Are you familiar with the Maslow’s Hierarchy of Needs? If not, that’s okay too. Well, Maslow’s Hierarchy of Needs explains how individuals start at the bottom of the pyramid in an effort to meet their basic needs, then advance up the ladder towards a state of Self-Actualization. According to this hierarchy, the first step in living and surviving is to fulfill our basic Physiological needs (i.e. eating, sleeping, breathing, etc.). Once those needs have been satisfied, we move up the pyramid our focus turns towards satisfying more complex needs (i.e. Safety, Love & Belonging, Self-Esteem, and lastly, Self-Actualization). A common need that encompasses all of the needs listed above, is the need to build a long-lasting legacy – which can be accomplished through Estate Planning.
So, listed below is a legacy building pyramid that lists the steps you can take to build your legacy, through Estate Planning:
Passive Planning occurs when you willingly accept an imposed estate plan. In other words, because you are a United States resident, you are given a generic legislation-based Estate Plan (called an Intestate Plan). It is the plan you are given when you die without having a will. This type of standardized plan is based on the “traditional family structure,” and does not take into account close friends, who played a major role in your life or relatives that you had adversarial relationships with when you were alive.
The good news is that as an employee of a company, you may be able to receive life insurance or participate in a retirement savings plan, where a beneficiary is established, or the beneficiary is your spouse. Again, this Passive Plan is not created by you, rather it offered to you by default. FYI: If the State is unable to identify any heirs, your assets go unclaimed.
It is important to understand that as adults, we are expected to perform some level of Basic Planning. What does that mean? Well, Basic Planning includes identifying the person you would like to manage your affairs if you are incapacitated. Your wishes must be put into writing so that the Court knows who is supposed to handle your affairs (i.e. financial, healthcare, and disposal of your assets) once you pass away. This probably sounds morbid, but it is a necessary practice for ensuring that your assets are taken care of after you leave this world in the way that you would like them to be.
What is Gap Filling? Well, if you have a person who depends on you for care and support, it is important that you be mindful of the gap that is created when you have to probate an estate. Probating an estate requires a court action to obtain access to your valuables. In other words, immediately upon your death, individually-owned assets are frozen, until the court can confirm its Personal Administrator or Executor.
The process is determined by the size and complexity of your assets. In cases that involve children and/or loved ones, who are dependent upon your assets, a “no gap” strategy should be created. A strategic plan may also be needed to ensure that the assets are available for the benefit of others.
Have you ever heard of Asset Preservation? No? Well, you aren’t alone – most people haven’t. But, asset preservation is a tool that helps you “preserve” a substantial amount of assets for your loved ones. If this is something that interests you, it is important that you consider how to most effectively transfer those assets to your beneficiaries, once you pass while avoiding probate. But, don’t forget to consider any tax implications or other concerns, such as divorces and/or your health. Structuring and transferring your assets is critical for the future of your loved ones because as we all know, life doesn’t always follow the path or plan we want it to.
Lastly, many, if not most of us, are concerned about those, who are less fortunate than ourselves. We have a strong desire to leave this world better than we found it. There’s nothing wrong with also wanting to defray any tax implications when you give to a non-profit organization. That is why Planned Giving is “win-win” situation. It confirms the values and legacy you have supported throughout your life. And, guess what? You can participate in Charitable Giving in a variety of ways! In fact, Legacy Development is not only transformative to the Charitable organization of your choice, but also to the family members that have an opportunity to walk in your shadow, building a better world!
So as we enter through another season of giving and appreciation, let’s make some considerations in estate planning for the people we love dearly. Get started today by answering a few brief questions!