Thinking Through a Legacy By Lewis J. Walker, CFP(R)

When you say, “I want to leave a legacy,” what do you mean? Is legacy about money, possessions, memories, meaning, love, circles unbroken, the lives of loved ones and fellow humans better off because you were here, spirituality...what?

There were consequence when you were born, consequences based on how you live your life, and there will be consequences when you die. It’s easy to be confused by complexities involving finances, accounting, taxation, and legal issues. As such things can be mind numbing, they easily are put off. But as a friend, estate planning and tax lawyer John J. “Jeff” Scroggin of Roswell, Georgia, explains, the real starting point is people.

Start with the people in your life important to you. How will your death impact your spouse, parent, adult or minor child, other loved ones, business partners or associates? If you were incapacitated prior to death, how would that affect those in your life? Money and possessions are just part of the equation. Ditto a closely-held business or other venture.

Conversations with advisors should revolve around people who depend on you and look up to you. What are their goals and needs? What should they know when they get the phone call that either you are incapacitated, unable to communicate or act in your own behalf, or deceased? Based on in-depth conversations, advisors can wrestle with legalisms, tax, financial, and accounting issues.

For most people, with proper planning, estate taxes are not a concern. In 2015, estate, gift, and generation skipping exemptions are pegged at $5,430,000 with inflation-based increases going forward. Done right, couples can pass twice the exemption to heirs, $10,860,000 free of federal estate tax. Death benefits from life insurance owned by a Irrevocable Life Insurance Trust (ILIT) can pass to heirs income and estate tax free.

High net worth individuals and couples, especially those with farms, closely-held business, or other non-liquid high value assets, should initiate a timely review of goals and objectives. Have you had assets valued lately? The Obama administration is making noises about trying to end-run Congress and attack tax-saving living and testamentary estate planning techniques involving substantial non-liquid assets via rulemaking. A conference with tax counsel is advised.

An up-to-date will is basic. Some of you don’t have a will, or it is old and outdated, or you or your loved ones can’t find it. A will only works when you are dead. What about incapacity? Do you have a Power of Attorney for assets and healthcare? A medical directive? Does your designated loved one or successor designee have copies? Do they know your advisors? Where are key insurance, asset, estate, family documents? Are you entitled to veteran’s benefits? Where are your service records?

A will is only part of the estate settlement equation. Beneficiary designations also direct the distribution of assets. Have you reviewed those to ensure that primary and contingent beneficiaries are up-to-date and still reflect your wishes?

How property is titled impacts distribution as well as potential income or estate taxation. Advisors need to know the nature of property, how it is titled, value, and tax basis. Strategies exist that potentially may lower capital gains taxes, even if you do not have estate tax exposure.

Trust planning may be called for regarding retirement accounts and/or assets that could pass to minors, incapacitated or special needs children or adults, or adult children with substance abuse or spendthrift challenges. Real estate owned outside of your state of residence needs attention.

Texas televangelist Mike Murdock, known for promoting prosperity theology, posits that legacy goes beyond issues of money and stuff: “You will only be remembered for two things: the problems you solve or the ones you create.”

Planning for incapacity and your ultimate death, while not fun to contemplate, provides clarity and comfort for loved ones at a time of confusion and sadness. Beyond what you leave behind, the real point is your eternal inheritance. James Dobson, evangelist and head of Focus On The Family, declares, “My legacy doesn’t matter. It isn’t important that I be remembered. It’s important that when I stand before the Lord, he says, ‘Well done, good and faithful servant.’ I want to finish strong.”

Finish strong, in love and with peace-of-mind.

Lewis Walker is President of Walker Capital Management, LLC. Certain advisory services are offered through The Strategic Financial Alliance, Inc. (SFA). Lewis Walker and Mike Hostetler are registered representatives of SFA which is otherwise unaffiliated with Walker Capital Management, LLC. lewisw@theinvestmentcoach.com

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