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Applied Financial Group - Woodbury, NY

The Living Balance Sheet

Leaving a Legacy

Leaving a Legacy: A Few Smart Moves Now Can Do More For Your Heirs in the Future

The following are a few essentials when it comes to legacy planning.

You Don’t Need A Castle To Have An Estate

The term “estate planning” applies to everybody: you don’t need to drive a Rolls-Royce or own a gated mansion. Your estate simply refers to the sum total of your finances, which includes property and real estate, money in the bank, cash value you’ve built in a whole life insurance policy, stocks and bonds, retirement accounts, financial assets, and possessions – basically anything that remains after you account for unpaid loans. To make sure your estate is in order and your heirs are taken care of, make sure you have a will, a living will, and life insurance.

Why Is A Will So Important?

An AARP study indicates that two out of five Americans are without a will.1 Unfortunately, not leaving a will behind is almost always bound to create issues for your survivors, at an already stressful time. Without a will that sets out your choices, the state in which you live will make all the decisions. Your estate will be subject to federal and state taxes, and handling your affairs could take months. Use an estate lawyer – licensed within your state – to ensure it gets done right.

Create Your Living Will Now

Deciding what’s going to happen if you’re medically unable to make decisions on your own is an important role – given to someone appropriately called a “trustee.” By law, a trustee has to maintain neutrality and act in the best interests of the estate – in other words, they have to follow your wishes. Set up a living will and appoint at least one backup trustee to make decisions for you if you’re unable to. Life support decisions and funeral arrangements are some of the issues that fit into this category.

You Can Do A Lot For Your Heirs With Life Insurance

A whole life insurance policy is a form of what’s known as permanent life insurance and will accumulate cash value2, money that you can use during your lifetime. It also guarantees a certain amount of money will be left to your heirs.3

You can transfer your whole life insurance policy, with its cash value, into a trust, which creates tax advantages for your chosen beneficiaries.4

You can also gift money tax-free to pay for a whole life insurance policy for a beneficiary, to ensure they’re financially secure when you’re gone. When your beneficiary is an adult, he or she can take over paying for the whole life policy to grow their cash value asset and create a legacy of their own.

Update Your Records Every Few Years, And Let Your Heirs Know How To Locate Them

Most estate attorneys will advise you to check back with them every few years, if not annually. This is because family dynamics can change, as can federal and state laws, affecting the way you leave gifts or decide upon beneficiaries.

Record current account numbers, life insurance statements, financial assets, safety deposit boxes (remember to include both the box number and the address of the financial institution), and your electronic passwords in one secure place. Make sure your trustees know each other’s contact information, and also where your essential information is held.

Consult With AFG

Financial representatives can offer you a variety of choices for leaving a legacy. Some courses of action may offer advantages from the standpoint of how much money your heirs inherit, or the timing of decisions they need to take after you pass away, particularly in paying estate taxes. As a firm specializing in estate planning, we can help you with your strategies.

1. AARP survey
2. Cash accumulations in a whole life policy come from dividends. Dividends are not guaranteed. They are declared annually by Guardian’s Board of Directors.
3. All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company.
4. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.