We began this two-part series with What Financial Legacy Are You Leaving? Part I. We shared that leaving a financial legacy is more than just leaving money to heirs. We talked about enriching a financial legacy with financial education, integrity, stewardship, end of life preparation, retiring debts, and generosity.
We covered the first three topics, financial education, integrity, and stewardship and we are continuing with end of life preparation, retiring debts, and generosity in this post.
End of Life
According to the National Funeral Directors Association (NFDA), the median cost for a funeral with viewing and burial in the nation was $7,181 in 2014. If you would like a vault, the median cost increases to $8,508. These costs, according to NFDA, do not include the ceremony, a headstone, flowers, obituary, etc. A friend shared with me how older folks are leaving funeral costs to their children, and she suggested it as a topic in my blog and podcast.
Many people are grief-stricken when a loved one dies and not having the funds to pay for a burial adds to the stress. Funeral costs are not an issue when an inheritance large enough to cover the costs is passed along to heirs; however, many people do not leave a large enough inheritance if at all. Funeral costs can be prepaid before a person passes away and doing so also allows them to choose the funeral they would like. However, many people die before they expect to do so, leaving the costs and planning to family members. Maryalene LaPonsie wrote 3 Ways to Plan for Your Funeral Expenses in a U.S. News & World Report article giving valuable insight into how to deal with this difficult subject.
Typically, children will not be responsible for the debts of a parent upon death. However, if debt exists, the proceeds from the sale of personal and real estate property, money from life insurance, and any money in an estate will first go to paying off debts owed to creditors with the remaining amount given to beneficiaries.
Approximately 30 states have filial responsibility laws, which means children can be held responsible for repaying debts related to medical care such as nursing home care. Most states do not force the law, but the laws exist, and with how quickly things change, states can start enforcing these laws in the states where they exist. Sharing assets with children can also put them on the hook for your debts, including medical bills. For example, if you share a home loan and a parent has debts upon when they pass away, the creditor can put a lien on your house. The proceeds from the sale of your home would then go toward repaying the debt.
The best course of action is to retire all debts to alleviate this as a potential financial struggle for your children.
Generosity is expressed in many forms. We can be generous in giving our time, money, resources, actions, and words. Many give of their time to others through church, non-profit organizations, hospitals, and government institutions such as helping at a City Clerk’s office. Others contribute money to those same institutions. On a smaller level, we exhibit generosity when we buy a friend lunch or give them a gift.
Sometimes, our generosity is shown by lending tools to others or giving items no longer needed to others in need. Generosity can also be as simple as a kind word or doing something for others. For example, a month ago or so, Parker and I became quite sick with flu-like symptoms and had to miss two ceramic classes. We returned to class once we were better, but we were behind. Our instructor offered to come in and work with us even though the class had finished. She didn’t have to offer, but she showed us her generous spirit by doing so. Her kindness allowed us the opportunity to finish and enjoy our projects.
It is impossible to ensure our children and grandchildren will be good stewards of what we leave to them without applying tight restraints. We can, however, increase their chances of success by expanding our view of financial legacy and including the intentional instruction in money management, integrity, and stewardship. Do you have valuable insight into this topic? If so, let us know your thoughts in the comments!