Your Estate – Creating a Legacy Plan

Creating a legacy plan is a more holistic approach to estate planning. It sets out a definitive plan for managing your total wealth while you’re alive, distributing your estate how you choose after your death, and passing on your legacy. Your estate includes all assets of any value that you own.

A legacy plan communicates more than financial details – it expresses your values, wishes and life lessons you want to pass along. It imparts wisdom that your successor may use to guide inherited assets in the future, so that these assets may endure for more than a generation.

You will want to work with your professional advisers – lawyer, accountant, financial planner and insurance provider – to create a legacy plan that is comprehensive and addresses all the elements of your estate.

There are four key goals when creating your legacy plan.

1. FINANCIAL SECURITY

Though few people realize it, putting yourself first should be the priority of legacy planning. Establishing a legacy involves giving to or providing things (not necessarily money) for others.

Once comfortable with your financial security, you need to make important decisions for the ultimate disposition of your wealth.

2. CONTINUING THE MANAGEMENT AND CARETAKING OF THE ESTATE

Too many estates, regardless of their size, dwindle rapidly after the first owners pass them on. Often, the successors did not understand how the assets were to be managed or did not share the values and outlook of the founder.

This issue is particularly important with small businesses. The founding owner must decide who will own the business, who will benefit from its income and who will manage the business. A key to successful legacy planning for a business is to have a succession plan in place and to follow it.

3. PROTECTING THE ESTATE

This goal is particularly important to small business owners and professionals. They feel a greater need to protect assets from potential creditors and lawsuits.

4. ADDRESSING THE POTENTIAL TAX BURDEN

Once you have established who should benefit from the wealth, you want to transfer the wealth to them in a way that minimizes the tax burden on the estate and results in the lowest possible tax bill in order to meet your other goals.

Planning a legacy involves far more than reducing estate taxes. It is time to start determining your goals and putting together your plan.