What does it really mean to plan your legacy? If your estate plan is focused entirely on your current financial position, it may not reflect the real you. You are so much more than your assets! How you live your life, who you care for, and what your values are have all impacted your decisions over the years. They should impact your estate plan, too.
Here are some options for thinking outside the box when it comes to legacy planning.
Charitable Giving As A Legacy
The easiest and most direct way to leave a legacy that honors your values is to remember charities in your estate plan. Animal lovers may want to donate to the Dumb Friends League to ensure that all furry friends are cared for and can find the right home. Many of our clients choose to leave a portion of their estate to their church or university. This type of gift reflects the assistance and identity those institutions provided to them. Advocacy organizations are another good option, particularly for those whose lives revolved around volunteering or community involvement.
Keep in mind that your legacy doesn’t just mean your financial assets. If you care deeply about education you may have chosen a career as a teacher, despite the lower salary. You may have less money to give away, but you are leaving a legacy of community involvement and influence that can’t be measured by a spreadsheet.
Distribution Guidelines to Preserve Your Values
Statistics show that 70% of people who receive an inheritance spend it within three years. That may be exactly what you want, if you’re the type of person who always gave generous gifts at holidays or paid for family vacations. More than one client has told us, “You can’t take it with you!” To these people, giving their loved ones some freedom and excitement is exactly the legacy they want to leave.
For others, that would be unthinkable. “I worked hard for this money, I don’t want them blowing it on a trip to Jamaica!” If you are a person who invests responsibly and likes to save for a rainy day, an outright distribution may not make sense. It may not reflect your values or who you are. If you choose to protect your children’s inheritance through a trust, you can include directions that it should be used primarily for education or investing in a home or business. Not only does this provide a sum that can be used for your children’s benefit, but because restrictions on the principal are likely to extend the lifetime of the trust, you may be giving a double gift and benefiting your grandchildren as well.
Statement of Intent to Communicate Your Legacy
While not legally binding, writing a statement of intent and including it in your estate planning document allows you to communicate to your heirs after you pass away. One child’s inheritance may differ from another (for good reasons to do this see our blog posts on unequal inheritances.) Often, blended families create the need for creative distributions. In these situations, a statement of intent can provide solace, explanation, and assurance of your love. It’s also a great place to give further direction to the heirs or Trustee, in a way that states your wishes without mandating any particular action.
Specialized Trusts Because Your Legacy Is Unique
Most of our clients understand that a one-size-fits-all financial plan will not maximize their assets’ earning potential. The same principle can be applied to estate planning. There is no one-size-fits-all option, despite what some legal websites will have you believe. A combination of specialized trusts can allow you to maximize growth and minimize taxes. A Standalone Retirement Trust, an Irrevocable Life Insurance Trust, or a Charitable Remainder Trust can protect the assets you are leaving to your heirs, as well as provide them a steady income throughout their lifetime.
This option allows you to retain the structure of your assets while transferring the benefits of their growth to your heirs. Instead of giving your kids a pile of cash that may or may not match their needs, trusts maintain the structure you design. You could even ensure immediate income, long term investments, and retirement income for your heirs. Critically, this can protect the assets from both creditors and poor financial decisions.
Your life choices are made in the context of specific values and beliefs. It makes sense that you would want to leave a legacy that honors those values and provides your heirs with the form of asset protection that’s right for them. We pride ourselves on providing options and information to all our clients to ensure that the plan we create is the plan you need. Give us a call to set up a complimentary meeting with one of our attorneys today.