Legacy planning is a comprehensive, exceedingly thoughtful way to plan your estate. When you engage in this process, you can consciously shape the way that you will be remembered. It is also possible for you to continue to provide a positive influence, even after you are gone.
Estate Tax Efficiency
If you have been very successful from a financial perspective, you will have the ability to provide resources for your loved ones to draw from. However, it is important to understand the potential impact of the federal estate tax. This death levy carries a hefty 40 percent maximum rate, so we are talking about a very significant level of asset erosion.
This is one threat to your legacy, but there is another. There are some states in the union that have state-level estate taxes. We practice in Michigan, and fortunately, there is no state estate tax in our state. However, if you own valuable property in a state that does have its own estate tax, it could come into play.
The existence of these taxes is the bad news, but the good news is that there are tax efficiency strategies that can be implemented to preserve your legacy. You could convey assets into an irrevocable trust, and they would no longer be part of your estate for tax purposes.
There are number of different possibilities, including a generation-skipping trust. With this estate planning vehicle, your grandchildren would be the final beneficiaries; you would bypass your children. However, your children would be able to receive income from the trust, and they could use property that has been conveyed into the trust.
The estate tax would be applicable when your grandchildren assume ownership of the assets. However, two generations would benefit, and there would be just one round of taxation.
Leaving money is one thing, but the gift of education is priceless. When you facilitate higher learning, you pave the way for young people to achieve their full potential. There are a number of different ways that you can set aside assets to pay for the college education of family members.
In addition to this more personal form of giving, if you are in a position to do so, you may want to provide opportunities for other deserving students. You could establish an endowed scholarship, or multiple scholarships, that carry your name. When you take this action, you can change the lives of deserving students that need financial assistance to realize their goals.
If you are in possession of family heirlooms, you can carefully decide how you distribute them to your heirs. These items carry a great deal of important history with them, and even if some of them are monetarily valuable, the true worth is something that cannot be measured in dollars and cents. The provenance that goes along with them should be passed along as well so the full context can be understood by the inheritance recipients.
As an elder, you have had many formative experiences, and they have invariably helped to shape your personality. The person that you are is part of the fabric of your family, and you can do your loved ones a great service if you take the time to record your personal memoirs. These reminiscences are valuable in many different ways, and they will be useful for anyone in your lineage that is interested in learning about the family history.
Everyone has heard of the last will, and most people are aware of what a living will can accomplish. However, there is another type of will that flies under the radar. Ethical wills date back to biblical times, and they have traditionally been used to pass along moral and spiritual values. Though it is not a legally binding document, an ethical will can be a very valuable, heartfelt addition to your legacy plan.
Attend a Free Estate Planning Seminar!
We have passed along some useful information in this post, and we urge you to visit our blog often, because it is updated on an ongoing basis. This is one educational tool that we offer, and there some additional opportunities to build on your knowledge coming up in the near future.
Our Clinton Township estate planning attorneys are holding a number of seminars, and they are being offered free of charge. You can learn a lot if you attend the session that fits into your schedule, you can click this link to get all the details.