Legacy planning is the new phrase that is used synonymously with estate planning these days, and is the general process of arranging your financial affairs in a way that reflects your main priorities and values. People often think about wills and trusts, and this type of planning will always incorporate that, but the documents are not the tail that wags the dog. Legacy planning has evolved today into holistic approach to incorporate people’s overall financial planning goals and concerns:
- Providing for many aspects of the financial, emotional, professional, and legal needs of surviving spouses and children
- Maximizing and controlling their wealth for themselves for long life spans
- Gifting to family members while they are alive, so that they can transfer wealth in a way that helps rather than hinders the individual
- Transferring their business (possibly to a family member) in a cost-effective way, taking into account all possible tax concerns
- Charitable concerns for which they have a passion
- Transferring their important values and beliefs to the next generation
- Providing enough assets for their minor children and surviving spouse if they die, but also arranging it in such a way that maintains privacy, protects assets from creditors, and provides ongoing professional management
- Transferring wealth to spouses and adult children, that cares for the surviving spouse, and transfers remainder amounts to the intended children, which is especially important if there are blended families, or the spouse becomes remarried
When people have discussed their concerns about these items and many others with their attorney and trusted financial advisor, then it is the attorney’s job to draft up the wills and trusts that work to address these concerns.
The next issue that many people neglect is to change the beneficiary arrangements to work hand-in-hand with the legacy plan. A beneficiary is someone you designate in writing in an appropriate form (beneficiary form) directing the holder (bank, insurance company, investment firm) of an asset, where to send your money when you die. When doing estate planning be sure that your beneficiary arrangements are consistent with your overall plans. Check your beneficiary arrangements for life insurance, IRAs, annuities, and retirement plans. In addition, investment and savings accounts can have beneficiary arrangements too, called Transfer on Death arrangements. Be sure that you have them and they are up-to-date!