DESIGNING YOUR LEGACY: TIME TO SHRED YOUR 5 YEAR PLAN
If you want to enjoy significant and sustainable family wealth, and a legacy which really makes a difference it may be time to rethink your financial plan.
Having a five year plan was supposed to be a big deal. Of course over the last decade millions of Americans and American companies have gone bankrupt. Unlikely that was in their plan, but it may be partially due to how short term their plans were. Meanwhile other international corporations, and a few leading investors and firms have thrived. The biggest difference with the latter group is their passion for having a 100 year plan.
If you don’t want to only do well for the next five years, but for the next ten, for the next few decades of your children’s lives, and perhaps their children as well you need to think bigger and longer. This applies if you have no plans for kids, and simply want to take care of your pet or to take care of a favorite cause, charity, or community instead.
How long do you want your legacy to last? How big do you want it to be? Put numbers on those things. Then work backwards to understand the steps that need to be taken to get there.
There are several parts to putting this type of legacy and estate planning into action:
While many avoid it, having conversations with your heirs about your estate and legacy plans early and often can be wise. Otherwise how will they know what you want, how to manage it best, and who to get help from? Tell them, show them, and explain why.
If you don’t have these conversations the chances are that you won’t get what you want. The wrong assets will get sold, they will be managed poorly, and the causes you care most about won’t be supported. And without a master plan odds are that you won’t arrive where you want to be on time.
None of us really know what will happen tomorrow, but you can put things into play now, today, which will put your legacy on the right track regardless of whether you are around to manage your finances and investments for another 12 months, 12 years, or 120 years.
4 WAYS TO HOLD REAL ESTATE FOR HEIRS, WITHOUT THE RISK OR HASSLE
Real estate can be one of the best multigenerational wealth building and preservation tools, but how do you hold it, and give it, without the risk or headaches?
1. Turnkey Property Management
The options and best strategy for holding and passing on real estate assets really depends on what type of property it is. For those owners of newer NYC condos or co-ops the easy answer may be simply to enroll a turnkey property management company who can go on taking care of it. This can provide a seamless transition and management across generations without worrying about how heirs will manage it.
2. Long Term Leasehold
A classic Sol Goldman strategy; offering a long term leasehold means eliminating the costs and management associated with holding a property, while retaining ownership, long term value gains, and income. On just one NYC office building the Goldman estate collects $2.7M per year.
3. Sell or Gift, with Life Estate
In some cases it is actually personal use of the property or providing a home for heirs which is the top priority. In this case consider selling or gifting the property to charity now, while retaining a life estate you, your partner, or children.
4. Lease or Sell Off Use Rights
There are many parts to a NYC property. This can include air rights, access rights, development rights, oil and mineral rights, and more. Those are often effortless to hold onto as assets. Or they can be leased or sold to cover property taxes and other holding costs on the property improvements. Consider holding the retained assets in a trust or foundation.
WITHOUT PURPOSEFUL ESTATE PLANNING ALL YOUR NYC REAL ESTATE COULD BE LOST
What’s your estate plan for your NYC property? Who are the experts making sure your vision happens?
We all know that we’re supposed to have a will. Few do. Even when one is created it may not cover all your needs, and is certainly not the only piece of the machine that will ensure your will is really delivered on. So what other tools might be smart to have regardless of how wealthy you feel or not? What essential moves should New Yorkers and New York property owners be making now?
Regardless of whether you will is to pass everything on to a single heir, simply create ongoing passive income for a loved one, give it all to a cause you care about deeply, or set you Golden Retriever up to be treated like a prince for life; you’ve got to have it on paper.
Many do create rushed wills to check this off their to-do list. But that will also needs to be setup to account for future real estate and asset changes. Does yours account for buying and selling different properties over time, family and belief changes, and to account for managing those assets to deliver on your goals after you are gone? Do you have a regular review scheduled? Or at least a professional who will gently nudge you when it’s time to make an update?
A will is just one cog in the wheel when it comes to real estate planning. The more you can do to streamline the process, avoid being tie up in probate, and to really empower executors, asset managers, and heirs to fulfill your wishes the better.
Some of these tools may include using LLCs or trusts to buy and hold property.
Additional estate planning and investment tools to explore may include 1031 exchanges or self-directed retirement accounts to help protect wealth, minimize tax liability, and maximize growth.
Among the most important of all though is your panel of executors and professionals.
The VIPs You Want in Your Corner Today
Estate planning is sadly one of those topics that families and many individuals love to avoid. Unfortunately that can lead to a lot of pain, and tons of waste.
These are great conversations to have early, no matter whether it is a spouse, child, or charity whom you want to help most.
It really doesn’t matter how massive your Empire State real estate empire is if it is all lost in the commotion of managed horrifically after you are gone.
So not only do you want a great family law attorney, real estate attorney, accountant, financial planner, and real estate advisor and asset manager on your team now, it’s smart to introduce them to your heirs today. Help them build a relationship, let each know who the other is, and foster an excellent model which will breathe life into your legacy for many generations to come…