Legacy Planning at Two-Year Mark in the Pandemic

There are a lot of things that are more fun than planning for the point in time when you’re no longer around. But if you have assets that you intend to pass along to loved ones, or that you hope to donate to a specific cause or organization, now is the time to figure that out. Failing to put these plans in place while you’re still alive can mean that your wishes may not be followed. And worse, the government, instead of you, may decide where your assets go once you’ve passed.

Failing to make necessary adjustments to an existing plan may also impact the amount you’re able to leave for loved ones, so now is the perfect time to reexamine legacy plans as the pandemic nears the two-year mark. Following are a things to consider for both creating an initial legacy plan, and revisiting an existing plan:

  • Anyone just beginning legacy planning should start by gathering a global picture of their assets—from real estate and valuable possessions, to total bank holdings and investments. Once you know where you stand and how much you’re likely to need for your own retirement purposes, you can then decide what percentage of your assets should go to a spouse, children, or grandchildren or to any organizations or individuals you want to be benefactors of your estate.
  • If the coronavirus has had an impact on your assets, you may want to re-weight some of your investments or adjust your savings to make up for any shortfalls. You may even need to lower the amount you ultimately expect to leave to your heirs. It may be worth the cost of bringing in an investment advisor for help, particularly if you’re already retired and the pandemic has negatively impacted your holdings.
  • If your assets include a business, it’s important to make sure you have plans in place for who will take over when you’re gone. Even if you’re not planning to hand over the reins for several years, the pandemic has highlighted the importance of having such plans in place for the unexpected. This is something that is also important to look at sooner rather than later, as things such as placing your business within a limited partnership or a trust that can leave your heirs in a better tax position when a business ultimately changes hands.
  • Look closely at how the current environment has impacted any insurance-related holdings within your estate. Lingering low-interest rates have led many insurance carriers to increase premiums. If a premium increase has a significant impact on your day-to-day finances it may necessitate altering your budget or shifting other investments. In some cases, lingering low-interest rates may cause insurance carriers to lower dividends, which can have a major impact on your long-term savings. And, if the pandemic has negatively impacted your finances, it may make sense to increase the amount of your life insurance coverage.
  • Varying tax laws among states make hiring a financial planner a good idea, particularly if you have a sizeable estate. There may be steps you can take that you’re unaware of that could reduce the inheritance or death taxes your heirs may be faced with once you’re gone.

Find out if you’re eligible for advance payments of the Child Tax Credit, and what you may need to do if your income has changed significantly in the past year.

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