It’s common for people to think about legacy planning when they are approaching retirement. In most cases, leaving a legacy for children, grandchildren, charities, and other causes you are passionate about takes careful planning. You must make the proper arrangements to ensure that your legacy reaches your heirs as you intend.
First things first, what does it mean to leave a legacy? Leaving behind a legacy means making an impact that will last long after you die. It could be financial, with something you create, or through the people you touch while alive. The good news is that it’s never too late to start working on building a legacy that will outlive you.
There are various ways you can leave a legacy. You may find that your focus is limited to your children and grandchildren, or you may prefer to have a touching funeral that gives everyone a chance to say goodbye. Here are some ways you can leave a lasting legacy.
A will is the cornerstone of any estate plan. You should have a Will no matter how much your estate is worth. You can generally leave any property to whomever you wish with a Will. To maximize the likelihood that your wishes will be carried out, create what’s known as a testamentary will. It’s arguably the best insurance against successful challenges to your wishes by family members or business associates after you die.
You can also leave property to your heirs using a trust. There are two basic types of trusts: (1) living or revocable and (2) irrevocable. Living trusts are flexible because you can change the terms of the trust (like renaming the beneficiaries) and the property in the trust at any time you want. You can even change your mind by returning your property and ending the trust. On the other hand, an irrevocable trust can’t be changed or ended except by its terms but can be helpful if you want to minimize estate taxes or protect your property from potential creditors.
A trust can’t distribute property it does not own, so you must also transfer ownership of your property to the name of the trust. A property without ownership documentation (e.g., jewelry, tools, furniture) is transferred to a trust by listing the items on a trusted schedule. You must also name a trustee to administer and manage the trust property. With a living trust, you can name yourself a trustee, but you’ll need to name a successor trustee who’ll transfer the property to your heirs after your death.
Be Clear About Your Home and Personal Belongings
While vacation real estate can be a slam dunk for an inheritance, the same isn’t always true of the family home. The family home can be challenging because it’s full of emotion. People thinking about leaving collectibles or anything worth monetary or sentimental value should include directions in estate planning documents with clear instructions for how those items are to be divided. If you want to leave certain things to certain family members, a list will generally be honored, as long as it’s referenced in the will.
Name a Child as Beneficiary for an Annuity
It’s possible to purchase an annuity and name a child as the beneficiary. Upon the donor’s death, the child has an income stream from annuity payments over their lifetime. Because the child is younger, there will be a more considerable stream of income throughout their lifetime. It’s a great way to guarantee a child’s income.
Do you have minor dependents? It can be essential to name guardians for any minor children or dependents you may have. This information can be contained in a will so the court and your family members know who is responsible for your dependents should you pass away.
Have questions about how you can leave a legacy? Contact us for a free consultation!