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Five Steps to Successful Legacy Planning

David Scheidel, CPA/PFS
August 28, 2022

Chances are your financial and personal priorities have changed since you were starting out; you are likely to change your approach to your personal assets as you get older. Whether you are a successful business owner who’s cashed out or someone who enjoyed a lucrative career, you need to think about wealth preservation—and decide where you want your money to go, now and in the future. Here are five tips for planning your financial legacy. 

#1 – Make a plan: set financial and life goals for retirement

What are your goals for your money? How do you want to live in your retirement years? Every individual’s plan is unique depending on their lifestyle, circumstances, and values. For example, you might want to:

  • Travel the world and spend down your funds
  • Make generous charitable contributions to organizations that are meaningful to you
  • Pass down as much of your wealth as possible to your heirs
  • Split your assets into part wealth transfer, part lifestyle funding

#2 – Button up your legal and financial paperwork based on your goals

Some estate planning steps will help you (and your loved ones) avoid issues with and between heirs and the tax man after you’re gone. Our CPAs can review your documents and guide you on these estate planning matters.

  • Make sure your will is updated; consider also using a power of attorney and medical proxy
  • If you have a child with special needs, set up a special needs trust to ensure your child is taken care of
  • Certain individuals may benefit from establishing a living trust to preserve wealth (the trust property) for their beneficiaries
  • An irrevocable trust can be established to shield your assets in the event you will need to enter a long-term care facility 

#3 – Create a budget

Are you extravagant or frugal? Do you need to be thrifty in retirement or can you make a luxury purchase whenever you want? No matter what your income level, it’s always wise to be on the conservative side with your finances. Go ahead and indulge—but maintain a realistic view of what you really can afford. (Even multi-millionaires should be mindful of living within their means.)

Look at what you are spending now and ascertain the necessary vs. discretionary “fun money” expenses. If you plan to spend down your assets or leave money to family or charities, you will need to determine if you will have enough money to meet your financial goals—and support your desired lifestyle for years to come.

  • Determine your “must have” monthly expenses and then add aspirational expenses (travel, hobbies, investing in property, etc.). Get a clear picture of what you need now and what you will need later.
  • Work with your financial advisor to do a long-term forecast of your retirement savings and other income streams, based on your time horizon, risk tolerance, and goals.
  • Identify all your assets and assess what they are earning. Look at your retirement accounts, passive income sources (such as rental properties, royalties, and other investments that provide ongoing income), and Social Security benefits. This will help you decide if you can live off dividends, interest and passive income alone, or how much in distributions you’ll need to take to fulfill your legacy plan. 

#4 – Put together a legacy planning team

We believe that the person with the money should be the one making the decisions about wealth preservation. But input from trusted advisors who understand your goals are important components of your legacy planning. These include your CPA, business advisor (if you are still working), attorney, financial planner, insurance agent and perhaps, family members who will bring expertise and insights into your wealth preservation decisions.    

#5 – Contact Scheidel, Sullivan & Lanni CPA

The financial professionals at Scheidel, Sullivan & Lanni CPA work with business owners and individuals seeking to preserve wealth through a range of financial planning and estate planning services. Our CPAs have extensive experience in all financial matters, with a wide network of professional service providers to advise you on all facets of legacy planning.  Contact us at [email protected] or 201-236-2226 to discuss your needs.

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