The term legacy planning has a variety of different meanings. While a legacy plan may be carried out through estate planning documents, planning a legacy involves much more than completing forms and signing documents. It involves self examination and thoughtful consideration of the broader meaning of your life and the impact you wish to make, whether during your lifetime or thereafter.
Because the legacy each person leaves behind is unique, any legacy plan you create is likely to be unique as well. A comprehensive legacy plan is one that you begin during your lifetime and may continue for a period of time afterwards through your estate plan.
The elements that make up your legacy plan will vary depending on several factors such as the types of assets you own, your income, your tax concerns, your expenses, the types of final beneficiaries involved, and your legacy planning goals. The following are examples of estate planning methods that may be included in a legacy plan:
Making a will with bequests to family members, institutions or charitable organizations;
Making a living trust or another type of trust, such as a life insurance trust or charitable trust;
Purchasing life insurance or changing beneficiaries on existing policies;
Gifting to children, grandchildren or other heirs; or
Forming a family limited partnership.
This is not an exhaustive list of methods that may be used to create a formal legacy plan. See estate planning for information on other methods that may be used to create your legacy plan. Your attorney and financial planner can advise you on the types of estate planning methods that are best suited to your individual circumstances and objectives.Another good opportunity to engage in legacy planning occurs at tax time. When you meet with a CPA or tax professional to prepare your annual income tax returns, ask about tax benefits associated with charitable giving. Explain that you are interested in using your estate plan to make a difference. An accountant is a good resource for information on how to gain tax advantages through gifts and bequests.Updated July 28, 2017.
The Benefits of Legacy Planning
Making a formal legacy plan has many benefits. Depending on your individual objectives and the nature of your estate, legacy planning may allow you to:1. Pass on your values to future generations and protect family assets;2. Define how you want to be remembered and the contributions you want to make to your family, your community or the world;3. Control how your property is used after your passing rather than allowing state intestacy laws to determine who will inherit your estate;4. Protect income, assets or family heirlooms for your spouse, partner, children, grandchildren or other designated beneficiaries;
5. Enjoy the satisfaction of knowing your property will be used to support a cause which is important to you;
6. Reduce taxes, when legacy planning is part of a comprehensive tax-saving strategy and estate plan; and
7. Gain peace of mind and a renewed purpose in life.
How to Get Help with Legacy Planning
If you want to make a legacy plan but don't know where to start, there are many ways to obtain knowledgeable guidance. Most universities, colleges, and hospitals have foundations or planned giving departments that help arrange charitable gifts and donations. Non-profits and charities usually provide information on their websites about how to make a bequest in an estate plan or a charitable gift or donation. See charitable gift annuity.
An estate planning lawyer can advise you how to structure your legacy plan in a manner which will avoid probate, provide the most tax advantages, and accomplish your legacy planning objectives. Your financial planner can advise you on a variety of legacy planning tools such as charitable gift funds, annuities, life insurance, and beneficiary designations on retirement accounts and investments.
Ideas for Getting Started on Your Legacy Plan
Whether you are already in the process of making a will or living trust, planning a charitable gift or contemplating your estate plan, you are in the perfect situation to plan your legacy. Whether your estate is large or small, you can help a cause that is important to you by helping fund it through your estate.You may already have an organization or institution in mind to receive your bequest. If you are still in the process of choosing a beneficiary, there are many different organizations and institutions you can consider, including animal shelters, rescue leagues, humane societies, and spay and neuter clinics. For a list of charitable organizations, see animal charities.Another inspiring idea is to use your estate plan to help a young student attend college when he or she would not otherwise have the funds to pursue a degree. There are several ways to establish a scholarship program. Scholarships are especially needed for students that attend high schools in small, rural towns throughout the U.S. If you are interested in leaving a bequest or making a charitable gift to fund this type of program, contact schools or alumni associations in areas where there may be a need for scholarship funds.