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Leaving a financial legacy: Do it your way

A retired senior couple support family by babysitting. Three young children sit on their grandparents' laps. The group is reading a book together.
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For many of us, it's important to leave something meaningful behind for the people and causes that matter most to us. With proper planning and execution, it's possible to create a financial legacy that will support your loved ones, your church or the organizations that matter to you, after you pass. We'll discuss ways you can leave a legacy through your generosity that makes a lasting impact.

Set intentions for your financial legacy

Begin by defining your purpose and considering how you want to use your gifts to support your heirs and community. It's easier to create a plan of action if you've explored your goals, motivations and the values behind your intentions. Asking the right questions now can help your loved ones later.

Ask yourself:

  • Have you financially covered funeral arrangements so your family doesn't incur costs?
  • Are there other family expenses you want to make sure are covered once you're gone?
  • Will the funding for your spouse's retirement be affected?
  • Do you have plans to ensure your family traditions will continue?
  • Do you have funding in place if you want to provide for future education expenses for your children or grandchildren?
  • What causes matter most to you and what would you like to leave them?
  • If you're an active church member, how do you support your church today?

Ways to leave a financial legacy

Next, take inventory of the ways you can give through your financial legacy. There are many ways to give, both today and after death. Consider all the things you have to share:

  • Your time, talents or expertise
  • Retirement accounts like IRAs or 401(k)s
  • Stocks, mutual funds and other investments
  • Annuities or life insurance contracts
  • A business you own
  • A charitable foundation you established
  • Your home or other property

You can evaluate your options and assets with a financial advisor and estate planning attorney, who can help you decide what plans fit best with your goals and situation. While Thrivent does not provide specific legal or tax advice, we can partner with you and your tax professional or attorney.

Leaving a financial legacy: 6 things to consider

To cement your legacy, pull together a plan that maximizes financial products created for giving and generosity to work in tandem with what you are planning to leave your heirs. Here are some common ways people go about it:

1. Make sure your beneficiary designations are up to date

A straightforward way to make your financial legacy clear is through beneficiary designations. Naming a person or organization as the beneficiary of a financial account, contract or policy allows that asset to transfer to them after your death—usually without the inconvenience or expense of probate. Designating beneficiaries is an important element of your estate strategy that can simplify estate settlement process.

2. Create a charitable trust that benefits your heirs & charity

One way to structure a financial legacy is with charitable trusts. For instance, charitable remainder trusts allow you to continue receiving income from the assets trust during your lifetime, with the remainder passing to a charitable beneficiary.

Meanwhile, charitable lead trusts provide income to a charity during your lifetime but allow you to leave the assets to a non-charitable beneficiary such as your children.

3. Receive a stream of income while you're living with charitable gift annuity

Charitable gift annuities are similar to charitable remainder trusts. You donate assets to a charitable organization that invests the assets and makes income payments to you for life. When you pass, the income payments stop and the charity retains the gift.

4. Create a personalized donor-advised fund

Donor-advised funds allow you to claim a charitable deduction for contributions you make, then invest the assets and direct gifts in accordance with your wishes over time. Donor-advised funds are particularly useful for getting multiple generations of your family involved in a tradition of giving since the assets can continue to grow and be used to fund gifts even after you pass.

5. Provide for others with life insurance

Life insurance contracts can be a cost-effective way to provide for beneficiaries—whether it's family, friends or an organization that's important to you—after you die. In most cases, the recipient of a life insurance payout doesn't owe taxes on the death benefit, so it can be an efficient way to transfer wealth.

6. Designate gift recipients in your will

Your will is a good tool, not only for communicating your wishes for your family, but also for charitable giving purposes. Including provisions for both your family and gifts in your will not only ensure your intentions are clearly documented, but it may help reduce your potential estate tax liability as well.

Putting your legacy plan into action

Deciding which tactics to implement for your planned giving goals is a big step that you can approach in stages. First think about your ideals, your values and the legacy you want to leave. When you have this in mind, then you can map out the details of setting your legacy on course. Weigh which strategies might be best suited for your goals and start putting them in motion.

If you need guidance along the way, Thrivent financial advisors have the expertise to help you with your plans.

Thrivent and its financial advisors and professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.