What do you want your legacy to look like after you're gone? While it can feel uncomfortable to think about at first, being proactive about managing your estate can help you live generously in support of the people and causes that matter to you.
Wise stewardship of your resources can provide you with money and other assets that can help you live comfortably in retirement and build the legacy you want to leave behind. But what is the best way to leave money to heirs or pass on your wealth? There's no one way that works for everyone, but learning about the options available to you and considering your values and needs can help you plan ahead.
Infusing values in your financial legacy
It may help you to sit down and consider your values first. Make a point to think through what matters most to you, and ask yourself:
- How do I want to be remembered?
- How can my resources build security and comfort for my family as they pursue their own goals and dreams?
- How can I allocate money to continue the work that mattered most to me?
In many ways, your resources can continue your life's work after you're gone. They can also begin the process of
Managing your estate can help you decide what methods of wealth transfer make the most sense according to your values and financial goals.
What are your options for leaving an inheritance to loved ones?
There is more than one creative way to leave an inheritance to the people you love, and you shouldn't feel boxed into a single path. Knowing your options and what kind of process is involved in using these methods can empower you to save your family extra work during the asset distribution process.
Consider which of these options, or a combination of them, would be the best way to pass on your wealth to match your individual estate strategy.
401(k) and IRA accounts
If you have money in a retirement account, it is possible to
Real estate and other property
The main conversation to have when leaving assets in the form of property is whether you'd like it to stay in the family or if you don't mind it being sold. A long-term place to live is a valuable way to leave a legacy, but if you expect to leave a single home to multiple heirs, you have to decide how to do so in a way that makes sense for your family.
In many cases, not every heir can live in the home, so they may advocate for selling the home and splitting the proceeds. If you want the home to stay in the family, it's wise to talk through how your heirs feel about that prospect and how everyone can receive the benefits of that home in a fair way.
Life insurance: Term & whole
Taxable investment accounts
If you have non-retirement investments, those accounts are usually subject to taxes. When you pass them along, taxes generally aren't due immediately, but if the assets have grown, there may be
Talk to your financial advisor about the implications of keeping assets in a taxable account given its growth over time. You can then help your heirs plan for any tax bills that might come their way.
Consider giving inheritance now
Thinking about the best way to leave money to heirs often leads families to feel grateful for all they have. The feeling of abundance can make you wonder if the best way to pass on wealth is to start right now. Perhaps family members or charitable organizations could put your gift to use immediately.
For this reason, you may decide you want to give monetary gifts now. Talk with your tax and financial advisors about whether your giving will exceed yearly gifting limits since this could require tax reporting and potentially an increased tax payment.
Set your plan in motion with a will and designations
Talking with an estate attorney can help you smooth out the inheritance process. Unclear documentation or a lack of named beneficiaries can create a complex, challenging process while your heirs are grieving. By
That said, conversations are key, even though talking about your estate can be tough to do. You can share what you've learned about passing on wealth and get insight into what would help your beneficiaries feel confident and comfortable about the process.
Partner with a financial advisor
Financial advisors understand a variety of financial products that pass through inheritance. It's important to work with one who understands your personal story and values to craft plans around the legacy you want to leave.
Connect with a