Death will come for us all, eventually. Although it is inevitable, most of us do not consider planning for what happens to our loved ones after we die. However, planning for the future of your heirs and beneficiaries will ensure that they receive the money and assets you want them to have after you are gone. Legacy planning will allow you to have that security, while also saving on unnecessary administration costs and taxes.
Legacy Planning in Fayetteville
If you have established a strong financial foundation for your family, planning for the future is crucial. If you do not determine now how your legacy will be transferred to your loved ones, they may be left without reaping the benefits of your hard work. Don’t let that happen. Consult with a Fayetteville Legacy Planning attorney now.
What is Legacy Planning?
Legacy Planning is a more comprehensive method of estate planning. Like basic estate planning, it involves creating a plan for distributing your estate to your family after your death, but it also includes managing your total wealth while you are alive and establishing a clear plan for passing on your legacy to the next generation.
Your estate is merely your assets, both financial and personal property. However, your legacy also includes your family’s core values, community involvement and personal effects, such as family heirlooms and the unique stories of your family.
What should a legacy plan include?
Legacy plans need to be comprehensive. Like any estate planning tool, a legacy plan should identify who will manage your assets and your personal needs if you become incapacitated. If you have children, the plan should consider who will take care of them if they are still minors when you die. Legacy plans usually include a durable power of attorney for finances and health care and a will. There are several other estate planning documents that can also be incorporated, depending on your specific needs.
Legacy wealth plans need to protect your assets
A good legacy wealth plan must provide protection from debts and legal judgments that may be left behind. Those debts must be settled from your estate before any assets will be distributed to any heirs. Asset protection involves lawfully arranging or rearranging assets in order to ensure they are not subject to the claims of creditors.
However, asset protection must be planned and accomplished well before the threat of judgment. This is because there are certain state laws that protect creditors from those who try to avoid judgment by transferring property into the name of someone else. If done correctly, your assets can be repositioned in a way that will protect them from the threat of creditors after your death.
Planning for Estate Taxes
Another issue that is important to legacy wealth planning is limiting estate taxes. As of this year, 2014, each person is allowed up to $5.34 million in estate tax exemption. If your total assets exceed that amount, however, a legacy wealth plan is crucial in order to reduce your potential estate tax liability.
In addition to this exemption, married couples are entitled to the marital deduction, which allows them to transfer property to one another, either at their death or during their lifetime, without paying estate or gift taxes. The amount of this exemption is unlimited.
It is important to revise your plan
Once your legacy wealth plan has been established, that is not the end of the story. Whenever your financial status changes considerably, or your family situation changes (e.g., divorce, marriage, dependents), you will need to revisit your legacy wealth plan with your attorney to determine if any modifications need to be made. It is also important to consider what effect, if any, a change in value of your estate may have on your estate tax liability.