Episode 12
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~One day your children will tell.~
~One day your children will st. ~[00:00:00]
Hey friends. Welcome back to the Household CEO podcast. It's Calista Anderson, your host here.
You know, one day your children will tell stories about you. The question is, will those stories include chaos or preparation? Well, today we're talking about how to build a legacy that protects your family long after you're gone.
~And my hope is that your family will talk, will tell stories~
~about how it was like going through that process.~
~As they go through such a difficult process.~
As they go through such a difficult process of losing their loved one.
Would you agree that most people work their entire lives to build something?
I would agree with that, but then they leave it exposed.
~Everything they've built, everything they've built with ~everything they've built ends up having no plan, no structure, no education for the next generation, and the wealth they worked so hard for could be gone within one generation. If you care what [00:01:00] outlives you, then this episode is for you. ~Let's, okay.~
~So let's dive in. ~Let's dive right in.
Over the past several episodes, we've walked through the family method
as a refresher. F is fund and manage cash flow, a attack debt. ~M, multiply income and income streams. ~M multiply income streams. I ensure what matters and L leverage assets. And today we close the series with Y. Your legacy ~each, ~each letter builds on the last. Funding and managing cash flow gives you stability.
Attacking debt gives you control. ~Multiply, ~multiplying your income, gives you margin. Ensuring what matters gives you protection. Leveraging [00:02:00] assets moves you towards freedom, but legacy. Legacy is where freedom turns into something bigger than you. Because financial freedom is not the finish line. The real end goal is to build something that outlives you and not just money, wisdom, structure, stability, and stewardship.
I wear many different hats, but as an entrepreneur who is also a financial professional, one of the most sobering things I see is this. People work their entire lives to build something and then they leave it exposed because they never created a plan for what happens after they're gone.
We plan vacations. We plan birthdays, we plan business launches, but most families don't plan for the one thing that is absolutely guaranteed. We all [00:03:00] pass. ~And I don't say that to be ha ~ and I don't say that to be heavy. I say it because planning is not about fear. Not planning doesn't take away the inevitable.
Planning is in fact a big part of love. It's about removing chaos from the hardest moment your family will ever experience. ~So today we're gonna talk about, ~so today we're talking about what happens when there's no estate plan, how estate taxes work, whether life insurance and other things are taxed. Why a trust matters, and most importantly,
why having certain documents prepared for you ahead of time is important
~and most important.~
And how to pass financial wisdom to your children. So wealth actually lasts. Before I move on, just wanna give a quick note. This episode is for educational purposes only. Laws vary by state and can [00:04:00] change. ~Always consult with qualified legal tax. ~Always consult with a qualified legal tax and financial professional before making estate planning decisions.
Alright, let's talk about legacy. Your home, your family. Just like a well run organization, it needs systems protection, growth, strategy, and ultimately succession planning. I'm gonna give a high level overview and not get into the nitty gritty details. I actually plan to bring on an estate attorney who will go over more details about legacy planning in the near future.
~So let's talk about the legacy. So let's, ~let's talk about the legacy gap, which is the reality. Only about one third of Americans have a will in place. That means the majority of families have no written instructions for what happens when they pass away. Even fewer have trusts ~and when. And when asked why most people say one of these three things, ~and when asked why, [00:05:00] most people say one of three things, oh, I'm not wealthy enough, or I'll get to it later, or it's uncomfortable to think about.
But here's the truth. Estate planning isn't about how much you have. ~It's about what you want to have happen. ~It's about what you want to happen to what you have. Make sense? ~Let does that, ~let me say that again. It's about what you want to happen to what you have.
What happens if there is no plan? If someone dies without a will or a trust, they die instate. That's I-N-T-E-S-T-A-T-E. Instate. That means the state decides who inherits assets. The estate goes through probate court, and the process can take six months to two years, sometimes longer, and it can cost anywhere from four to 7% of the estate's.
Value [00:06:00] in court costs, , attorney fees, and other administrative expenses. So if someone, let's say has a $500,000 estate, probate alone could cost 20 to 35,000. That money could have stayed with the family
~probate~
and just think of all the energy it would take ~to go through the whole court.~
To go through the whole court process over a span of a couple years. Probate is also public. Anyone can see what was owned and who inherited it, and if minor children are involved and no guardian was legally named, a court can decide, not you. Okay. Legacy without paperwork becomes chaos.
And did you know that there are estate taxes?
Well, let's clarify estate taxes. ~At the federal level. ~At the federal level, there is currently a very high exemption, $13 million ~per, ~[00:07:00] per individual, and double that for married couples with proper planning estates above that amount can be taxed up to 40% on the excess.
So meaning if somebody passed away and their net worth was 15 million, anything above 13 million would have this up to 40% taxes on that remaining money. But you might say, okay, well I don't have lots of millions of dollars in my net worth, at least not today. ~So Mo. ~So this wouldn't apply. And most families today, you know, , if they haven't accumulated that much in assets, ~the federal, ~the family would not owe federal estate taxes.
However, laws change exemptions can decrease, and some states have their own estate or inheritance tax with much lower thresholds. So while taxes may not affect everyone today, [00:08:00] planning ensures you're protected no matter what the laws look like tomorrow.
Okay.
So trusts are a big part of legacy planning
and it really does matter, ~and they can make the difference between,~
They can make a big difference while you're here and after you've gone. Trusts are not just for the wealthy and ultra wealthy. ~They allow you to, ~they allow you to avoid probate, keep matters, private control how and when the distributions happen. They can protect your children. Your minor children potentially protect assets from creditors ~and coordinate with strep.~
And coordinate tax strategies.
~Aside from having a trust, here are other documents that are really important to have as part of your legacy planning.~
~Here are three of the us~
Aside from having a trust, having. These top three documents in place
will give you really strong legacy planning.
Number one, having a durable financial power of attorney. ~This. ~This allows someone you trust [00:09:00] to pay your bills, manage investments, handle banking, sign documents. If you are alive but incapacitated
without it, your family may have to go to court to gain authority.
Number two, . Healthcare Power of attorney. This designates someone to make medical decisions if you cannot,
i've seen this happen so many times as an ICU nurse ~where a patient is at the end of their life~
where a patient is nearing the end of their life, and there could be a. Medical solution or there could not be a medical solution, ~but big, especially big families, ~but families especially big families, often can't come to the same
agreement on what to do next for their loved one. So, having a healthcare power of attorney. We Will appoint one person to make that decision for you, someone you trust and someone you know would carry out your wishes. [00:10:00] Which brings us to document number three. ~Having a legal. ~Having a living will.
Also called Advanced Medical Directive. This document outlines your end of life preferences, life support decisions, resuscitation instructions,
and other medical wishes. This removes guilt and guesswork from your loved ones.
So these three documents guide your family , to carry out your wishes and make the decisions you want them to.
All, oh~ Here are a couple questions I get asked.~
Switching gears a little bit.
Here are a couple questions people ask about inheritance
and when they're curious about estate planning, they ask. Is life insurance inheritance taxed? ~Well, this is one of the biggest misco. This is one ~well, this is one of the biggest misconceptions in most cases, life insurance death [00:11:00] benefits are income tax free to beneficiaries. That's one of the reasons life insurance is such a powerful legacy tool.
Another question that people ask is about real estate, they ask
if somebody inherits real estate, is it taxed? Well, when someone inherits real estate, they typically receive a step up in basis,
~which means the value of the house. Which means the value of the property resets, which means the value of the real estate,~
~which means the value of the property to the fair market value, ~which means the value of the property resets to the fair market value at the time of death. ~And if the property is, ~and if the property is sold shortly after, capital gains may be minimal or zero because the gain is measured from that stepped up value.
~This is. ~This is one of the most powerful wealth transfer advantages available, but again, it only works properly when assets are documented and transferred correctly.
So if you hadn't thought about it, legacy planning isn't just about your assets and passing your [00:12:00] wealth and what you've accumulated to your family, ~but it's also planning for in, but it's also planning for. But it's also planning, but it's all, ~but it also includes incapacity planning,
you know, having those other documents in place. ~I.~
~ You wanna square things away for,~
~you wanna square things away for both, while for both,~
~you wanna square things away. ~You wanna square things away for when you're no longer here, but also if you are still living but aren't able to make decisions,
whether that's temporary ~or permanently,~
~whether that's temporarily ~or permanently.
I know this is really heavy to think about, but not thinking about it and keeping your head in the sand like an ostrich.
Because it is too uncomfortable to look at, doesn't make the potential problems go away,
it actually puts your family at risk. Here's something I want you to remember, most wealth is not lost to taxes, ~but it is lost because of lot. Uh. Yes,~
but it is lost because of lack of education, lack of action,
family conflict, emotional decision [00:13:00] making, or sudden access without preparation.
And all that brings us to the most important part of legacy, passing down financial wisdom and showing your family how you have planned as much as you can for them. Your children aren't going to learn, ~earn ~cash, flow management tax strategies, insurance structure, investing discipline.
~Or how you want all your hard earned money and assets to be distributed~
or. How you want all your hard earned work and assets to be distributed or even how to handle your health and estate if you become incapacitated. They won't learn any of this in school. That responsibility belongs to us. ~Legacy should not be a~
legacy is not secrecy. Legacy is teaching. It's inviting your children into conversations, explaining how the household runs, ~modeling good financial ~modeling, good financial decision making, teaching delayed gratification, ~showing them all the uncomfortable thinking and making plans for them anyway, ~showing them you've [00:14:00] done all the uncomfortable thinking and making plans for them anyway.
We're not just raising children, we're raising future stewards.
And the way we manage money and difficult decision making today becomes their blueprint.
. Believe me. I love talking about light things too, but these things are just too important not to talk about.
~It's heavy. I know, but I, ~it's heavy. I know. But I can help with a little bit of that heavy lifting by. Starting these conversations ~and if you want helping and if you want help thinking through ~and if you want help thinking through protection strategies, estate coordination, or building a legacy plan that aligns with your values.
~I work with someone close. ~I work with someone closely to help guide those conversations. And if you're interested in a free consultation, you can email me directly at callistaAnderson@callistaanderson.com and I can connect you with them. I know there's lots of AI chat, GPT, et [00:15:00] cetera. Around now that can answer your questions, but there's nothing like talking to a real life attorney to get your questions answered
that is specific to you.
Before we close today, I want you to think about something one day, hopefully many, many years from now, ~your children will tell stories, ~your children will tell stories about you, and wouldn't it be great if they talked about how you handled this type of pressure, how you talked about money, how you made decisions, how you showed up for your family.
That is legacy. Legacy is not a document in a safe. ~It's not just a trust or a policy. It's not just a trust or a policy. ~It's not just a trust or a policy. It's the systems you built, the conversations you are brave enough to have.
~It is the conversations you were brave enough to have.~
All right, friends, you've walked through the entire family framework with me. I hope you see this. Now, this isn't just about money. ~It's, it's about becoming the. ~It's about becoming the kind of [00:16:00] household CEO who thinks beyond today, beyond this year ~and beyond even ~and beyond even your own lifetime. Now, that's generational thinking and that's powerful.
If this episode helped you, please share it with another parent or friend who needs to hear it.
Also, I'd be so grateful if you left a rating or review on whatever podcast platform you're listening to so that more families can find this message. Thanks for listening. Until next time, take care. [00:17:00]
