Everyone, regardless of age, status, material wealth, education, or notoriety, will leave a legacy behind. Even if we never think about our legacy, never take any actions to prepare for after our passing, each of us will still pass and leave our imprint on the world. Think about it: what if today was your last day on Earth? What kind of impression would you leave behind? How would you be remembered? Who would you be in the memories of those who know and love you?
Thinking about our legacy can be a little daunting. After all, how can we possibly control what others' think of us or how our actions are received? In all honesty, we can't. For those of us who have tried, we know controlling others' thoughts and emotions is a futile effort. But, we can help shape the way our lives impact others by being intentional about our choices. We can create plans that ensure that our wishes are carried out and that our legacies are guided by our lives.
First: Make Decisions about Your Estate Plan Foundation
As you begin considering how to shape your legacy, the first place your mind may go is to the time-honored “Last Will and Testament.” In point of fact, it's a great place to start. Your Will is a document that does three basic things: 1) appoint a guardian for your minor children (if you have any), 2) determine “who gets what” out of your assets (including any real estate, financial assets, and personal property), and 3) name the individual who will oversee the process of disposing of your estate.
We say a Will is a great place to start because it definitely shouldn't be the end of your estate planning endeavor. Many, many things are not covered by a Will, so it's not a complete estate plan. It is however, an essential part of a comprehensive estate plan. By beginning with your Will, you will be able to organize your thoughts, resolve some of the most basic estate planning issues, and create a stable foundation upon which you can begin crafting your legacy.
Second: Minimize Wealth Loss
You don't need to be wealthy to need an estate plan. In fact, the more modest your means, the more important an estate plan will become for you and your loved ones. Why? Because a failure to plan (or an incomplete plan) will subject your estate to wealth loss.
Wealth loss comes at any number of stages. Wealth can be lost through long-term end-of-life care for which there has not been proper preparation; the high cost of probate (the legal process by which assets are distributed after you are gone); failure to properly transfer assets such as IRAs and other retirement benefits; and transfer taxes. Tools such as revocable living trusts, tax planning, and probate-avoidance can help minimize wealth loss and preserve as much of your estate as possible for future generations.
Third: Incorporate Your Intangible Assets
When you think about the kind of legacy you want to leave, is it really all about money? No, of course not! There is so much more to you than the house you own and the bank accounts you manage. In fact, arguably the most valuable assets you have are those intangible ones: your values, your experiences, and your lessons learned. How do you ensure that these intangible assets are passed down?
One way to preserve your intangible assets is through recording memories, experiences, and lessons for future generations. These can be shared through letters, photo albums, audio recordings, or even video interviews. If you have ever come across an old letter or photograph of a loved one long passed, you know how impactful these memories can be.
Another way to pass on your values to future generations is to incorporate charitable giving into your estate plan. You can do this by leaving money, real estate, or personal property (such as automobiles, culturally-significant collections, or even art) to charitable organizations that uphold the values you want to protect.
Fourth: Avoid the Generational Trap
You may have heard this shocking statistic before — seventy percent of wealthy families lose their wealth within two generations. Ninety percent within three. Why do families lose generational wealth so quickly? Well, there are a number of reasons, but most have to do with a failure to plan and a lack of communication. Creating a comprehensive estate plan is the best way to organize your wishes and prepare for a frank and honest conversation about wealth protection and preservation with your heirs.
Fifth: You Aren't in This Alone
Still overwhelmed at the thought of crafting your legacy before you pass? Don't believe that it's really possible to guide what happens after you are gone? Let's talk about it. At The Tyra Law Firm, we are committed to providing honest, compassionate, and comprehensive support through every step of the estate planning process. You don't have to do it all at once, and you aren't in this alone. Let's take estate planning step by step together. Give our office a call at (301) 315-0811 to get started.