There is a more complete form of estate planning called legacy planning that you may want to consider. Your legacy plan could contain some financial elements, but you can also include some things that money cannot buy that are very valuable as well. Let’s look at some of the components that could be included in your legacy plan.
We are going to primarily focus on possibilities that have nothing to do with money, but we should discuss the value of wealth preservation for high net worth individuals. There is a federal estate tax that can seriously impact your legacy, because it carries a 40 percent maximum rate.
The reason why this tax is only relevant for people that have accumulated a significant store of wealth is because there is an estate tax exclusion or credit that is relatively high. At the time of this writing late in 2019, the exclusion is $11.4 million. We are mentioning the date because there are typically adjustments at the beginning of every year to account for inflation.
There are a number of different ways to arrange for tax efficient asset transfers if your estate is going to be subject to taxation. The ideal course of action will depend upon the circumstances, but this being stated, there is a commonly utilized type of trust that can optimize your legacy.
This vehicle is the generation-skipping trust. As the name indicates, you would name your grandchildren as the beneficiaries rather than your children. Throughout the life of your children, they would be able to benefit from assets that are contained within the trust and receive distributions from the earnings.
After their passing, your grandchildren would inherit the assets. Yes, the direct transfers would be subject to the estate tax, but one round of taxation would be avoided.
The heirlooms that you have in your possession could simply be sold by your trustee or executor after your passing, and the proceeds could be distributed to the inheritors. This being stated, the objects that have been in your family for generations have value that exceeds mere dollars and cents.
You could inventory all of the heirlooms that you have acquired over the years and examine your inheritance list. Ultimately, you can get the right meaningful item or items into the hands of each respective family member. In fact, you can start doing this with some items while you are still alive.
When you are devising your legacy plan, you may want to consider the inclusion of your personal memoirs. It can be rewarding and cathartic to reminisce and share your memories in writing so that your loved ones can gain a better understanding of your formative experiences.
An explanation of the family history that you remember could be contained within your memoirs, or you could choose to have a document that is strictly devoted to your lineage. Many people start to get interested in their family tree at some point in time, and you can be of great assistance if you share what you know about your family’s roots.
There is another document that has nothing to do with money that can be a powerful addition to your legacy plan. Ethical wills stem from the Judaic tradition, and they go back to biblical times. With an ethical will, you record your moral and spiritual values so that your loved ones will be able to gain access to valuable guidance during challenging times.
We have shared a little bit of food for thought here, and there are some other legacy planning possibilities that we will look at in a future post. This blog has a lot of information, and we go the extra mile to provide help in another way.
Our firm offers free Webinars, and there are a number of sessions being held in the near future. To get all the details, visit our Webinar schedule page.
