Considering Your Legacy
Estate planning is first and foremost about your legacy. Your will or trust is the last chapter in your book – the epilogue – and you get to write it. So before you dive into the technical and practical elements of your planning, it’s a good idea to think about the philosophy behind the decisions you make. I will admit that these tips are a bit … heady. Consider this: you’re going to leave a legacy of some kind. Do you want that to be the legacy you choose, or do you want to leave it to chance?
- Identify your goals for your estate plan.
When it comes to estate planning, your wishes and desires come first. So think about what you want to accomplish before you even meet with an estate planner: family harmony? Support a charity? Save on taxes? It’s up to you – not your family and certainly not your lawyer. - Make a list of the people or causes you might want to support.
Who are the important people in your life? Is there someone who you want or need to support? Is there a cause or charity that you are passionate about? Once you’ve answer those questions, write down the people or entities you thought of. - Do your planning in the context of your “money story.”
A money story is a description of your lifelong experience with money. Think about the financial circumstances of your childhood. Compare your attitudes about money today with the way money was treated as you were growing up. How are today’s money thoughts different from those of your childhood? Use your money story to shape your financial legacy. - Consider how your personal beliefs affect the plan you have for your ‘money’.
Money = Stuff for number 4. Does your religion or faith instruct you to use money a certain way? What about your personal philosophies? The role money plays in your daily life should inform the role it plays in your estate plan. - Would you like your heirs to use their inheritance in a certain way?
It’s your stuff, so you can place restrictions on how your heirs use it. Will you require them to donate a certain amount to charity? Must they use it for their education? Their children’s education? If you have minor kids, you know they make bad decisions, so restrictions may be appropriate. - Think about whether there is behavior you want to encourage or discourage.
Have I mentioned that young kids make bad decisions? If restrictions on the use of your money seem too harsh, you might want to place conditions on when and how your heirs inherit. Many conditions can be appropriate – age, disability, continued employment or career, for example. Some aren’t: you cant require a child to get married before they receive their inheritance. - Is there a tradition you want your loved ones to follow after you’re gone?
Here’s an example: create a “get together fund” for your kids that they must use to hold a family reunion every year or every five years. A fund like this could pay all the travel, food, and lodging expenses, encouraging your descendants (kids, grandkids, great-grandkids, etc.) to maintain their relationships after your death. - Set aside finances
What personal legacy do you want to leave your family? What lessons have you learned that you want to share or teach? - Consider what impact, if any, you want to have on your community.
Everyone is a member of a community or two. Whether that’s family, friends, neighborhood, town, country or even the whole planet, you can choose what impact you have on your communities. - Consider writing a legacy statement to your family or friends.
Your will or trust can handle most or even all of the heavy lifting needed to transition your stuff from you to your heirs. But you might find it personally beneficial to write a final letter to the people you leave behind. The message you leave can be incredibly meaningful for you as you write it and for you loved ones who read it. You can even write one letter to everyone or separate letters to specific individuals.
Getting Started
Once you’ve thought about the “why” of your estate plan, it’s time to think about the what, who, and how. This is where the rubber meets the road.
- Identify what financial institutions you have accounts with and list all accounts.
Where do you bank? Where do you have investments or retirement accounts? For each bank or company, list which accounts you have there and provide account numbers. - Confirm the title on your accounts.
You will need to know who is an account holder for all your accounts. Take your list of accounts (see #11) and indicate who is listed as an account holder or owner for each one. - Confirm the title on your property.
Identify who is listed as an owner of your property – cars, houses, etc. – by listing each item of property and who is a named title holder. - Make a list of your “stuff”
If you have valuables, your insurance company probably already encourages you to have a list like this. After your death, knowing what personal property you owned can make the executor’s job easier and may prevent fighting among the kids. - Make a list of all your insurance policies (life and property/casualty).
Most people think of life insurance, but your property insurance is also important. Your executor may have to continue insuring your house or your car until the estate is closed, so make a list of the insurance companies you work with and the policy numbers for each policy you have. - Keep detailed information about debts people owe to you and the payment history.
If you lend money to kids, grandkids, and especially strangers, make sure you keep track of if/when/how much they pay you back. Bonus Tip: If you don’t expect to be paid back, that’s called a gift and shouldn’t be listed as a debt owed to you. - Make a list of your debts.
Your executor will be in charge of paying back your creditors. Home loans, credit cards, and money borrowed from individuals should be listed out to ensure your debts get paid. - Make a list of your family members and/or loved ones and their contact information.
Write out the contact information for each person you plan to include in your estate plan in some way. Spouses, kids, grandkids, great-grandkids, and nieces and nephews, are just a few examples of people who your executor will have to contact once the estate has been opened. - Make a list of your advisors.
If you have been working with an accountant or financial advisor, they will be best able to provide certain information to your loved ones after your death. Your executor will have a much easier time dealing with your income tax filings and investments if they know who has been helping you with those items. - Make an appointment with an estate planner.
Not just a lawyer – an estate planner. A lawyer will start by asking you for one or two of these lists. An estate planner will start by building your legacy. Lawyers draft documents; estate planners help you accomplish your dreams. An estate planner will help you take care of yourself and your family while you’re living and give what you have to the people you want, when you want, and the way you want.
