How to Successfully Gift to Heirs
Sharing wealth with family members is often a complex process that involves determining what to give, who will receive it and taking steps to ensure your gift(s) are administered according to your intentions. One of the best ways to ensure your goals are met is to create a governance structure that can stand the test of time.
Here are the key areas to focus on:
When will funds be distributed to heirs?
Distributions generally work best when benefactors express clear intentions regarding how and when funds should pass to family members, whether as direct gifts or placed in trust.
When assets are held in trust, the distribution decisions legally fall to the trustee. While these distributions may be guided by the financial needs and circumstances of each heir, they must be consistent with the provisions in the trust document. Many trustees find this task daunting, especially when there are multiple current beneficiaries and potential future beneficiaries named in the trust.
To increase the likelihood that your wealth-transfer intentions will be realized, ensure the trustee(s) you choose fully understand their responsibilities and are committed to implementing your goals with care.
How will the money you give be invested?
Whether your gift is placed in trust or given directly to heirs to be invested, a disciplined approach begins with you and carefully considers:
Time horizon and asset allocation: Generally, the first step in the investment process is assessing when your heirs are likely to need the funds, which naturally transitions into asset allocation strategies. Start by considering these points on your gift’s time horizon: Near-term (within five years) and further into the future.
Risk profile: This is informed by your (and your heirs’) investment skills, financial needs, and psychological and financial willingness to assume risk. In our view, there are generally three main key considerations here: risk required, risk capacity and risk tolerance:
• Risk required: What is the amount of risk needed to achieve goals?
• Risk capacity: What is the investor’s ability to take risk based on their goal priorities, amount and time horizon?
• Risk tolerance: What is the investor’s willingness to take risk, which is influenced by personal factors that are subject to emotions and environment?
Both risk required and risk capacity are anchored in an investor’s goals and time horizon, making them more stable, while risk tolerance is less stable due to personal sentiment.
To increase the likelihood of a successful family legacy, we place a high emphasis on educating generations two, three and beyond around financial literacy concepts to ensure they are well prepared to be responsible stewards of large gifts coming their way.
Rick Barragan is the Managing Director,
Los Angeles Market Manager, for J.P. Morgan Private Bank.
[email protected] | (310) 860-3658
privatebank.jpmorgan.com/los-angeles
Source: “How to successfully gift to heirs” by Marc E. Seaverson, CPWA, Wealth Strategist, April 28, 2025
