Help Me Retire Podcast - Episode 18

Creating your legacy

Show notes:

This is the Help Me Retire Podcast… with your host… Mike Brown… Senior Wealth Advisor with Raymond James Financial Services… and head of Brown Family Wealth Advisors…

Mike is the best-selling author of Your Way to True Wealth: How to Make It Happen, Make It Last, and Make It Matter…

He and his team have been helping clients pursue their dreams of financial independence for the past 30 years… and in the Help Me Retire Podcast… he’ll share his best ideas with you…

And now… here’s Mike…

In today’s episode... the final installment of our 7-step process for retiring successfully...

This is the same process we use with our clients... to help them through what can often be... an overwhelming series of questions...

This is the process I teach in my classes at St. Louis Community College... it’s what I talk about when I give workshops on retirement planning...

Retiring is too complex... and the stakes are too high... to try to make these decisions as they crop up...

You’ve got to take one issue... one decision... at a time...

And this 7-step process puts everything in a logical order... each decision building on the one before... and it helps make you sure you don’t miss a step along the way...

So let’s quickly review those seven steps...

• Step one... begin with creating your own retirement vision... decide... as specifically as you can... what you want the rest of your life to look like...

  • We talked about this in Episode 12... where are you going to live... what are you going to all day... what’s your purpose?

• Step two.. we get even more specific...

  • In Episode 13... we talk about what you want to be able to spend once you’re not getting a paycheck anymore... and we helped you design a spending plan... based on the retirement lifestyle you designed in Step One...

• And then... we asked... where’s this money going to come from?

  • Step 3 of our... How-to-Retire process... we made a list of all your income sources... Social Security... pension... other outside income...

  • And we explained that most people plan to spend... more than they’ll be receiving from those outside income sources...

  • There’s usually a gap... a difference between income and outgo... and that’s what you make up with your savings... the money you’ve been putting away for retirement all these years...

  • That’s all in Episode 14 of the Help Me Retire podcast...

• In Episode 15... our conversation flows naturally into the next step of the process... step four... which is how to invest your life’s savings to cover that gap...

  • Your goal is to have all the income you need to cover your spending needs...

  • You want that income to increase every year... faster than inflation...

  • And finally... you never want that income to run out... in fact... wouldn’t it be nice if your portfolio generated enough income to live off of... without ever having to invade your principal...

  • We cover all that in Episode 15...

• Episode 16 covered some broad... but essential issues...

  • You’ve built this wonderful retirement plan... now you need to protect it...

  • Protect your wealth, yes... but also protect your health... and protect your privacy...

  • We talk about all those things in Episode 16... Step 5 of our process...

• Step 6... reducing your taxes as much as possible... Episode 17 of the Help Me Retire podcast...

  • You’re probably not going to escape taxes altogether... but that doesn’t mean you should pay more than you have to...

  • You earned this money... it’s what you’re going to be living on in retirement... and every dollar you pay in taxes... is a dollar you can’t spend... to do what you want to do for the rest of your life...

• And here we are in Episode 18... Step 7 of our retirement process...

  • You’ve led a successful life... now how do you share that success with the people you care most about...

  • Today... I’m going to help you create your legacy...

So, we talk about your legacy... and you immediately start thinking... legacy is how you want to be remembered when you’re gone... right?

Well, clearly that’s a big part of it... but your legacy... is also about how you want things to work while you’re still here... but maybe you’re not able to do everything for yourself any longer... it’s not just about what happens when you die...

So... why is it important to create a legacy? Why should you go to the time and trouble... and often the expense... of making a plan for this stuff?

There are a lot of very good reasons to be thinking about this...

Let me give you six...

• The first reason is obvious... legacy planning will help make sure your wishes are carried out...

  • You’ve created financial wealth during your lifetime... where do you want that money to go when you die?

  • Who do you want... or need... to take care of?

• Second... a plan can help you avoid probate... the legal process that determines what happens to what you leave behind...

  • Do you want your assets to go directly to the people you choose?

  • Or would you rather a probate judge and a bunch or lawyers try to figure it out after you’re gone?

• Third... if your estate is large enough... there might be taxes involved...

  • A good plan can help you avoid or reduce estate taxes... which can be as much as 40-percent of your taxable estate as of the date of this recording...

• Fourth reason to plan your legacy... it can help protect your assets... the money and property you might want to leave your family... from lawsuits and creditors...

• Five... without a plan to bypass probate... if a will is all you have in place... then the whole process is public...

  • A good legacy plan will help protect your family’s privacy during a time when they’ve got enough stress to deal with already...

• Reason number six to start working on your legacy by the time you retire... as I mentioned before...

  • It’s not just about dying...

  • Who do you want to take care of you if you can no longer take care of yourself?

  • Who do you want making financial decisions on your behalf?

  • Who do you want making medical decisions for you?

    • What medical care do you want to receive?

Planning your legacy... it’s easy to assume we’re just talking about money... your financial assets... but it’s not...

Of course it’s important to decide how to pass along your wealth...

• But what about passing along who you are... what you believe... what you care deeply about...

• What about passing along the wisdom you’ve accumulated... and the life lessons you’ve learned over your long and successful life...

  • Don’t your loved ones deserve that wisdom?

  • You know your story better than anyone else... and you deserve to tell it the way it ought to be told...

When it comes to the nuts and bolts of a legacy plan... once you’ve had a chance to think about your intentions a little bit... it’s time to call in a professional to help you put everything in writing...

When you meet with a qualified estate attorney... you’re going to learn about some basic estate planning documents... some or all of which might apply in your situation...

• A will, for example... we all know what a will is for... but many people aren’t familiar with the will’s limitations...

  • A will allows you to specify where you want your money and property to go when you die...

  • But it won’t help you avoid probate...

• For that... you might need something called a revocable living trust...

  • If you set up a trust... then anything you title in the name of that trust... bypasses probate and goes directly to the beneficiaries you name in the trust...

  • Revocable... means you can amend the trust... add to it... subtract from it... get rid of it altogether if it makes sense...

  • But in addition to bypassing probate... a trust gives you a lot more control and flexibility over how things are done when your estate is being distributed...

• You don’t have to have a trust to bypass probate, however...

  • If you’ve named a beneficiary on your life insurance policy, for example... the proceeds will go to that beneficiary outside of probate...

  • Same goes for your 401-k... your IRAs... traditional and Roth... and annuities also allow you to name beneficiaries...

  • So Rule number one... make sure you name beneficiaries wherever you can...

  • And Rule number two... make sure you review those beneficiaries every year or two... and keep them up to date...

• Whether you have a will... a trust... or both...

  • You’ll want to make sure you name at least one individual to oversee the whole process of settling your estate when you die...

  • Your will should name a “personal representative”... or executor...

  • And your trust will have... a trustee...

  • In most cases... you might name yourself as trustee of your trust...

    • It’s your money... and you reserve the right to control it...

  • But you could name your spouse as a co-trustee if you’re comfortable managing things together...

    • If your spouse also has a trust... maybe you’re co-trustees of each other’s trust... your estate attorney will advise you on that... and draft the legal documents that create the trust itself...

  • It’s generally a good idea also to have a... successor trustee... to step in if you and/or your spouse die or become incapacitated...

    • That successor trustee could be an adult child or children... it could be another relative... someone willing and able to take on that responsibility... someone you trust who truly cares about you...

    • If you prefer... your successor trustee could also be an institution... like a trust company... legally empowered and responsible... and paid a fee... to carry out your wishes according to the terms of your trust...

• In addition to your own trust... if that’s the direction you go...

  • You might need to make special arrangements for anyone you’re personally responsible for...

    • Family members with special needs who depend on you for their care...

    • A business you own a part of...

    • Any other special situations...

• Do you like to give money away... to charities, for example? Do you want part or all of your estate donated to a charity when you die?

  • You can add specific directions for that in your will or revocable trust...

  • Or you might consider setting up a separate charitable trust... a trust created specifically for giving money to charity or non-profit...

    • These assets would bypass probate as well... and setting up a charitable trust during your lifetime could also come with some tax advantages...

  • Something else to talk over with your estate attorney and financial advisor...

  
  

• Now... a lot of people associate estate planning... legacy planning... with what happens when you die...

  • In fact... some folks think... I’ve got a will... that takes care of it...

• Well, what happens to your assets... more importantly... what happens to you... if you reach a point when you can’t take care of these things anymore?

  • You have an accident... or some debilitating disease... or dementia...

  • Whatever it is... you’re either temporarily... or permanently... unable to act for yourself anymore...

  • I hope that never happens to you... but if it does... I’d want you to have somebody you love help take care of things... and I’m sure you do, too...

  • So there are other legal documents the attorney can prepare for you... to give someone else the legal authority to act on your behalf...

    • A financial power of attorney... will allow someone you designate to oversee your finances... work with someone like me to look after your investments... pay your bills... make your deposits...

  • When it comes to health care...

    • You might give your spouse... or your adult children... your healthcare proxy... otherwise known as a health care power of attorney...

      • It gives them the legal authority to make healthcare decisions on your behalf... if you’re unable to...

    • Your attorney might also recommend something called a “living will”... or advance directive... another legal document that provides instructions on exactly what medical care you want to receive if you’re unable to communicate...

      • How much support... and for how long...

Listen... I realize this probably won’t be your favorite part of the process...

• I mean... a lot of legacy planning involves what you want to happen when you die... what happens if you become terminally ill... or incapacitated in some way...

  • Nobody likes talking about stuff like that...

  • Much less going to a lawyer... a reading through all those legal documents...

  • It’s not a fun process.

That’s why I want you to think about it... in a different way...

I want you to put yourself in your family’s shoes for a second...

• As hard as it might be to think about... imagine something has just happened to you... you die, for example... unexpectedly...

  • And nobody can find anything...

  • Your family can’t agree on what to do next... because you never talked about it with them...

  • There’s no plan for what happens to your money...

  • Nobody can find your will... your financial statements... even the name and phone number of your closest advisors...

  • The bank account’s in your name... and nobody... not even your spouse... has access to the money...

  • You wanted to help your kids buy a house...

  • You wanted to help your grandchildren go to college without taking out student loans...

  • You had even talked about setting up a scholarship fund at your alma mater... to help bright, hard-working... but less fortunate students – who maybe reminded you or yourself at their age – get a good education...

• You never got around to putting your thoughts and intentions on paper... because it was just to hard to think about...

• And now... when they should be thinking about you... and what you meant to them...

  • They’re looking through a mountain of paperwork...

  • And arguing about funeral arrangements...

  • And trying to decide what you would have wanted them to do...

Creating your legacy gives you the opportunity to tell them...

• So meet with your financial advisor... find a good estate attorney...

  • Get your family involved in the process... it’ll be easier for everyone that way...

  • They’re going to have a roadmap to follow if something happens to you...

  • And you’re going to enjoy much more peace of mind in the meantime...

All right... there’s the last of our seven-step process on how to retire... we’ve covered a lot of ground in these last seven episodes...

And we’ve got a lot more resources on our Help Me Retire website... that’s HelpMeRetirePod.com...

Go back and listen to these podcast episodes when you need to... refresh your memory... they’ll always be there for you...

And so will we, by the way...

My family and I wish you a very successful retirement...

I hope this process we’ve created... will you make some of those tough decisions you might be facing...

If we can help you more directly... if you’ve got questions about how we’ve followed this process with hundreds of local families... feel free to get in touch with us...

And I’ll close with this wish for you... the same wish I close my book with... Your Way to True Wealth:

May you wake up every morning with something to look forward to...

Spend each day learning something new...

And go to bed each night with one more thing to be thankful for...

Such is the meaning... of True Wealth.

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Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC.

Investment advisory services are offered through Raymond James Financial Services Advisors, Inc.  Brown Family Wealth Advisors is not a registered broker/dealer and is independent of Raymond James Financial Services.

Any opinions are those of Mike Brown and Brown Family Wealth Advisors and not necessarily those of Raymond James. This material is being provided for informational purposes only and is not a recommendation. There is no guarantee that these statements or opinions will prove to be correct. Investing involves risk, and you may incur a profit or a loss regardless of the strategy selected. Past performance is not indicative of future results. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Raymond James and its advisors do not offer tax or legal advice. You should discuss tax or legal matters with the appropriate professional.