How to Leave A Lasting Legacy for Your Children
As parents, we all dream about leaving a legacy for our children. Whether that’s in the form of passing on the family home, or another valuable asset, we typically want them to get a head start in life.
Some people take a different approach to leaving a legacy though.
While life insurance is a vital part of a robust financial plan, some women hold onto it much longer than is necessary. Their children may have left home (no longer financially dependent). Yet they hold onto their life insurance so they can leave the proceeds to their children. However, this may not necessarily be the most effective approach.
Time to Think About Yourself
Now that the kids have left home, it’s the perfect time to think about yourself. This isn’t selfish, in fact, it is the total opposite. If you start thinking about yourself and the lifestyle you’d like to live in retirement, you will inevitably start to think about the savings you will need to fund your retirement lifestyle.
This will lead you to considering superannuation as a savings vehicle. If you start accumulating more in super, then you’re going to potentially have more to pass on to your children. There are several benefits to this approach, however, the tax-effectiveness alone is a substantial motivator to building an asset base in super that could act as a legacy.
Leaving a larger tax-effective inheritance for the kids doesn’t sound very selfish to us.
Install A Safety Net to Preserve Your Legacy
Unfortunately, some people with life insurance neglect the other types of personal protection. Life insurance is pretty self-explanatory – it pays a lump sum if you pass away.
What happens if something bad happens and you survive?
If you don’t have other types of insurance such as total and permanent disability and income protection, then you may be in trouble if you are unable to work due to sickness or illness. This would mean that you would need to use savings and eventually get help from others. Usually this falls to the children to assist with and can place significantly affect their children financially. You can probably see that this would be the opposite of leaving a legacy.
To architect a robust strategy that allows you to leave the legacy that you desire, you need to analyse all the options available to you, before committing to the required action to bring it to life. We are specialists at helping our clients create a plan for their desired legacy. We’re here to help if you ever need assistance.