The world is structured in a way where the everyday citizen gives a majority of their time on this earth to someone else. We go to work, come home and relax for a little while, and go to bed only to repeat the same routine over and over again. Although the monotony of this type of life can weigh heavily on us all, many still find success and eventually define an exit strategy by accumulating some assets, possibly building a business by grinding during their downtime, or acquiring real estate and additional investments. Unfortunately, even those who find their way out of corporate America and profitably navigate through the uneasy waters of entrepreneurship fail to truly develop a legacy plan.
What is a Legacy Plan?
For those of you wondering what a legacy plan is, it’s exactly what it sounds like. It’s establishing a plan for your legacy, building a foundation with your loved ones and taking the time to think about what happens to the things you worked so hard for when you’re no longer here. And listen, I get it. Encountering one’s own mortality is never an easy thing to think about, but we also have to think about how life will carry on for our loved ones.
Where do I start?
The first step to coming up with a legacy plan is simply having a conversation. Whether it be your spouse, parents, or children, it’s important to start the conversation and begin thinking about who will be the legal heir of your assets. Throughout my years of experience as a mortgage loan officer, I’ve seen plenty of messy situations that could have been avoided if families just had a conversation. We become so focused on the here and now that we fail to think about the future. And don’t get me wrong, having present moment awareness is important, but failing to plan for the future can have dire consequences for those closest to you. For example, when you don’t have a legal plan in place, the divvying up of your assets is left up to courts and attorneys to sort it out for you. What ends up happening is confusion about who was entitled to what and instead focusing on mourning the loss of a loved one, families are left scrambling trying to settle estates. When you’re transparent and devise a plan there are no surprises.
How does it work?
I wanted to provide a real world example of how a legacy plan worked for one of my clients. I was working with a young lady in San Francisco who inherited a home from her grandmother. Fortunately, her grandmother set up a legacy plan where she put the property in a trust and named her granddaughter as the beneficiary. When her grandmother passed away, the plan enabled the property to transfer to the granddaughter with just a small loan against it and a good amount of equity remaining. Subsequently, my client scheduled an appointment with me to see what options she had to refinance the property. We worked together to design an affordable mortgage loan that would allow her to access equity and fix up the property, consolidate her debt, and pay off high-interest credit cards. Because her grandmother had the foresight to create a legacy plan, my client was able to rent the home out and use the additional income to pay for her law degree.
Who else should I talk to?
Once you establish a plan with your family members, the next step is to set up some time with a real estate attorney. This will help you solidify your plan and sort out the details. The real estate attorney will have a firm understanding of the various legalities necessary for setting up the heirs for your assets.
So now what?
Now that you have a plan in place, you can rest easy knowing that your family will be taken care of when that day comes. Legacy is so much more than just passing on material possessions. It’s giving those who come after you the comfort and ability to carry on so they too can establish a legacy.