Step 5: Distribute

Most people, when they think about distributing their assets, assume it only pertains to what happens after their death and, of course, their own demise is the last thing they want to think about. But you have the power and option to detail how you would like this to happen; if you don’t, your state will help determine how it gets done. As unpleasant as it may be to think about your own demise, how much more unpleasant is it to think about your state government calling the shots? (In all fairness, the state’s intestacy laws generally follow the family blood line – it’s not like they’re going to give your money to strangers – but that may not be what you want.)

So, I encourage you to sit down with an attorney and discuss just what it is you’d like to happen with your hard earned money by drafting a will and power of attorney. Don’t feel like you have to justify any of your decisions, you don’t. Determine who you trust to carry out your wishes and who could fill in if that original person is unable or unwilling to serve in that capacity. Just do it. And update your beneficiary designations on any life insurance policies and retirement plans.

But the good news is that you may not have to wait until you’re no longer alive to share your wealth. That’s right, you can share it anytime you wish! In 2011, if you are a US citizen, you can give up to $13,000 per person to as many people as you like, every year, without incurring gift tax (yes, there could be a tax on gifts). There are two exceptions to this limit: (1) You may pay any amount to a medical institution or (2) an educational institution directly on behalf of any person.

In addition, you may make charitable contributions in any amount you choose (although the amount you deduct may be limited).

A financial planner can help you determine how much you may be able to reasonably share during your lifetime without negatively affecting your own retirement. Your planner may also help you structure your assets (such as how assets are titled) in such a way as to coordinate with your wills, trusts and beneficiary designations. Discuss with your planner what it is you are trying to achieve and carefully consider your planner’s ideas & suggestions.

Deciding how you want your financial assets to be distributed during your lifetime and/or at death reflects your wishes and desires but also reflects your values and the type of legacy you would like to leave. Thinking about what your legacy is – or could be – may just be the step you need to take to create one.