Leaving Behind a Legacy With Your Estate Plan
What will you leave behind?
A proper estate plan will allow your legacy to live on. Many assume that estate planning is limited to the distribution of assets, but several other factors come into play. What is most important to you? Is there a particular message you would like to give your loved ones? By focusing on your legacy, you can craft your estate plan that provides your heirs and surviving loved ones with a lasting, personal gift. This does not necessarily refer to material assets; a well-crafted estate plan can carry your legacy forward by reflecting your personal values and encouraging beneficiaries to pursue their own interests in an efficient manner.
For those with children, a common estate planning goal is to provide them with a financial safeguard upon their death. Multi-billionaire Warren Buffet once stated: “You should leave your children enough so they can do anything, but not enough so they can do nothing.” While not everyone has a vast amount of wealth at their disposal, the underlying objective is clear: A strategic estate plan can guide your beneficiary in the direction of success, rather than providing them with a lump sum that may be spent unwisely.
The use of trusts can give you peace of mind in knowing that inherited assets will be used appropriately. By incorporating trusts into your estate plan, you can set parameters on how much will be dispersed, when funds will be dispersed, and even select the purpose for which the funds are used (schooling, childcare, pet care, etc.).
Another element of legacy-based estate planning is charitable giving. If you would like to associate your memory with a positive cause, there are countless non-profit and philanthropic organizations that accept posthumous donations. This frequently overlooked option is a wonderful opportunity to support a cause that reflects your ethical and ideological values.
When one dies without an estate plan (also referred to as ‘dying intestate’), their estate is handled and distributed by State courts. Individuals with no legal heirs or with a surplus of assets may prefer to have their estate go to a good cause. You may solidify your choices for charitable donations in your will or by forming a charitable trust.
Make your long-term business goals a reality by protecting the future of your business. If you are a business owner, there are several possibilities for how your business can be handled upon your death. Among other facets, a business succession plan involves choosing a successor or creating a Buy-Sell Agreement (in which ownership is transferred to an outside party) and naming a representative to carry out your business plan.
For family businesses, it is equally important to have your business succession plan on paper and to thoroughly discuss options with your family members. You must be confident that a chosen successor is willing and able to follow in your footsteps as a company leader. If no family member is interested in continuing the business, your surviving loved ones may still profit from the company’s dissolution, according to your preferences. The key to business succession planning is having an open dialogue with your chosen successor(s), if any, and making arrangements to make this transition as smooth as possible. As with any business endeavor, taking the time to plan ahead is essential.