Downs Law Firm, P.C.

Legacy Planning

What Will Be Your Legacy?

Please Share!
Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on email
Email

Your legacy is what you leave behind: What people will remember about you and receive from your life? Legacy planning is about fostering your relationships and passing on what is most important to you for your loved ones.

Your legacy is what you leave behind: What people will remember about you and receive from your life? Legacy planning is about fostering your relationships and passing on what is most important to you for your loved ones.

It’s about your relationships. For my family, this is the Advent season, which is a time to examine and renew our Spiritual relationship as we prepare for Christmas.

For all of us, during this coronavirus pandemic, the holidays will be challenging to keep one another safe and yet be supportive. A Christmas like no other. Still a time of hope and expectations.

Legacy also includes the memory of how you take care of those you love. a part of that is financial, a part of that is providing guidance to help access and manage your affairs. We are here to help with those parts. See Protecting a Digital Legacy(Opens in a new browser tab)

Asset distribution is how many estate plans begin, but we can create legacies for generations to come through our estate planning, says Kiplinger in the article “Legacy Planning: Create a Lasting Legacy.” You may not realize it until you sit down to prepare an estate plan, or even until you prepare a second estate plan. Your life has been devoted to building wealth and now it’s time to plan for the next generation. This is when estate planning becomes legacy planning.

Why is Legacy Planning Important?

If the goal is to leave children provided for, the plan may be simply to bequeath assets.

However, if children are not good at handling money or if there is a concern about a marriage’s longevity, then you’ll want to look past a simple transfer of assets on death. For some families, a concern is leaving too much wealth to children, undermining the parent’s life of work and respect for their accomplishments. Legacy planning addresses these and other serious issues.

Which Documents are Necessary for Estate Planning?

Most people need the following documents:

Revocable Living Trust, or RLT. The person who creates this trust maintains full control of assets that are titled to the trust while they are living and then directs how assets are to be passed on when one spouse dies and then after both spouses die.

Wills or Pour-over Wills. These are either alternatives to trusts, which will rely on probate, or used in conjunction with an RLT, these work to direct assets to the RLT.

Durable Power of Attorney. These documents are part of planning for incapacity. They designate a person who will make financial and/or legal decisions for you if you cannot do so.

Health Care Directives. Note that these have different names and details, depending on the state. For most people, they consist of a Living Will and a Durable Power of Attorney for Health Care. Together, these two documents provide a platform for you to share wishes about medical care. The Living Will gives guidance about your wishes, if you become too sick to communicate, including your wishes on pain medication, artificial feeding and hydration, and resuscitation. The Durable Power of Attorney (sometimes called a Health Care Proxy) names a person who can make health care decisions if you can’t do so for yourself.

How Do I Leave a Lasting Legacy?

Many people believe that their legacy is exclusively for their children. However, for others, even those with modest estates, supporting an organization that has meaning to them through a gift in their will is just as important as leaving money to children and grandchildren, and their chosen charities.

Here are a few questions to consider when thinking about a legacy:

  • How much wealth is “enough” for heirs?
  • At what age should money be transferred to heirs?
  • Should incentive milestones be created, like completing college, attaining higher education goals, or staying sober?

If assets are left directly to children, there is always the risk that they may lose wealth. Sometimes that is not the child’s fault, but this can be prevented with good planning. Inherited assets can be protected in trusts, which can be created to protect wealth and provide for professional management.

Do Trusts Avoid Estate Taxes?

Another important consideration when creating a legacy is minimizing tax liabilities. Not every estate plan is designed with taxes in mind, so you’ll want to discuss this with your estate planning attorney.  The issue of taxes can become more complex, if the estate includes illiquid assets, including real estate or a family-owned business.

Reference: Kiplinger (Oct. 30, 2020) “Legacy Planning: Create a Lasting Legacy”