Legacy

Thinking about Giving It All Away? Here’s What You Need to Know

There are some individuals who just aren’t interested in handing down their assets to the next generation when they die. Perhaps their children are so successful, they don’t need an inheritance. Or, according to the article “Giving your money away when you die: 10 questions to ask” from MarketWatch, they may be more interested in the kind of impact they can have on the lives of others.

If you haven’t thought about charitable giving or estate planning, these 10 questions should prompt some thought and discussion with family members:

Should you give money away now? Don’t give away money or assets you’ll need to pay your living expenses, unless you have what you need for retirement and any bumps that may come up along the way. There are no limits to the gifts you can make to a charity.

Do you have the right beneficiaries listed on retirement accounts and life insurance policies? If you want these assets to go to the right person or place, make sure the beneficiary names are correct. Note that there are rules, usually from the financial institution, about who can be a beneficiary—some require it be a person and do not permit the beneficiary to be an organization.

Who do you want making end-of-life decisions, and how much intervention do you want to prolong your life? A health care power of attorney and living will are used to express these wishes. Without these documents, your family may not know what you want. Healthcare providers won’t know and will have to make decisions based on law, and not your wishes.

Do you have a will? Many Americans do not, and it creates stress, adds costs and creates real problems for their family members. Make an appointment with an estate planning attorney to put your wishes into a will.

Are you worried about federal estate taxes? Unless you are in the 1%, your chances of having to pay federal taxes are slim to none. However, if your will was created to address federal estate taxes from back in the days when it was a problem, you may have a strategy that no longer works. This is another reason to meet with your estate planning attorney.

Does your state have estate or inheritance taxes? This is more likely to be where your heirs need to come up with the money to pay taxes on your estate. A local estate planning attorney will be able to help you make a plan, so that your heirs will have the resources to pay these costs.

Should you keep your Roth IRA for an heir? Leaving a Roth IRA for an heir, could be a generous bequest. You may also want to encourage your heirs to start and fund Roth IRAs of their own, if they have earned income. Even small sums, over time, can grow to significant wealth.

Are you giving money to reputable charities? Make sure the organizations you are supporting, while you are alive or through your will, are using resources correctly. Good online sources include GuideStar.org or CharityNavigator.org.

Could you save more on taxes? Donating appreciated assets might help lower your taxes. Donating part or all your annual Required Minimum Distributions (RMDs) can do the same, as long as you are over 70½ years old.

Does your family know what your wishes are? To avoid any turmoil when you pass, talk with family members about what you want to happen when you are gone. Make sure they know where your estate planning documents are and what you want in the way of end-of-life care. Having a conversation about your legacy and what your hopes and dreams are for family members, can be eye-opening for the younger members of the family and give you some deep satisfaction.

Reference: MarketWatch (Oct. 30, 2018) “Giving your money away when you die: 10 questions to ask”

Leaving a Legacy? Expand What That Means

Your legacy is far richer than your assets and possessions. Planning to pass on a legacy to your family becomes more rewarding, when it includes non-tangibles, like values and treasured family stories.

Who wants to think about death, dying and bank accounts? Not too many people do. That’s why so many of us tend to put off creating or updating our wills. However, taking a different approach, breaking up the task into four key components, and including more than the assets you’ve accumulated over a lifetime can make planning your personal legacy rewarding. The Street’s recent article, “Planning Your Legacy: More Than Just Finances,” explains how this works.

MP900439346Pillar 1: Values and Life Lessons.  People can forget to provide for some of the most valuable gifts that can be passed on to the next generation of family members, which are experiences and memories. Your years of life encounters have given you a wealth of life lessons and knowledge you can pass on to your heirs. Document your memories, relationships, and any important lessons you want to preserve.

Pillar 2: Instructions and Wishes to be Fulfilled. Engage an estate planning attorney to be certain that the necessary legal documents are in place to carry out your instructions and wishes. This includes a living will and healthcare directive, as well as powers of attorney. These will make your wishes known and grant the authority to a trusted agent to have your instructions performed.

Pillar 3: Personal Possessions of Emotional Value. Items associated with the loved one can create the most conflict among family members. To preserve harmony, you should plan ahead by considering which items may have personal importance and special meaning.  You should then speak to the other family members to see which items have a special meaning for each of them. These discussions, at an early stage of the process, can make it easier to decide the best way to distribute your meaningful possessions.

Pillar 4: Financial Assets and Real Estate. The final pillar focuses on the financial aspects. Work with an attorney and divide it into three areas. First, look at items of financial value and inventory high-value items like art, antiques, and jewelry and determine what will happen to them.  You should next consider your residence(s) and other real estate. The final step is to evaluate all of your financial assets, such as savings, investments and retirement accounts, as well as any trusts and insurance policies you may own.

There’s no way around the fact that planning your personal legacy is a big task to tackle.  However, try using this process. One thing is certain: once you have written down your wishes, shared your memories and done the hard work of planning for your family after you’re gone, you will feel a great sense of relief. It’s a gift you give to those you love, and that is invaluable.

Reference: The Street (September 19, 2018) “Planning Your Legacy: More Than Just Finances”

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