Legacy Planning
“To himself everyone is immortal; he may know that he is going to die, but he can never know that he is dead”
Samuel Butler
No one likes to confront their own mortality. It’s a simple fact of life, that we will all die. We know not the day, nor the hour, but it will happen. Sounds kind of macabre.
In a recent financial planning discussion with a client, we discussed their legacy – What did they want this money to do once they no longer have a need for it? If they live their lives and have money left over, what do they want to be done with it? Do they leave it to heirs? Do they want to leave it to charity?
With every choice they make, it leads to even more choices that have to be made. Do I use a trust to help make sure the money isn’t spent frivolously? Do I put parameters on the usage of the money I give to a non-profit? Do I leave it to kids or grandkids? Different families have different dynamics that come into play, so there is no one-size fits all solution.
Let us not forget about tax impacts, too. IRAs, Roth IRAs, and taxable accounts all have different rules for taking money out, as well as different tax treatments on these withdrawals. And these rules are ever changing, such as the recent Secure Act passed at the end of 2019 that changed some of the IRA rules. In the coming years, there’s likely to be even more changes that will happen.
Just like an investment plan, a legacy plan is not a “done and done”. You cannot complete it one time and expect that it will always be the best way for you to pass along your money. As times change, and as rules change, it’s best to revisit your wishes and make sure everything is still set up the way you want it to be. With the help of an advisor, a tax professional, and legal counsel, you can have your accounts set and titled exactly the way you want them to be.
If it’s been a while, contact your advisor and ask how your accounts are set up in the event you pass. Make sure that’s the way you want them to be. And if not, then begin that conversation. For we know not the hour…
We do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.