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Passing On the Story of You

Planning Your Future

Legacy planning can ensure your wishes (as well as your wealth) live on through your heirs.

Sometimes, the best things in life aren’t … things. And that’s where legacy planning comes in. Legacy planning goes well beyond leaving your wealth to loved ones. It incorporates the elements of estate planning and then some, allowing you to pass on your philosophy, life lessons, family stories, and charitable nature.

Legacy planning begins with the basic component of estate planning—distributing your financial assets. And you can control how (and how much of) those funds are disbursed to your heirs.

Man giving grandson piggy-back ride

But you can also shape future generations in more profound and lasting ways by weaving your beliefs and ideals into gifts to loved ones and your favorite charities. Personal treasures like a Babe Ruth rookie card (if you don’t sell it first) or a wedding ring spanning multiple generations can be left to the grandchild who would most enjoy them. Really, anything that tells your story (and conveys your wishes)—family trees, photographs, videos, charitable giving, etc.—can be included in your plan.

“Legacy planning lets you leave behind much more of who you are and what made you the person you’ve become,” said Nick Manley, CFS Financial Advisor at SELCO Investment & Retirement Services*. “It’s never too late to establish a legacy or estate plan to ensure that your family’s needs and your wishes are met.”

When framing your legacy, there are many factors to consider—setting your children (and their children) up for financial freedom, supporting your favorite charities, passing on your vision, and more. The process can be complex, so consider consulting a legacy planning attorney before you dive in. Then when you’re ready, meet with a financial advisor to hash out the details. But here are four basic ways to establish an estate plan and add subtle touches that will make your legacy last:

Writing a will

No matter how much wealth you accumulate, a will is the cornerstone of planning for the future, even if you opt for other planning strategies. The two most common types are specific bequests and general bequests:

  • specific bequest directs a piece of property to an individual (“I leave Aunt Jane’s pearl necklace to my daughter, Molly”). Direct gifts to charitable organizations also fall under this category (and add to your legacy).
  • general bequest is a precise dollar amount (“I leave $27,418 to my son, Steven”).

Creating a trust

As the name suggests, you’re essentially trusting your descendants to take care of your assets. But you won’t simply designate A, B, and C to your individual heirs. You’ll appoint a trustee—often an honest, detail-oriented family member—to handle your assets after your death. A trustee is highly recommended when some or all of your assets will go to minor children. By setting up a trust, you can avoid probate, maintain your privacy (wills are public record), and be prepared for mental incapacity.

There are two basic types of trusts:

  • Living (or revocable) trustThe more flexible of the two, a living trust lets you make changes whenever you want. 
  • Irrevocable trustWhile an irrevocable trust better protects against legal action and estate taxes, you can’t make changes without permission from the named beneficiaries.

Beyond that, you can also establish charitable trusts and education trusts. Creating a trust is a complicated process, so you’ll want to hire an attorney.

Designating beneficiaries

Beneficiaries (persons or entities) are a crucial component to estate and legacy plans. Because they are contractual in nature, assets such as retirement accounts, life insurance, and annuities are passed along by beneficiary designation. Listing beneficiaries can be as simple as filling out a form, signing it, and submitting to an exchange traded fund (ETF). Consult a legal or tax advisor when completing this form. During this process, you can literally share the wealth—to relatives, business associates, friends, charities, or trusts. You’ll want to pay close attention to tax ramifications when naming beneficiaries—some proceeds are taxed, while others are not. It’s also important to keep your beneficiaries list up to date as circumstances or contact information change.

Your beneficiaries can also include one or more public charities close to your heart. Or, if you regularly donate large sums, you may consider creating an endowment or private foundation to extend your gift long after you’re gone.

Joint ownership arrangements

Joint ownership arrangements come in two forms: joint tenancies with rights of survivorship (JTWRS) and tenancies in common. These arrangements have their place in some areas but aren’t ideal in others. For instance, a joint checking account will allow an heir to have immediate access to cash. A joint owner or other beneficiary can also help your legacy live on by managing your charitable giving. On the flip side, naming someone who is not your spouse as co-owner may trigger unwanted gift tax consequences.

While there’s no shortage of complexity, legacy planning lets you create a lasting gift that can shape your heirs’ future well beyond financial matters.

“Don’t wait,” Manley advises. “Life moves quickly so you want to be proactive with your planning.” 

*Nondeposit investment products and services are offered through CUSO Financial Services, L.P. ("CFS"), a registered broker-dealer (Member FINRA/ SIPC) and SEC Registered Investment Advisor. Nondeposit investment products offered through CFS are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. SELCO Community Credit Union has contracted with CFS to make nondeposit investment products and services available to credit union members.

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