×
Newsmax TV & Webwww.newsmax.comFREE - In Google Play
VIEW
×
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
VIEW
Tags: financial legacy | estate planning | life insurance | giving

4 Moves to Make Now for a Strong Financial Legacy

4 Moves to Make Now for a Strong Financial Legacy
Yurii Kibalnik/Dreamstime

Jolene Latimer By Wednesday, 25 August 2021 03:44 PM Current | Bio | Archive

Your approach to finances now doesn’t just impact your present moment — it will reverberate through the future generations of your family to create a lasting legacy. Setting the foundation for a solid financial future can help chart a course for your descendants, no matter how much money you have. Whether you plan to leave behind a little or a lot, your financial values will be inherited long after you’re gone. Want to leave a strong financial legacy for your family? Here are four financial moves to make now to ensure you set your family up for success.

1. Estate planning

Expected inheritances vary greatly across the United States. The top 1% of the wealthiest families will inherit about $1.7 million on average, the middle 49% will inherit about $273,000 and the bottom 50% will inherit about $39,000. No matter which group you’re in, estate planning is paramount.

Many people consider estate planning to be writing a will — but it’s more than just that. Planning your estate now can help you determine the most advantageous way to leave money for your descendants, especially if you live in one of the six states with an inheritance tax.

Estate planning can help you determine if you want to disperse some funds while you’re still alive, and having an open plan that your children are aware of can help create a smoother process with less room for error after you’ve died. According to a 2021 survey, more than 67% of American adults do not have estate planning documents in place, which can lead to messy family feuds or drawn-out probate proceedings after your death. Prioritize this aspect of your family’s financial future now.

2. Charitable giving

Individuals are giving more to charities than ever before. In 2020, individual charitable giving totaled $324.1 billion — the highest dollar amount to date, even after adjustments for inflation. Modeling your philanthropic values for your family can help you chart a legacy that extends beyond your own kin. Whether you decide to start your own charitable organization or contribute to the work of others, allocating some of your funds to support charity work can help establish a lasting legacy that upholds whatever values are dear to you.

To bring your family into the process, consider these strategies:

  • Decide as a family how funds will be donated each year based on your collective values.
  • Let your children know about the organizations you financially support and why these matter to you.
  • Designate some funds to be given to charity in your will.

Including a charitable giving component in your financial plan can help your children understand and uphold the causes that matter to you, long after you’re gone.

3. Help your children build credit

Results from a longitudinal study on inheritances show almost one-third of people who receive an inheritance have negative savings within two years. Setting your children up for financial success involves more than simply leaving them an inheritance. Helping your children develop a healthy approach to money is essential to developing a flourishing financial legacy. Excellent credit is a foundational building block for the future finances of your children.

If your children do not already have the money management skills needed to maintain or improve their credit, start by helping them learn how to budget, prioritize bills and repay debts. If you prefer not to do this yourself, hiring a money coach could be an easier way to broach the topic with your family. Your children should understand how a credit score is determined, and you will ideally want to have your children practice sound personal finance practices such as building an emergency fund.

Make sure your children have a savings account that they are regularly contributing to with minimal fees. If you’re going to help your children open new accounts, be sure to shop around for the best deal. Some banks offer bonuses of up to $300 for new account holders, which could be an immediate boost to help jump-start savings for your children.

4. Obtain life insurance

In 2020, 54% of Americans had a version of life insurance coverage. You can obtain coverage at any age. You might be tempted to forgo life insurance after you’re done raising a family, but many empty nesters do see value in obtaining a policy. If you have other dependents, such as an aging parent, grandchildren or a disabled child, life insurance is highly recommended to ensure secure finances for your family as you age.

Life insurance can also be a boost to your retirement savings in case of the premature death of a spouse. If a spouse dies early, you might lose the income increases you were expecting toward the end of their career that could make a major difference in your retirement planning. Life insurance can mitigate the financial fallout of the death of a partner and maintain your money legacy. In some cases, life insurance can also help you navigate the change in Social Security benefits after a spouse’s death.

You can also choose to have a portion of your life insurance benefit directed to your descendants after you die — securing a financial inheritance.

Bottom line

Creating a strong financial legacy involves more than saving money and writing a will. Your financial legacy will be the values and opportunities you pass on to your children through the decisions you model and the conversations you have. No matter how much money you have saved right now, you can use these four steps to build your financial legacy and help your heirs feel confident about their finances.

Jolene Latimer has her master's in Specialized Journalism from the University of Southern California. She writes about personal finance, marketing and sports.

© 2021 Newsmax Finance. All rights reserved.


JoleneLatimer
Your approach to finances now doesn't just impact your present moment - it will reverberate through the future generations of your family to create a lasting legacy. Setting the foundation for a solid financial future can help chart a course for your descendants, no matter...
financial legacy, estate planning, life insurance, giving
950
2021-44-25
Wednesday, 25 August 2021 03:44 PM
Newsmax Media, Inc.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved