What kind of legacy do you want to leave?
That is a tough question that probably involves more time than it would take to read through this blog. But it is good to start thinking about your legacy and what you want it to look like.
Your estate plan is a great step in setting the framework for your legacy. But estate planning can be intimidating and unapproachable. I’d like to change that narrative today by giving you insight into how you can set up an estate plan that will make your money more impactful.
Establish a Will
A will is one of the most important documents in your estate plan. It is a legally binding document that outlines your wishes for your estate. A will also details the particulars of your estate and allows you to select beneficiaries, for example, if you left your mother’s diamond earrings to your granddaughter or your antique book collection to your nephew.
Even though a will is really important to have, it is a document that many people forget about or put off creating. The main reason this happens is because they think that they don’t have enough assets to organize and sort through. When you start this process you may be surprised at the amount of wealth and assets you have accumulated throughout your life. Below is just a sampling of things to consider putting in your will. Directives for your:
All insurance policies (life, health care, health savings account, flexible spending account)
Retirement accounts (401k, Roth IRA, Traditional IRA)
See how quickly all of that added up! It is best for you and your family to work out how you wish to divide your assets. If you don’t, a courtroom judge may have to guess what you would have wanted.
It is important for you to know that the beneficiaries you elect on other official documents such as your insurance policies, checking accounts, and other accounts will take precedence over the name you list in your will. Take for example your Roth IRA. If you list your spouse as the beneficiary on the form and list your daughter to inherit the account in your will, the official form will be followed meaning that money would go to your spouse.
Think Outside The Box
The design of your estate plan has the power to help you set up a memorable, lasting legacy for yourself and your family. The best part about this plan is that it can be totally created and customized by you to fit your personality and mold the message you want to pass on to future generations.
You don’t have to follow the status quo, you can use your money in a powerful way to help you make a lasting impact on society. Below I have outlined a few options that might work really well for you.
Create a scholarship
What better way to help mold young minds and increase the value of your impact than with a special scholarship? You can establish this with your own terms and application process to highlight what is most important to you. Maybe you are passionate about arts and humanities and want to start a scholarship for a college freshman who wants to pursue a career path in that field. Whatever it is, you can make it fit your vision.
Donate to charity
You can set up a fund that will donate a portion of your estate to the charity of your choice. If you want to maximize that gift, it is important to find organizations you believe in and trust. Look for places that are open and honest about where your money is going and how it will make an impact.
You may also have your heart set on opening your own charity which is a kind and altruistic idea. Keep in mind though, you will have overhead and maintenance costs to factor in which may dilute the overall impact of your money.
Start a trust
Estate taxes are something you should factor into your estate plan. Once you pass away, your estate gets probated which often involves courts, lawyers, and taxes. These costs eat into the overall value of your estate. In order to avoid that, you can set up a portion of your estate in a trust fund, set to be transferred to your selected beneficiary once they become of age. This could be a great way to invest in your grandchild’s future.
Talk With A Financial Planner
Estate planning is highly specific to each person. It involves looking at your overall financial landscape, but it also takes into account your goals, wishes, desires, and vision for the future.
Your financial planner will be able to help you balance your goals and come up with a plan that honors the life you have built and the legacy you want to leave behind. If you would like to start the first step in talking about your legacy plan, give us a call!