Regional Investment Officer Carissa Froome at Arvest Asset Management in the Greater Kansas City market says many families should start with the end in mind.
“The objective is that each individual is able to pass along their estate in the most tax efficient way possible to their heirs, the organizations they have an affinity for, or both. With planned giving, I usually lead people through some questioning,” she says. “We talk about where they donate right now. It might be a religious, an educational or an arts organization. I want people to think about the broader categories, and then they can narrow down the decision. I want clients to see and experience thoughtful guidance through this process.”
Gifts might include cash, appreciated securities, real or tangible property, and will bequests that are designations as a percentage of the estate. Froome says Arvest Asset Management employees help people plan for retirement and beyond. “We work alongside the families’ other trusted advisors, such as certified public accountants or attorneys. We also advise the families to consult with their legal and tax advisors to ensure that the gifts are in line with estate and financial needs.” Froome understands the appeal of specific organizations. “We want the clients’ specific wishes followed,” she says.
For younger workers, Froome recommends saving early and often as soon as they get a job and become eligible for a retirement plan, such as a 401(k). They should contribute at least the amount that is matched by their employer; otherwise they are essentially leaving available money on the table. “And when you change jobs, my suggestion would be to roll a 401(k) into an IRA. Also, when a person has a major life event, such as getting married or having a child, my advice would be to get an expert involved. A financial advisor or planner can help with concepts of saving for short-term, mid-term, and long-term goals. These are savings for daily living, a car, a house and retirement. There should also be savings for the unexpected, like a disability.”
Along the way, giving may become part of life. Froome says if people are willing to get multiple quotes and ask questions for things such as roof repairs, they should look at taking the same sort of approach with wealth transfer and giving. “Don’t be afraid to talk and to ask tough questions. Make sure to include your spouse to ensure the continued legacy of giving. Two spouses often have very different opinions about wealth management. As advisors, we often spur the difficult conversations. These ideas are often passed to children through a value system … your social, moral and financial values.” Froome also suggests that parents and children have open and candid discussions with just immediate family (without their children’s spouses present). Children and parents may express their wishes more freely without impediments.
“One of the best things I can advise is be careful about setting a specific dollar amount that goes to charity,” Froome says. “It can be detrimental to your heirs. Even with an estate plan and potentially unknown estate taxes, after all is said and done, the distribution to the heirs may be diminished by setting a specific dollar amount.”
