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Using trusts to teach family members money management

Angel investors in New York can take a number of steps to ensure that they pass their wealth on to their children, grandchildren and future generations. They can begin setting up trusts to share assets with their children and remove those assets from their taxable estate before there has been significant growth in the assets' worth. Trusts are also a good way to begin teaching children how to invest and how to manage money. Assets in a trust can be designated for specific purposes such as education or for buying a house.

Some ways of managing charitable and family giving are more effective than others. Giving gifts to family members throughout one's lifetime is a way of removing assets from the estate before they appreciate while charitable gift giving is best done when the assets have appreciated. This helps to avoid capital gains tax. Both direct giving and donor advised funds can be effective means of charitable donations.

Investors should keep careful track of their angel investments so that family members have clear records of what they have done. They should also talk to advisers about their needs. In doing so, they may discover strategies that they were unaware of.

Estate planning as a lifetime project instead of something confined only to the end of a person's life may also mean better communication with family members about plans for the estate. By setting up trusts and gift giving over a period of decades, a person is less likely to leave an estate in disarray or with confusing instructions for family members. This could reduce the likelihood of conflict and challenges to the estate plan after the person's death. Open lines of communication may also help in selecting people to manage the estate such as trustees and executors.

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