What do you think of when you think of your legacy?
We have so many things to do in our daily lives that sometimes the thought of our legacy is the last thing on our minds. I can describe myself as a planner for most things and even though I have yet to have children, I often think of how I want to be remembered and what I would like to leave behind for future generations of my family and/or friends. There are so many areas to a legacy and the one I want to highlight today is finances/assets.
As I watch the news or learn from personal situations, there are so many people prematurely losing their lives to violence such as in Chicago and Maine, or dying from illnesses at a young age and I often think about those who are left behind. You often see online fundraisers to cover funeral costs or family’s struggling financially in their day to day following the loss. In the case of having children, after the funeral someone has to take care of your kids and yes social security can be obtained but having additional funds can help as well especially for events such as prom or going to college. So the question to ask, Is your family prepared financially in the event of your death? Is there one person who can handle your business affairs after death? Below, you will find some financial recommendations to think about and help with this.
It took until the last year of my twenties to realize that this life I live won’t last forever, so I started looking into the differences between whole life and term life insurance to obtain a policy.
- Whole Life Insurance: Higher monthly payment but lasts your whole life with the same payment and serves as an investment insurance account as well with a cash value. The value of the policy does not decrease until older age at about 90 years, but there is opportunity to close it out and receive the cash value before death.
- Term Life Insurance: Lower monthly payment that lasts for a term of your life which is ~20 years. After that time, you will still have insurance, but the payment may increase after reassessment of your health/lifestyle after each term is finished.
In the end, I went with whole life insurance for myself, but everyone’s situation is different and if you have children under the age of 21 having a policy of greater value for less may be the best option to leave money behind after funeral costs.
Whether as a single person without kids, a single person with kids, or a couple, assigning who receives your assets is important, especially if you have a home or minor children. If not in place the courts can make these decisions such as awarding your assets to your next of kin or a spouse in the case of marriage. Each state has different rules, so look into this carefully.
Allows you to determine how your assets are managed while living and after death. The trust “owns” your selected assets (house, car, bank accounts, etc.) and if you put yourself as the beneficiary, you control the assets under the trust such as in a business until your death when the second beneficiary takes over.
- Revocable: The person who creates the trust can elect to have it changed or revoked at anytime if stated in the original documentation
- Irrevocable: In the documentation what is listed cannot be amended or revoked once directed under its original contract.
It’s never easy speaking about these things but it’s very important for your legacy, not just for who you are and what you did in your lifetime, but for how you pay it forward to your kids or those you loved.