What’s Your Legacy?
By: David Smyth, February 19, 2014
By David Smyth
The first quarter always marks the beginning of something new; a time of starting over, re-evaluating and making plans for the coming months. With the ending of one year and beginning the next, our instinct is to think about and plan for what will happen over the next 365 days. This year, however, we’d like to encourage you to do things a little differently. From a financial planning standpoint, it’s important to look beyond 2014 and to consider how your decisions today may leave a mark on future generations. How will you be remembered decades from now?
Leaving a legacy is something most all of our clients wish to do, but knowing where to begin can be difficult. Families often come to us with questions about how they can utilize their resources in a way that will make the most impact for younger generations such as children, grandchildren or even great-grandchildren. There are different ways to make sure your wealth is successfully passed on, so it’s important for you to discuss your priorities and your vision with us. Continue reading for some of the most popular ways to give to future generations.
One way to make sure your legacy lives on is to invest in the education of your children or grandchildren. Helping to fund education can remove the stress and worry of paying for rising tuition costs, and can offer a way for your loved ones to reach their goals and aspirations. There are a couple of methods usually used for funding education:
- 529 Plans are a great way to save toward college education. Money saved within a 529 can be used for tuition, supplies, and fees required for study at an accredited university or college and is exempt from federal income tax. There are two types of 529 Plans. A Savings Plan allows you to invest contributions in mutual funds, while a prepaid plan allows you to pre-pay all or part of the costs of a college education.
- Coverdell ESAs are very similar to 529 Plans. However, contributions can be withdrawn and used for primary and secondary education, as well as college. Unlike 529s, Coverdells have an annual limit. The total contributions for the beneficiary cannot exceed $2,000 annually. Contributions to the account grow tax free, and are not taxed upon use as long as they are used to cover educational expenses. Coverdell contributions can come in a variety of investments, including bonds, stocks and mutual funds.
You can also help provide a secure future for your family with legacy gifts. These gifts can include hard assets as well as insurance, and provide your loved ones with more of a say in how and when they’re used after you’re gone.
- Hard Assets are an easy and common way of passing on a tangible gift to those you love. This can include real estate, land, investments and other assets. For this type of gift, it’s important to have an estate plan in place to help ensure that your hard-earned assets are passed down properly without unwanted taxes or fees incurred by your family members.
- Life Insurance is another way to leave an impact on future generations. If you’re in good health, purchasing life insurance that can benefit children and grandchildren could be a good option. This type of gift also frees up other assets so that they can be used during your retirement, and transfers from you to your loved ones tax-free.
At Family Financial Partners, we understand that you work hard to save, plan and invest not just for your security, but for the success of generations that follow you. Because of this, our top priority is to help grow your wealth in a way that will allow it to last. We can help you analyze your options and find the best solution for protecting your family. Whether it’s providing the best possible education for your newest grandchild, or making sure the family home is passed on to your children, our team is here to help make your visions for your wealth become a reality.
If you know of other families who may benefit from learning about the above strategies for leaving a legacy, we would love to meet them! Simply provide us with their name and contact information, and we’ll be happy to follow up with a friendly phone call that introduces our team and the services we provide. We look forward to hearing from you!