The Importance of Planning Your Legacy

11/18/2019 by Maggie Mau

When you make a financial gift to Bridging, or volunteer your time, we hear you loud and clear: what Bridging does for our neighbors in need is important to you, and you want to help make sure that it continues!

In addition to the good work at Bridging, we know that there are many other things in your life that are important to preserve and plan for. Because of that, we invited Mike Smith and Patrick Kratz, attorneys from Larkin Hoffman, to come discuss Estate Planning with Bridging volunteers. We learned a lot of great information and wanted to pass along some of the highlights as you and your family prepare for the future.

Even if you didn’t write a will, you have one. The State of MN has written it, and you may not like it.

Incapacity Planning

Planning for one’s incapacity can seem daunting, but it is helpful for your loved ones in the event of the unforeseen.

For healthcare decisions, creating a specific Health Care Directive allows you to name a health care agent to act if you are unable to make medical decisions for yourself, and outline any health care values, wishes and preferences you want your health care team and substitute decision makers to know. This is most helpful for your loved ones – giving them the peace of mind that they are honoring your wishes and avoiding difficult choices.

Creating a Power of Attorney allows you to designate another person to handle your property and finances. This is important to make sure that financial decisions can be made in the event of your incapacity. In Minnesota, we have a Statutory Short form for Power of Attorney. Without these documents in place, a court proceeding may be necessary to appoint a Guardian or Conservator to make medical decisions or manage your finances for you if you become incapacitated.

*Helpful Tip*:

Certified copies of the Power of Attorney act as the Original – so get several certified copies, as various institutions may require an “original.”

Tax Planning, Retirement Accounts & Charitable Giving

Trivia Question:

If you want to make a gift to your child and a gift to charity, and you had an IRA and a savings account, which account would you use for each gift?

Answer: In making a gift to your child, you would use your savings account, because they won’t have to pay taxes on that gift (up to $2.7 million in the state of MN). In making a gift to a charity, either account would be fine, because the charity does not pay taxes!

If someone asked you if you wanted to save on taxes, save for retirement, leave a gift for your children AND support your favorite charity, you would probably say, sign me up please!

The key to effectively planning your estate is to understand how all these puzzle pieces fit together.

Beneficiary Designation:

No matter what your will says, the beneficiary designations on your retirement account(s) are the first to be considered. So, in considering your Beneficiary Designations, keep in mind the following:

  • Money in your retirement account has not been taxed, so if you designate your child as a beneficiary, they will have to pay income taxes when taking a distribution. This is a good reason for making gifts to charity from your retirement account, because the charity will not be taxed on the gift.
  • A simple way to give to a charity (without involving an attorney) is to change your beneficiary designation on your retirement accounts to include your charity of choice.
  • Another option, besides a retirement account that makes sense for charitable giving is a gift of appreciated stock at the end of the year – the benefit here is to avoid capital gains taxes – while providing your favorite charity with the support to continue their mission! Contact Maggie Mau for information on how to make a gift of stock.

Click here for more information on including Bridging in your Estate Plan – to help us Furnish Homes with Hope, Today….and Tomorrow!

Action Steps

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