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What is Legacy Planning?

There’s much debate on whether legacy planning and estate planning are synonymous or differ entirely. For the purpose of this article, legacy planning can be defined as such: an extensive plan that goes beyond the distribution of assets and factors in future generations’ financial security, removing the tax burden of the benefactor(s) & heir(s), and other components such as long-term goals, family dynamics, and personal values that will enable you to openly discuss their plan. So, how do you start?

Here are 5 key steps for preparing a legacy plan…

1)Identify Goals and Priorities

Sit down with a loved one to identify chosen heirs and clarify their roles. This may also include leaving significant money to a charitable cause (a strategy that can have certain tax benefits) or considering how you might preserve a family business. This conversation will set the tone for the others that follow. By sharing your desires for where your money will go with a designated person, you can spell out your wishes in no uncertain terms as well as plan what you will tell your loved ones to ensure the discussion is a peaceful one.

2) Take Inventory of Assets

You should always be talking to your advisor about your legacy plan in some capacity as you build wealth, but now is the time to sit down with your advisor if you haven’t already. You’ll want to have a more defined conversation with them to determine the value of your assets and which assets to leave to whom. These can extend beyond stocks, bonds, retirement accounts, real estate, etc. to family heirlooms and personal possessions. During this conversation, organize a clear distribution plan in order to confidently tackle the next step – creating a will/estate plan.

3) Create A Will/Estate Plan

As advisors, we always recommend establishing a will early on in life, especially once you’re married and have started a family. Not only will you want to put in writing who will be inheriting what, you’ll also want to determine who will take care of any children or disabled family members, a plan for protecting your heirs’ inheritance in the event of divorce or marriage, and when an heir should receive an inheritance, especially if they are underage or you’ve determined they are not financially responsible enough at this point in their life. You will also want to consider including official documents such as Power of Attorney, probate avoidance trusts, business succession plans, and others.  For more information on creating a will or estate plan, click here.


4) Update Your Plan Every 3 – 5 Years

Update beneficiaries to include any new family members or remove a beneficiary who has unexpectedly passed away. If any of your goals have changed due to life-altering events such as divorce or marriage for yourself or your loved ones, you’ll want to factor this in as well. Changes to your health will also be cause for an update, as you may have to designate someone else to control your medical care and assets if you are unable to manage them. Additionally, as you update, consider charitable contributions and other tax minimization strategies with an advisor who specializes in tax. The tax law is constantly changing and thus, so should your estate plan to accommodate these changes.


5) Talk to Your Loved Ones

This is one of the most crucial steps. Many people prefer not to discuss money, especially because it can prompt heated emotions. What’s more, many future heirs couldn’t tell you what their inheritance will look like, just that they have one. The problem with this is that in the wake of a loved one’s passing, heirs are often left feeling unprepared and overwhelmed by the prospect of managing their inheritance. Combined grief and anxiety can lead to reactive decisions with significant tax consequences.

The key is to not bombard loved ones with sudden talk of legacy planning but to schedule a day and time to sit them down. Let them know ahead of time what you’d like to discuss so that they can mentally prepare. Explain to your heir in easy-to-understand terms what their role is and what your expectations are for them. In doing so, you open the conversation to questions you may not know they had and may be able to quell any of their lingering financial fears. Perhaps you can even talk about what roles they are comfortable stepping into if you were previously unsure about their capability to take on a family business, manage family affairs, etc.

It’s important to note that this need not be one long, arduous conversation. Talking to a parent, child, sibling, etc. about plans after your death can be uncomfortable and emotional. Feel free to break up the conversation with levity over a shared meal or reminisce on familiar memories together. The key is to be intentional with how you allow them to process your wishes.


The Storen Financial Legacy Planning Process

When you work with a Storen Financial Advisor to build your legacy plan, we help strategically determine the steps needed to protect your loved ones and minimize tax on an inheritance. We will also sit down with you and your family to discuss your plan with them. If you desire to have this conversation with your loved ones without numbers being brought into the mix, we can simply break down your plan in more broad terms that still clarify their roles. Overall, the process of legacy planning can be smooth and easy when you work with a trustworthy advisor looking out for your goals. We’re here to help ease the burden of legacy planning, foster candid conversations, and tackle your goals head-on.

Need help with your legacy plan? Or interested in a consultation? Click here to contact us now. Or click here to learn more about our Financial Planning and Investment services.


Want to learn more?

Here are more resources to help answer your questions…
5 Steps for Starting a Legacy Conversation with Your Family – Forbes
Legacy Planning – Finance Strategists



Blog by Ronnie Jackson, CFA® – Financial Advisor

Learn more about Ronnie and the rest of the Storen Financial team here.


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