The process of estate planning can be looked at as a bare bones, basic necessity, or you could take things a step further. If you discuss things with an estate planning attorney, you will learn about the process of legacy planning.
This is a conscious, proactive effort to make a lasting impact after you are gone. If you schedule a consultation with our firm, you can get a detailed explanation, but we will provide an overview in this blog post.
Estate Tax Efficiency
High net worth individuals must be aware of the potential impact of estate taxes. We practice in the state of Connecticut, and there is a state-level estate tax in our state. We also have to be concerned about the federal estate tax.
This tax carries a hefty 40 percent maximum rate, and this can significantly reduce the wealth that you are passing along to your loved ones.
The federal estate tax credit is $5.45 million during the 2016 calendar year. This is the amount that you can transfer to anyone other than your spouse before the estate tax would potentially be applied. You can transfer unlimited assets to your spouse tax-free, but transfers to others are potentially subject to the estate tax.
On the state level, the exclusion or credit is just $2 million.
If you do face estate tax exposure, there are steps that you can take to mitigate the burden and preserve your financial legacy.
As you get older, you become a remaining link in a long chain. Your family memories were not shared by some of the younger members of the family, and you can record the family history that you remember when you devise your estate plan.
Family heirlooms are also part of the equation. Each object that has been passed on to you has a great deal of meaning, and these items are physical manifestations of your family’s history. When you are crafting your legacy plan, you can give the matter a lot of thought, and you can make sure that these items get into the appropriate hands after you pass away.
If you are remembered for your kindness and generosity, your legacy will be cemented in a foundation of goodwill. There are various different ways that you can set aside assets for the benefit of charitable causes.
Donor advised funds are often utilized by people who want to give to multiple charities efficiently. There are also charitable trusts that can be created to benefit worthy causes and institutions.
You may want to consider the creation of a private charitable foundation. Contrary to popular belief, you don’t necessarily have to be a billionaire to create a foundation. The majority of the foundations in the country are working with operating budgets that do not exceed $1 million.
Giving direct monetary inheritances to your loved ones is great, but the gift of education can be an even greater windfall. When you are shaping your legacy plan, you can provide resources for younger family members so that they can get the education that they need to reach their full potential as human beings.
You have undoubtedly heard of the estate planning document called a last will or last will and testament. This is not the only type of will that is used in the field of estate planning. There is another type of will that is called an ethical will, and you could include an ethical will when you are creating your legacy plan.
With an ethical will, you record your moral and spiritual values so that your love ones will be able to draw from your rules to live by after you are gone.
Consult With a Hartford, CT Estate Planning Attorney
Legacy planning is a broad and comprehensive form of estate planning. There is certainly a financial element to the equation, and if you are exposed to estate taxes, you must take steps to preserve your wealth.
However, there are other things to consider that transcend dollars and cents. You can make sure that your loved ones have access to the history that you remember, and you can provide wisdom and guidance that is truly priceless.
If you would like to sit down and have a conversation about legacy planning with a licensed estate planning attorney, our firm is standing by to help. We have helped countless Hartford area residents craft lasting legacies, and we can do the same for you.
To schedule a consultation, send us a message through our contact page or give us a call at 860-548-1000.