Ensuring Your Legacy

Ensuring Your Legacy: Key Considerations for Estate Planning During Your Lifetime

In navigating the journey of life, one accumulates more than just tangible assets; we also amass invaluable memories and experiences that comprise our enduring legacy. The true challenge lies in ensuring that this inheritance, both material and sentimental, is seamlessly transferred and continued.
Through precise planning and expert guidance, legacies can be safeguarded and live on from generation to generation. The below points can get one started in their legacy transfer plans, but a much more thorough exercise should be done with the assistance of your Rockefeller Private Advisor, as well as the Rockefeller Estate Administration Planning Guide.

1. Assign Roles

The estate planning process can be overwhelming to any individual thinking about legacy transfer. An advisable first step is to decide to whom assets should pass (beneficiaries) and who to entrust to control the disposition of those assets (a fiduciary), whether it be an executor or trustee depending on the circumstances. While this list may change over time based on life events, establishing relevant stakeholders in your legacy transition help to set the foundation. In addition to these roles, one should consult with hired professionals such as an attorney, accountant, and Private Advisor for expert guidance.
Additionally, it is crucial to make clear your wishes for succession planning. Alongside the transition of wealth and assets with respect to ownership, decide who will take control of any businesses or entities under your purview. This will not always be a simple turnkey solution. Think critically about those who will carry on your business’ legacy and the necessary steps to guarantee they are prepared to do so.
The sooner these roles are established, the better. Giving your named fiduciaries a clear plan will result in a more efficient and accurate transfer of assets and fulfillment of your wishes.

2. Establishing a Will and Revocable Trust

The bedrock of any effective estate plan begins with comprehensive planning. . Before establishing any estate plan, consideration should be given to the state(s) in which you reside, own property and where your beneficiaries are located. The choice of jurisdiction can carry with it various tax and legal implications, so it is important to consider this when beginning your planning. .
A Last Will and Testament, otherwise known as a Will, is a document that is used to dispose of probate assets after death. A Will can also name guardians of any minor children. Probate assets are all assets held in individual name that do not have beneficiary designations or rights of survivorship. After one’s passing, the Will undergoes a process known as probate, in which the Will is admitted to local court and authorizes an Executor or Personal Representative to have legal authority over those assets. A common tool used to avoid the probate process is to establish a Revocable Trust, otherwise known as a revocable living trust. A revocable trust serves as a “Will substitute” and is created by an individual during his or her lifetime to hold assets and direct distribution or management of the assets on death. Any assets that an individual transfers to their revocable trust will not be considered part of the “probate estate” and, thus, if all assets are transferred to a revocable trust probate will not be necessary. In addition to a basic Will or revocable trust, it is important to have a valid Power of Attorney and Living Will or Health Care Proxy. A Power of attorney allows an individual to act on your behalf in legal or financial matters. A Living Will expresses wishes regarding end-of-life care in conjunction with a Health Care Proxy that names an individual to make health care-related decisions in the event of incapacity. It is important to revisit these documents on a periodic basis, including upon the occurrence of major life events or changes, such as a marriage, divorce, having a child or moving.

3. Beyond the Basics

A common strategy to protect one’s legacy is to incorporate planning with trusts.. Beyond planning for your basic estate planning, it is important to consider the relevant tax and legal landscape as it pertains to your assets to take advantage of what is often referred to as ‘advanced estate planning techniques’. Advanced planning includes commonly leveraged irrevocable trusts such as a charitable lead trust, irrevocable life insurance trust, spousal lifetime access trust, grantor-retained annuity trust, or an intentionally defective grantor trust. These trusts can be an effective way to protect wealth from a tax and planning perspective, and depending on the type of trust, can hold a myriad of assets including,individual stocks and bonds, real estate, bank and investment accounts, closely-held company interests, artwork, and even copyrights.
While this litany of options can be overwhelming, a Private Advisor will be able to parse through and recommend the best course of action for you and your family.

4. Gifting and Philanthropy

A large part of advanced estate planning techniquesleverage an effective strategy regarding gifting, in conformance with the lifetime federal gift and estate tax exemption.
Be mindful that gifts in excess of $18,000 (for calendar year 2024) per individual count against one’s estate tax exemption amount, which is $13.61 million per person for 2024 and due to increase to $13.99 million in 2025. If an individual gave away $3.61 million worth of gifts during their lifetime and dies in 2024, the first $10 million of their estate would not be subject to estate tax. Notably, however, the first $18,000 of gifts (in 2024) to an individual each year will not utilize any of a donor’s lifetime estate and gift tax exemption. This is known as the ‘annual exclusion amount’ and is adjusted by the Internal Revenue Service. This annual exclusion amount can be given to an unlimited number of individuals each year without utilizing any of one’s lifetime estate and gift tax exemption.
Part of one’s legacy can go beyond assets and business to include a positive impact through philanthropy. Think about causes that you are passionate about and the organizations that support them. Leveraging vehicles such as a charitable lead trust, private foundation or a donor advised fund can be an effective way to put your purpose into action. Rockefeller’s Philanthropic Advisoryguides individuals looking to establish a charitable legacy for themselves and their families.

Final Thoughts

Taking the step of creating an estate plan can be one of the most important actions of our lifetime. Comprehensive estate planning not only serves as a guide to our loved ones on how to navigate complexities, but also empowers future generations to be properly set up to carry on one’s legacy.

Speak to your Rockefeller Private Advisor to learn more about preparing for your legacy transfer and read the entirety of our Life Transitions series for more insights.