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A Financial Legacy

by on January 19, 2020 5:00 AM

By Judy Loy 
Registered Investment Advisor, ChFC® and CEO of Nestlerode & Loy, Inc.

When people think of a financial legacy, they believe working with an attorney on an estate plan will suffice. The reality is much more complicated. Many people, from young to old, dislike talking about money but talking and educating yourself and your family and friends about your wishes and values can lead to better management of your money later. When planning an estate, include your financial advisor, attorney and accountant. This makes sure all the pieces are in place.

To start, simply showing your young child or spouse or prospective spouse the checkbook can be an eye opener. Many are not aware of the increasing costs of having a car (insurance, maintenance and gas), having a pet (vet, grooming and food) or even owning a house (mortgage, upkeep and utilities).  An annual family meeting is a great way to keep everyone not only informed but educated and hopefully agreeable to a budget that works.

Values play a large part in how money is used. From giving money to a charity annually to family vacations to private getaways, everyone has their own idea of what’s enjoyable and what is important to give money to promote. If a charity or cause is important to you, it can be included in an estate plan or money can be given earlier through a charitable annuity or other plan. You can enjoy the income off the principal and know that the charity will benefit from the principal in the future. Making a charity your beneficiary on an IRA can have a benefit tax-wise so making these plans with an advisor, attorney or expert is a good idea. Put your whole team together, including key family members and have a discussion.  

Having open and honest communication can lead to great ideas for gifting, not only to charities but to family members. Gift tax exclusion for gifts to individuals is limited to $15,000 a year but that means a husband and wife can give $30,000 a year to their offspring and grandchildren. If the person is married, a husband and wife could give $60,000 to the couple each year without tax consequences. You can get the money out of your estate and help your relatives with a down payment on a home while you are still here to enjoy it with them.

Another excellent opportunity to help a charity of your choice is a Qualified Charitable Contribution (QCD). This tax break is a huge advantage for IRA owners over age 70 ½, or now over age 72, who do not need their Required Minimum Distribution (RMD) and have charitable intentions. It permits the IRA owner to distribute their RMD to a charity of their choice tax-free.

When dealing with teenagers (your children or grandchildren), they should be learning about longer term goals if they are working or earning an allowance. Having them help with their bigger purchases (computer, car or college) can help them in the long run learn the right habits and gain discipline. If possible, get them involved with investing for their college education. This can be beneficial as they learn about investment vehicles such as mutual funds, stocks and bonds. Alternatively, if they enter the workforce right out of high school, suggest the possibility of putting money away for retirement, even a minimal amount each month. It is easier to save in small increments now than to try to catch up later.

Helping family members carry on family values, avoid your financial mistakes or helping you be more comfortable with their future can be a great conversation to start in 2020.



Judy Loy, ChFCâ, is a Registered Investment Advisor and CEO at Nestlerode & Loy Investment Advisors, State College, Pa. A graduate of Penn State University, Loy has been with the firm since 1992, assisting clients with retirement planning, brokerage services and investment advice. She can be reached at [email protected]
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