What the Kids Get: Planning Your Legacy

By Jane Farrell

After a lifetime of working hard and saving faithfully, some people just want to enjoy retirement and spend their money without worrying about passing on anything to the next generation.

But plenty of others are determined to leave a legacy – whether it’s by bequeathing a tidy sum to their children and grandchildren, or bestowing a beloved charity with a parting donation.

Not everyone, though, takes the necessary steps to accomplish their goals.

“Don’t assume everything you have left when you die will go to your children or to your favorite cause,” says Stephanie Fullerton, president and co-founder of Fullerton Financial Planning Group and author of Living a Happy, Healthy and Inspired Retirement (www.fullertonfp.com). “Taxes and other costs can eat away at your legacy.”

That’s why it’s important to have a financial plan in place to help make sure as much of your wealth as possible ends up in the right hands.

It’s wise to seek professional advice from those who can guide you through the options, Fullerton says. Among some of the things to consider:

• A will. Everyone knows about wills, at least in theory, but that doesn’t mean they take the time to visit with an attorney and have one drawn up. A Harris Poll last year reported that 64 percent of Americans don’t have wills.
• An IRA. Many people think of an IRA as the nest egg that will help them survive retirement, but these accounts also are one of the largest types of assets inherited by beneficiaries. If you don’t anticipate needing your IRA money in retirement, Fullerton says, you might consider a legacy-planning strategy that will help reduce taxes and increase the payout your beneficiaries will inherit upon your death.
• Trusts. There are many different types of trusts, and they can be complex to set up and execute. However, a trust can be a flexible and advantageous means to transfer your assets in the future, Fullerton says. Most trusts also provide current benefits, such as tax-deferral and deductions. Unlike a will, a trust will avoid probate upon your death, but a trust is also more expensive to prepare. A qualified estate-planning attorney who specializes in these matters can explain more.

Before you get started on a plan, Fullerton suggests thinking about what types of gifts you want to leave to others – and it doesn’t have to be just money.

“It can be items you own, such as your house, a favorite work of art, special dishes used at every family gathering or a family heirloom,” she says.

You don’t even have to wait until you die, Fullerton says. Experiences also can be a legacy, such as taking a special trip each year with a different grandchild to give them memories that will last not only your lifetime, but theirs as well.

Stephanie Fullerton, author of Living a Happy, Healthy and Inspired Retirement (www.fullertonfp.com), is president and co-founder of Phoenix-based Fullerton Financial Planning. She and her husband, Steve, an investment adviser with Kingdom Financial Group, work together to assist clients in protecting their retirement savings and to create an income stream that will last a lifetime. She is featured on two weekly radio shows and frequently appears on local television.