Vail Financial Focus column: How can you leave the legacy you desire?
You may not see it in the greeting card section of your local drugstore, but August is “What Will Be Your Legacy Month.” So it’s a good time to think about the type of legacy you’d like to leave.
Of course, “legacy” can mean many things. In the broadest sense, your legacy is how you will be remembered by your loved ones, friends and the communities to which you belong. On a practical level, establishing your legacy means providing your family and the charitable organizations you support with the resources you’d like them to have.
And that means you may need to take the following actions: create your plans, communicate your wishes and review and update your documents.
Let’s take a quick look at all of these steps:
Create your plans
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• Create your plans. You will want to work with your legal professional, and possibly your tax and financial professionals, too, to draft the plans needed to fulfill your legacy wishes. These plans may include drafting a will, living trust, health care directive, power of attorney and other documents.
Ideally, you want these plans to do more than just convey where you want your money to go — you want to impart, to the next generation, a sense of the effort that went into building the wealth they receive. Without such an appreciation, your heirs may be less than rigorous in retaining the tangible legacies you’ve left them.
Communicate your wishes
• Communicate your wishes. It’s important to communicate your legacy-related wishes to your family members as early as possible. By doing so, you can hopefully avoid unpleasant surprises and hurt feelings when it’s time for your estate to be settled — and you’ll also let people know what tasks, if any, they need to perform. For example, if you’re choosing a family member to be the executor of your estate, or if you’re giving someone power of attorney over your financial or health-related matters, then they should be prepared.
Update your documents
• Update your documents. During your life, you may well experience any number of changes — new marriage, new children, opening a family business, and so on. You need to make sure your legal documents and financial accounts reflect these changes. For example, if you’ve remarried, then you may want to change the beneficiary designations on your IRA, 401(k) and other retirement accounts — if left untouched, these designations may even supersede the instructions left in your will. And the directions in life chosen by your grown children may also dictate changes in your will or living trust. In any case, it’s a good idea to review all your legacy-related documents periodically, and update them as needed.
In addition to taking the above steps, you also need to protect the financial resources that go into your legacy. So, when you retire and begin taking funds from your IRA, 401(k) and other retirement accounts, make sure your withdrawal rate is sufficient for your living expenses, but not so high that it eventually jeopardizes the amounts you planned to leave to your family or to your preferred charities. A financial professional can help you determine the withdrawal rate appropriate for your situation.
With careful planning, and by making the right moves, you can create the type of legacy you desire — one that can benefit your loved ones far into the future.
This article was written by Edward Jones for use by local Edward Jones financial advisers. Edward Jones and its associates and financial advisors do not provide tax or legal advice. Chuck Smallwood, Bret Hooper, Tina DeWitt, Charlie Wick, Chris Murray and Kevin Brubeck are financial advisors with Edward Jones Investments. They can be reached in Edwards at 970-926-1728, in Eagle at 970-328-4959 or 970-328-0361 or in Avon at 970-688-5420.
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