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Creating a legacy that lasts
Legal Disclosure: Tony Robbins is the Chief of Investor Psychology at Creative Planning, Inc., an SEC Registered Investment Advisor (RIA) with wealth managers serving all 50 states. Mr. Robbins receives compensation for serving in this capacity based on increased business derived by Creative Planning from his services. Accordingly, Mr. Robbins has a financial incentive to refer investors to Creative Planning.
We all want to be remembered, to feel that we’ve contributed something greater than our own lives into to the world. For some, this can be the compelling motivation to help create change, further mankind through invention or elevate culture through works of art. But for most of us with more immediate and grounded goals, what fuels us is the desire to create security and prosperity for our family and the causes closest to our hearts.
The hard truth is — no matter what we achieve in our lives, our time is finite. And regardless if you’ve moved mountains or modestly made an honest living, death doesn’t wait patiently for old age — it can come to us anytime, anywhere. If you’re an adult with dependents who rely on you or the property you own, it is vital to start planning for the ultimate outcome by establishing and securing a financial legacy for your family and loved ones.
We’ve crafted an easy-to-follow but highly effective action plan to help you take control of your financial legacy today. Make this your personal assignment for the week, and be able to rest assured that you will not only be remembered but will continue to contribute to the people and purposes that matter most to you.
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STEP 1: OUTLINE YOUR PERSONAL OBJECTIVES
How can you best serve the needs of your family, relatives and loved ones?
Dave Ramsey recommends creating a Legacy Drawer, containing up to 11 Action Items in an easy-to-locate but secure place in your home. Include your legal will, estate plans, important documents such as: financial and insurance account paperwork, titles and deeds, passwords and even recent tax returns.
• Draft an income-replacement plan if your spouse or children will not be able to support themselves through life-insurance
• Make arrangements for elderly or medical care, for your aging parents or dependents with disabilities
• Finalize your children’s education funds or trusts
• Create a transition strategy for any businesses or partnership ventures
• Decide on gifts to non-profit or charitable organizations
STEP 2: DOCUMENT YOUR ASSETS
Providing clear records of your assets and liabilities will ease the burden on the executor of your will and help avoid financial penalties you may be leaving your spouse or children to deal with.
Secure up-to-date paperwork for:
• Properties, including any outstanding mortgages, liens or debts
• Vehicles, including outstanding loans
• A snapshot of your businesses, including loans, debts or liabilities
• Full documentation of your retirement accounts, including IRA, 401(k), 403(b), ESOP and pension plans
• Up-to-date life insurance and annuity policies
• All current saving, checking and credit accounts
• Full investment portfolio, including all stocks, bonds and mutual funds you own
• Itemized list of any and all notable property; wedding china, valuable collections, antiques, jewelry and precious metals
• Full documentation of all outstanding debts or loans
Including all important paperwork inside your Legacy Drawer is so much more important than simply organizing your estate, it provides a final gift of closure and peace of mind for the people who dearly love and miss you.
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STEP 3: REVIEW YOUR RETIREMENT PLAN & CREATE YOUR LEGACY
Those of you who have already protected their nest eggs by designing and protecting their retirement plans — as advised in this post, already understand the various options in tax deferment, liabilities and the dangers of unexpected, hidden fees.
PART 1 — THE REVIEW
• Evaluate your entire portfolio, from personal savings accounts through long-term retirement investments.
• Reassess outstanding loans, debts and interest rates to determine areas you can reduce, consolidate or eliminate.
• Finally, sit down with and speak face-to-face with your spouse, children or dependents to help them create a safe and intelligent transition plan.
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PART 2 — YOUR FINANCIAL LEGACY
Meet with professional financial advisors you trust to learn about creating a gifting plan or living trust to distribute your wealth to your dependents now. Options range from lump-sum payments, establishing a trust to provide regular payments, to gifting stocks and bonds. If you’re in a higher-tax bracket, these options can help defer or avoid penalties by transferring the taxable dividend stream to your dependents. Your spouse and children can gain huge benefits from the dividend income or can reinvest to suit their own needs.
Financial planning isn’t only for the wealthy; even people of modest means have the opportunity to make strategic decisions with their estate holdings to create the maximum return. But, be aware — a poorly drawn trust or gifting plan can end up costing more than they provide and endanger your entire financial legacy.
Donor Advised Funds allow you to hold cash, stocks, bonds and other securities into a managed fund designated as a charitable organization, entitling you to a tax deduction and allowing you to safely invest while researching and determining what specific charities you’d like to eventually distribute into.
Similarly, Charitable Gift Annuities are designed to donate entire sums into a single charity, in exchange for a monthly income over your life, ending upon your death wherein the charity keeps the remaining balance.
It may be shocking to know that only 37% of people polled by Modest Money have actually written a will, never mind taken the steps above to protect the lifetime they have built from descending into potential years of legal proceedings and attorney fees. None of us want to spend any more time than necessary contemplating our own mortality, but as we mature and take on elder roles within our families, the responsibility of providing slowly shifts from everyday needs to the creating a greater legacy of financial contribution.
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