, friends, charities, and any other group towards which the retiree is inclined. This has the advantage of allowing a person the satisfaction of being able to see the full results of their giving instead of imagining what good will might come after their death. Another benefit of the giving during one’s lifetime is that it creates a certain measure of certainty that the money is being well used. A common theme of inherited wealth is irresponsible heirs blowing through the money and finding themselves broke and unable to care for themselves so giving while alive helps avoid this tragedy. But be advised, this strategy requires careful planning to make sure that the money matches a lifespan so always consult a trusted estate planner to guide the process.
See Kyle Krull, What is “Don’t Die Rich” Estate Planning?, Wealth Management, February 3,2016.
Special thanks to Jim Hillhouse for bringing this article to my attention.
