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The Importance of Legacy Planning

Matt Mentzer, JD, CPA

Director of Financial Education

Last Updated
May 12, 2022

How Legacy Planning and Estate Planning Go Hand-In-Hand

The terms “legacy planning” and “estate planning” are often used interchangeably. Over time, estate planning has come to refer to the transfer of assets and personal belongings following someone’s death, while legacy planning includes financial bequests as well as a strategy for passing along one’s personal values and closely held beliefs. The following are several reasons it’s important to establish a legacy planning strategy.

#1 – A legacy plan can help protect your values.

Many high-net-worth individuals have worked hard for decades to build wealth, and they often wish to pass along the result of their hard work to the next generation. Will your loved ones remain motivated to work hard and pursue their own career interests if they receive a financial windfall?

The legacy planning process provides several opportunities to pass along your work ethic as well as your financial assets. You may decide to create trusts, nest eggs or college savings accounts to encourage hard work while also financially supporting your family’s next generation. Proper legacy planning can ensure your assets are available to support — but not fully enable — your loved ones’ financial independence.

#2 – A legacy plan can encourage a spirit of giving in future generations.

A great way to support the charitable causes that matter most to you is by bequeathing assets as part of your estate plan. However, if you wish to pass along a legacy of giving to next generation, you may want to consider incorporating a donor-advised fund (DAF) rather than a direct gift.

DAFs allow you to name a successor advisor who can decide how to distribute grants from the account. This provides a great opportunity to talk with your children or grandchildren about the importance of charitable giving and your desire to make a lasting impact on the causes that matter to you. Not only can this practice encourage your loved ones to become more charitably minded but it can also give then a direct vehicle with which to make an impact.

#3 – A legacy plan can be useful while you’re alive.

If you become incapacitated and can no longer make decisions for yourself, having a solid legacy/estate plan in place can help protect your interests (as your plan will designate a trusted individual to step in and make decisions on your behalf). Without a legacy plan, your family or friends may have to go to court to gain the authority to act on your behalf, and there’s no guarantee that the person acting in this role is the person you would have chosen to do so.

#4 – A legacy plan can protect your family’s privacy.

In many jurisdictions, wills are considered public record, meaning anyone can see who was designated as an heir in your will. At the very least, this can cause your family to be bombarded with advertisements from companies trying to sell their services. Proper legacy planning can protect your privacy and the privacy of your family members.

Are you ready to implement your legacy planning strategy? Creative Planning Legal can help. We work with clients to implement custom estate planning strategies that help protect their families and leave a lasting legacy for the people and causes that matter most. If you’d like help establishing a legacy plan, or with any other financial matter, please schedule a call.

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This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.

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