As we age, it’s common to consider and prepare for what our priorities will be later in life, including if and how we may want to help (or continue to help) either people or causes that are important in our lives. There are family, friends, and organizations that we love, like and are involved with, and we support them by sharing our time, giving them gifts, or volunteering on their behalf.
Lifelong passions and commitments don’t have to stop at the end of life. People and causes that matter to us can still be provided for after we're gone, not only with possessions or financial support, but with specific instructions and legal entities that ensure that they are cared for exactly as you want. If you are interested in continuing to help others when you're no longer around to personally assist them, consider how you want to positively affect their lives for years to come; how your present can benefit another's future.
Providing for the future requires planning today. Legacy Planning is a professionally guided, step-by-step process structured so that after your passing, who and what you love are taken care of according to your precise instructions so that no actions are ambiguous and that your money is used to fulfill your after-life goals.
What is Legacy Planning?
When people consider end-of-life planning, most often they think of legal documents such as a Will, an Advance Medical Directive, and Power of Attorney; creating and finalizing these documents usually involves the work of an attorney who may then file them with the county courthouse. The purpose of the will is to provide instructions for the disbursement and use of the deceased’s estate—their possessions and money, including real estate and investments.
While Legacy Planning makes use of standard legal documents, it goes beyond them to create a more comprehensive, detailed set of activities based on a structured, in-depth plan. This plan covers all aspects of what the deceased wants to occur after their passing, including how people, organizations, and causes will be funded or otherwise supported. Legacy Planning may involve discussions and collaboration with family members and participants outside family, and might incorporate the establishment of independent legal entities such as trusts or foundations. Additionally, Legacy Planning may bring in a range of advisors, from a Legacy Planning specialist to lawyers, accountants, and other professionals who are highly experienced not only in managing money, but in government regulations—including tax laws—at both the federal and state levels, as well as other complex topics.
The benefits of Legacy Planning; why it's important
Legacy Planning can help get the most value on a significant personal investment, since its wide-ranging benefits extend from the present to well into the future. Ultimately, the Legacy Planning process:
- Provides a sense of security for the future with the knowledge that interests and efforts will continue to be supported.
- Maximizes your ability to help family members or others because your directives are focused,
- Ensures that your specific instructions are implemented; that the mission of your planning is accomplished.
- Ensures that children, grandchildren, friends, and others understand your wishes prior to your passing and how they are affected by them, including their participation in your goals.
- Reduces time, effort and anxiety for children or other loved ones, as they know in advance that required documents are final and that there will not be a need for probate.
- Takes difficult decisions out of your heirs' hands so they can focus on your life rather than highly emotional healthcare decisions.
- Means planning and taking actions now may save significantly on current and future taxes, with more money available to accomplish important goals.
Essential Legacy Planning activities
While every legacy plan is different based on the unique preferences of the plan owner, there are generally some universal elements that may be found in the overall process. When planning your legacy, you may expect to encounter some of these core steps:
- Seeking and receiving objective, experienced, professional Legacy Planning advice
- Deciding how your funds should be used—are you helping children, grandchildren, other family, friends or causes?
- Creating essential legal documents or legal entities/structures—such as a Will, Advance Healthcare Directive (Living Will), Power of Attorney, trusts and foundations.
- Determining who will be the trustees, administrators, or executors of trusts, foundations, or wills that you create. Ensure that these individuals entrusted with fiduciary responsibilities understand what each position does and that they will accept their legal role and will put in the time and effort necessary to fulfill their duties. Note that while it is common to have the eldest child named to a leading position, a younger child may be more qualified or willing to serve.
- Making relatives and friends aware of your preferences, decisions and actions so your beneficiaries are prepared and so they don’t have to make on-the-spot life or death decisions.
- Having multiple copies of a clear, comprehensive, step-by-step plan shared with those involved so they have a guide to ensure goals are completed and help eliminate ambiguity, guesswork, and mistakes.
What family members and friends can do now
For family members—and, possibly, friends—of someone who is considering Legacy Planning, they can also become active in the early stages of the process, while coordinating with that person. Family and friends can begin supporting planning by:
- Talking with their parent and the parent’s financial advisor and attorney about the Legacy Planning process and next steps.
- If necessary, creating financial accounts where their parent has accounts.
- Accepting and signing Power of Attorney and Advance Medical Directive documents.
- Taking the time to understand the role and responsibilities of executors, trustees and administrators.
- Knowing where important documents are stored so they are available when needed.
How to start Legacy Planning
If you are interested in exploring Legacy Planning, here are a few initial moves you might want to start with:
- Collect and organize details on all financial accounts (including insurance), possessions, real estate and other physical assets of significant value. If you’re uncertain of the potential value of an item, consider hiring an appraiser to offer an expert valuation.
- Look into meeting with a CERTIFIED FINANCIAL PLANNER™ professional to explore planning options and narrow down your preferences.
- After meeting with a financial planner, consider meeting with an attorney and an accountant to discuss legal documents and structures that need to be created.
- Do some research to understand how wealth passes to heirs after death, in accordance with state laws. There are four primary ways for transferring assets at death, and they are through title, beneficiary designation, wills, and trusts.
- Begin discussions with family members and other loved ones about your intentions for your quality of life should you become incapacitated, end-of-life services, and how assets should be managed.
- Using the advice you’ve received from a planner, begin developing and executing your legacy plan.
