Life and Legacy
Planning
Creating a Lasting Legacy
Legacy and Estate Planning go hand in hand. Creating your Legacy adds abstract elements to a comprehensive Estate plan, which focuses on asset protection and legal documentation. Sometime clients approach legacy and estate planning with a sense of uncertainty and hesitation. Often, the answer to how much they plan to leave behind is "whatever's left at the end." However, when we consider how hard we have worked throughout your lives and the sacrifices we have made, the true value of our accomplishments deserves a more strategic and intentional approach.
Legacy Planning
Estate Planning
3 Steps to Creating Your Legacy
1. Defining Your Legacy Goals
The first step in legacy planning is to define what you want to achieve with your legacy. This could vary significantly from person to person. Here are some examples:
- Providing a Safety Net: Ensuring your children never have to face financial hardship.
- Supporting a High Quality of Life: Offering financial support for specific needs like family vacations or retirement savings.
- A Long Lasting Legacy: Creating wealth that benefits not just your children but future generations.
2. Developing a Strategy … Planning How and When to Gift:
Many families default to leaving their legacy at the end of their lives due to the uncertainty of their own retirement needs. However, there are compelling reasons to consider gifting during your lifetime:
Maximizing Impact: Money holds different values at different ages. Gifting earlier can provide more meaningful support, such as helping your children retire earlier or alleviate financial stress.
Dynamic Income Planning: Instead of making a one-time retirement decision allow for more flexibility and responsiveness to changes, enabling you to make more intentional gifts. Here is an example:
A couple with a $1 million retirement portfolio aim to spend $5,000 per month. A full review of their plan revealed that their spending capacity exceeds their goal. This allowed for potential gifting and with solid portfolio performance, they could significantly increase their spending or gifting capacity over time.
3. Tax-Focused Gifting
Importance of Tax Efficiency
Taxes are a significant obstacle to effective legacy planning. A forward-looking tax plan can help minimize these obstacles and maximize your gifting potential. Here are some key considerations:
- Tax-Deferred Accounts: Gifting from tax-deferred accounts can trigger higher tax liabilities. Planning withdrawals and gifts carefully can mitigate these impacts.
- Gifting at Death: Understand that passing on tax-deferred accounts like traditional IRAs will impose tax obligations on your heirs, who must withdraw the funds within 10 years.
Gifting Limits and Strategies
As of 2024, individuals can gift up to $18,000 per recipient annually without triggering gift tax filings. Exceeding this amount requires filing a gift tax return, but for most families, this simply reduces their lifetime estate tax exemption.
Legacy planning involves a range of strategies and considerations to ensure your wealth is passed on intentionally and effectively. The goal isn’t necessarily to accumulate more money but to have a better plan for the wealth you have.
Components of an Estate Plan
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Medical Power of Attorney
Allows you to designate someone to make healthcare decisions on your behalf if you are unable to do so. It is crucial to ensure that this person has access to your medical information, which is facilitated through a HIPAA release.
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Financial Power of Attorney
This grants someone the authority to manage your financial affairs if you become incapacitated. It is essential to have this in place to avoid the need for a costly and time-consuming conservatorship or guardianship process.
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Living Will
A living will specifies your wishes regarding end-of-life care. It allows you to dictate whether you want extraordinary measures taken to prolong your life under certain conditions.
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Living Trust
A living trust helps manage your assets during your lifetime and provides instructions for their distribution after your death. It can help avoid the probate process, making the transition smoother for your heirs.
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Will
While a will is essential, it only takes effect after you pass away and primarily addresses the distribution of your assets. A will also names guardians for minor children and can include burial instructions.
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Pour-Over Will
This type of will ensures that any assets not included in your living trust are transferred to it upon your death, providing a comprehensive plan for your estate.
The Importance of a Comprehensive Estate Plan
Avoiding Probate
Probate is a legal process that can be lengthy, costly, and public. By having a living trust, you can avoid probate, ensuring a more private and efficient transfer of assets.
Protecting Your Heirs
- Divorce-Proofing Inheritance
By placing assets in a trust, you can protect your children’s inheritance from being lost in a divorce. - Preventing Mismanagement
A trust can prevent heirs from squandering their inheritance by providing controlled distributions based on specific conditions, such as reaching a certain age or achieving certain milestones.
Funding Your Estate with Life Insurance
Why Life Insurance is Important
Life Insurance is a great way to protect your family’s financial security because it can pay funeral expenses, debts and taxes after your death.
Some Life Insurance policies even provide immediate access to cash, that you can use for future expenses tax-free while you are alive. Others may even allow you to accelerate your death benefit to help cover expenses related to an illness, injury or long-term care.
To say the least, Life Insurance can play many different rolls within your overall investment and retirement strategy.
Most of today’s Life Insurance policies simplify the underwriting process, eliminating the need for blood and urine and in other cases, they eliminate the underwriting questions all together, meaning you’re guaranteed to be accepted.
Replacement
Protection
of Taxes
Planning
Benefits
Reasons Why Life Insurance is Important for Your LOVED ONES
to Cash
Stability
Planning
Retirement Income
Which Type of Life Insurance Is Right For You?
Legacy RP provides free, 100% confidential consultations to help guide you to the best decisions based on your specific wants and needs.
Although, there is a ton of information on line you can’t be sure what is fact and what is fiction. Beyond the honest education you are guaranteed with Legacy RP, benefits, pricing and add-on benefits vary between the many insurance companies.
One company may approve someone with type-2 diabetes, whereas another might not, and the same principle stands with all other possible health related backgrounds.
With access to all options in the public market and private proprietary solutions Legacy RP can simply stay focused on what suits your needs best. We present a comprehensive comparison across all providers and policies so that you not only understand your coverage, but how it’s better than the other options available.
Provides protection for specific, limited amount of time such as 10, 15, 20,25 or30 years; or to a maximum age, such as 80
Designed to stay inforce for individual’s entire life - normally to age 120.
Typically provides no cash value but offers a lower premium.
Has a cash value that accumulates over the life of the policy.
Often provide protection for specific times of need, such as a mortgage or raising a family.
Cash value can be accessed if needed for any reason, and can provide guaranteed income after retirement
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