5 Considerations for a Successful Wealth Transfer

Estate Planning

 Brian King By: Brian King
5 Considerations for a Successful Wealth Transfer | Plancorp

You’ve worked your whole life to build and maintain your wealth, so thinking about passing it on can seem daunting. How much should you tell your children about your finances? And how can you distribute your wealth in a way that supports your heirs, as well as your community?

I’ve seen many clients struggle with these questions, but the answers don’t have to be as difficult as you might imagine. They just require some forethought and reflection on your long-term goals. Here are five considerations for leaving your legacy—whether to your heirs, causes you care about or a combination of both.

1. To thine own self be true.

Having wealth accumulation as an end goal generally does not lead to a higher level of fulfillment—and can actually make planning more difficult.  Wealth, regardless of amount, should be a tool to help you achieve a specific purpose or goal.  Spend time thinking about these goals.  A plan that is aligned with your life’s purpose will be easier to execute.

In addition, many of these approaches require early planning. For example, if your priority is to impact the community, but you’re not sure exactly how yet, there are tax-advantaged approaches you can take now that still offer flexibility in execution down the road. A Donor Advised Fund or private foundation are both good options to facilitate charitable planning, but one might be a better fit for your particular situation.

2. Tax benefits aren’t everything.

Think of it this way: your money can either go to people, charities or taxes. Where I see people run into the most trouble is when they focus only on making that tax bucket the smallest. Purely tax-motivated decisions can lead to a plan that’s more complicated than it needs to be—or the unintended consequences of disinheriting heirs in favor of charities.

Your financial advisor should help you work through your different options, showing you how pulling certain levers or increasing/decreasing these “buckets” will impact your different legacy scenarios.

3. The “money talk” doesn’t have to be about numbers.

Every family is different, but discussing money is important for many reasons.  A little education up front can prevent a lifetime of poor decisions.  This is especially true when it comes to wealth transfer and estate planning.  Many are concerned about disincentivizing an heir, which is certainly an important consideration. However, we see just as many problems (if not more) arise because an heir is surprised by a significant inheritance.

Sharing your plans doesn’t mean you have to lead with the numbers. You might begin by explaining the blueprint for your plan.  Who’s in charge? Do your heirs have any say in decisions? If you want to share numbers, be specific about how it will impact the person’s daily life. The point is that you want to make it tangible for them. For example, let’s say there’s a $1 million bucket of assets, and they’ll get $50,000 a year.  You’ll want to make sure they understand how they will receive the payment, when they’ll come and any related tax consequences. That way, it’s very practical for them, and not this esoteric concept floating out there that they don’t really understand.

4. Your wealth can start working today.

One downside with many estate plans is that, oftentimes, no wealth is transferred until someone passes away. That person never gets to witness the benefit of their generosity. Plus, heirs may receive an inheritance later in life, when it would have been more impactful earlier. You should always focus on your own financial independence first.  However, if you can afford to transfer wealth while you are alive, the psychological benefits can be significant.

There are a number of ways to do this. For example, in St. Louis, it’s very common for children to attend private K-12 schools. That provides a great opportunity for their grandparents to pay tuition directly to the child’s school without it counting toward the annual gift exclusion ($15,000 per “donee” in 2019). The same strategy applies to the payment of medical expenses directly to a healthcare provider.  Tools like these are not only effective, but they also are more tangible than other strategies. You know exactly where your money is going and how it is being used.

These strategies can also serve as a behavioral litmus test of sorts; they allow you to assess how you’d like to gift future benefits, based on how the individual heir or charity behaves when given money.

5. The right advisory team can make or break your wealth transfer.

Whomever is leading the planning—whether it’s your CPA, estate planning attorney or financial advisor—can design the perfect plan, but it will only work if there’s a strategy in place to execute it. It’s vital that all parties involved in execution, including from the investment, legal and tax compliance sides, must understand the rationale behind the plan.

By designating one person on your advisory team to essentially coordinate the rest, you can help ensure that all parties are aligned—and that communication is working well across the team. This allows you the headspace to do some soul-searching and determine what your true objectives are for your wealth. 


For additional resources tailored to your specific situation, take our 2-minute financial wellness analysis to quickly access resources focused on the areas of your finances that matter most.

New call-to-action


This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice. All investing involves risk. Past performance is no guarantee of future results. Diversification does not ensure a profit or guarantee against a loss. You should consult your own tax, legal and accounting advisors.

Related Posts

Brian King joined the Plancorp team from PricewaterhouseCoopers, LLP in 2008. Now our Chief Planning Officer, he brings his advanced income tax and estate planning experience to Plancorp’s family office practice, where he helps families understand, grow and preserve their wealth. More »