Taking Pride in Your Legacy

Say the word legacy and what springs to mind? A stately home passed down through the generations? Or a trust fund that keeps a rich man’s descendants in gracious comfort? Or perhaps an endowment that promotes some noble cause?

Instead, think of the people you care about. What will you leave them? Your legacy might include the values you instilled in them, the memories you made together, or the worldly goods they inherit from you.

When it comes to the worldly goods, part of your legacy will be how much thought you put into planning your estate. Will it be a legacy of well-managed wealth and clear instructions or one of confusion and unkept promises? Regardless of the extent of your assets, having a well thought-out estate plan can save your loved ones time, money, and a lot of stress.

A basic estate plan includes a will, financial power of attorney, and advance medical directive. These documents will enable someone you trust to manage your finances and health care if you become unable to. They will also provide for the efficient transfer of your assets upon your death—your legacy to the people you care about.

Exactly how your assets should be transferred is up to you. For example, if you have a partner, the two of you will probably want to name each other as your primary beneficiaries. That’s easy enough. Many couples are at a loss, however, when it comes to deciding who should inherit when the surviving partner dies.

Having a well thought-out estate plan can save your loved ones time, money, and a lot of stress.

If you don’t have children, you could divide your assets among your nieces and nephews. This is a favorite option. You might also want to benefit an aging parent. If the parent is receiving Medicaid benefits, the bequest should go into a “special-needs trust” to avoid jeopardizing your parent’s public assistance.

If you do have children, you should consider setting up a children’s trust. Rather than receiving their inheritance outright, your children would have the money managed by a trustee who would make distributions for their health, education, and support. Each child would also receive a portion of the principal at a certain age—say, half at 25 and the remainder at 30.

Whether you have children or not, estate planning is especially important for those of us who are partnered but not yet married. When an unmarried partner dies, the survivor is effectively disinherited unless a will states otherwise. Unmarried couples who plan carefully can also take advantage of special laws that will give them medical decision-making rights and exempt their house from the Maryland inheritance tax.

Preparing an estate plan also enables you to make provisions beyond saying who gets what. For example, who should settle your estate? If you have minor children, who should serve as their guardians and trustee? And who would manage your finances if you became incapacitated?

It is important to address these questions now, while you are healthy and clear-headed, rather than waiting until the unexpected happens.

A quick phone call to an estate-planning attorney is all it takes to get started. In the course of two appointments, one to plan your estate and one to execute the documents, you can protect yourself and the people you care about.

What will your legacy be?