ETHICAL INVESTING: LEAVING AN ETHICAL IMPRINT

After selecting the rightful ethical investments and making it work, it is about to decide how to disburse your assets after you die. You have two options in distributing your assets: create a plan yourself or ask someone else to do the planning for you.

Establishing your ethical legacy is a highly personal decision, not to mention the numerous factors one has to take into account. An investor can give his estate either to his family or a charitable institution, or both.

In case of leaving the money to individuals, say spouse, children or grandchildren, believing they will continue upholding your principles, an investor may consider writing an ethical will, an informational document outlining your investment philosophy with your heirs. They still have the discretion on how they will handle the money. Or, you can put up an incentive trust where beneficiaries should fulfill requirements before receiving your money.

If you want to leave it to a not-for-profit institution, set up a charitable trust. It enables a person to provide for both individual beneficiaries and charities. How does it work? Assets are put into the trust, which are distributed following your death based on what you have planned. There are two kinds of charitable trusts, which reduce estate taxes:

• Charitable Lead Trust - Money is first given to charities and then to beneficiaries as an income stream
• Charitable Remainder Trust - Assets are first disbursed to beneficiaries as income stream and the remaining money goes to chosen charities.

Estate planning, especially in this matter, should begin as soon as you start working and/or investing. While it seems too early for that, one can still choose the inheritors of your investment returns should something happen that ends your life suddenly. Determining the recipient of your assets can ensure your money will go to the person or institution of your choosing. To do so, an investor needs to fill out a beneficiary designation form from the form managing your assets. If married, obtain your spouse’s permission to assign another person (other than your significant other) as the heir, especially if the account in question is a retirement account. And for a smooth sailing estate planning, it is ideal to consult an estate planning attorney or tax professional in order to avoid paying unnecessary fees.