What is Legacy Planning, and why is it important?

Posted On July 30, 2022,

After a lifetime of careful money management and wealth building, it’s sensible to plan for your later years and beyond so that your assets can be shared and enjoyed by those you love even after you’re gone. Estate planning and legacy planning are two related methods of doing this. What’s the difference, and how do they work together? We break it down below.

What is estate planning?

In broad terms, estate planning is the technical process of ensuring your money works for you in your twilight years, and that your wealth is distributed according to your wishes after you’ve gone.

It includes legal measures such as Power of Attorney (PoA) which grants another person the right to manage your finances if you’re no longer capable. It should also include a Representation Agreement which gives similar authority over your senior healthcare, entrusting someone to work for your benefit according to instructions you make in advance.

And lastly, estate planning ensures you have a legally sound will which provides instructions on how your material wealth should be divided among your beneficiaries.

What is legacy planning?

Legacy planning takes things a step further, adding an emotional aspect to the dry documentation of estate planning. It sets out a personal expression of values, beliefs, family history, and so on, and includes ways of ensuring your legacy reflects these values over and above simple material wealth distribution.

You could think of legacy planning as the icing on the cake of estate planning, refining the bare details to make your legacy richer and more meaningful, but it works better when the two are woven together as a single package.

How does a legacy planner help you build upon your basic estate planning?

• Instead of directly bequeathing money with no strings attached, it can be placed in a trust and only released under certain circumstances. For example, a belief in the value of education could be reflected by ring-fencing the bequest for college fees.
• For younger beneficiaries, the inheritance could be split over several payments with conditions attached, to reduce the possibility of it being wasted through youthful inexperience.
• If your legacy includes a business you’ve built, you could provide detailed guidance on how you’d like it to be managed in the future, including any ethical approaches you feel are particularly important.
• Specific possessions or heirlooms can be left to named individuals, to continue family traditions and avoid future disputes.

Some of this can be achieved through careful drafting of a regular will. Other parts may require additional legal tools, which a good legacy attorney can advise upon.

However, for the less tangible aspects of your legacy, a letter of instruction can be drawn up which sets out to your family what you hope your legacy will be, and how you hope your life experiences will live on after you.

This letter won’t be legally binding, but it can provide a powerful emotional benefit to your family during a difficult time, and help ensure your legacy is delivered in line with your wishes.

Neither estate planning nor legacy planning are solely for those with high wealth. Legacy planning in particular can help ensure whatever size legacy you leave reflects your life, values, and experience, which to most people is worth more than material wealth alone.

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Coast Capital Savings Federal Credit Union provides advice and service related to deposit, loan and mortgage products. Coast Capital Wealth Management Ltd provides investment and financial planning services. Coast Capital Financial Management Ltd. provides advice and service related to segregated funds, annuities and life insurance products. Worldsource Financial Management Inc. provides advice and service relating to mutual funds.

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