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What Will Be Your Legacy? Tips for Legacy and Estate Planning

A close up of a man signing his last will and testament. A pair of eyeglasses rest on the desktop in the background. A warm color scheme dominates the scene. A strong directional light casts a strong shadow across the image.

After a lifetime of building wealth, you will eventually reach a point where you want to know how you can provide a legacy to your future generations. This may be something you’re already thinking about, or it may be something that will come up in the future. Whatever the case, you want to think about your goals and determine what sort of wealth you would like to leave. This specific type of financial strategy is called legacy planning.

“August is What Will Be Your Legacy Month, and is an excellent opportunity to review your estate and legacy planning goals in order to make sure you’re leaving behind a clear roadmap for your future generations,” says Pamela Klapproth, CEO of Kendal on Hudson, a not-for-profit Life Plan Community serving older adults in the Quaker tradition in Sleepy Hollow, NY. “This is the month to reflect on your past and your future goals to consider what you will be leaving behind for future generations.”

The exact definition of legacy wealth is wealth that’s passed down from the older generation to the younger generations. This is also known as family wealth. In other words, it’s how you contribute to the growth of generational wealth in your family now and in the future.

“If your goal is to leave the entirety of your wealth to your heirs, it may seem like a simple matter of bequeathing your assets to them,” says Pamela. “However, you may have concerns about how your heirs will manage the wealth, or you may be concerned about them mismanaging assets in the future, or you have specific generational goals for your wealth. That is why legacy planning is important.”

The best legacy plan is one that you’ve thought through, adapted as necessary and continue to revisit every three to five years. If you haven’t yet created a legacy plan or if you’re beginning to look for legacy planning advisors or you simply want more information about the meaning of a financial legacy for you, here are some tips for you to review and follow this month.

Please note, these tips are no substitution for information from a licensed financial advisor. Please check with personal legacy planners in your area before making any financial decisions.

1. Get your estate documents in order. These can include:

  • A last will and testament, which is the guideline for how your estate will be divided and inherited
  • A revocable living trust (RLT), also known as a family trust, which allows you to maintain full control of the assets while living and then direct how assets are passed on after your and your spouse’s passing (if applicable)
  • Durable power of attorney, which includes a living will and power of attorney for health care
  • Any other information that your financial advisor suggests being placed in your estate documents

2. Review your legacy plan every three to five years. The only thing constant in life is change, and this is especially true in estate and inheritance law. Laws and rules can change, and you’ll want to remain up to date about what sort of estate and inheritance is taxable. Make sure you meet regularly with your financial advisor and ensure the legacy plan is up to date with any current laws.

3. Update your plan after any large life event. As we get older, life events can become more and more frequent: a family member dies, a child is born, a marriage is dissolved, a new marriage occurs, a change in financial circumstances happens. You will also want to make sure that any beneficiary designations are current and up to date … you may not want an ex-spouse to get your life insurance, for example.

4. Know what sort of legacy you want to provide. The simple answer for many people is, “I want to leave my wealth to my children and grandchildren.” This may be the best solution for you, but there are other questions to consider, especially if you have a sizable estate. In this case, the concerns may be how much money to leave each individual, and if there are any guide rails or rules that should be put in place to safeguard the assets. Some individuals may not want to leave millions of dollars outright to their heirs because it may decentivize them to create their own careers or build a good work ethic. Some good questions to ask are:

  • How much wealth is “enough” for our children? Grandchildren? Other relatives?
  • At what age should the money be transferred?
  • Should incentive milestones be put in place, such as graduating from college, before any money is transferred to heirs?

5. Stay up to date with gift and estate tax planning. Minimizing transfer taxes to your heirs is incredibly important, as you would more than likely prefer to have the wealth go to your heirs instead of the government. Make sure that your plan has safeguards in place to help reduce the tax burden as much as possible. One good way to do this is to follow a gift planning schedule, which allows you to give a certain amount of money per year to individuals in a tax-free manner. This can help not only reduce your taxable estate, but also pass along your wealth prior to your death so that your heirs can use it to build their own wealth.

6. Determine if you want to leave a charitable legacy. While leaving money to one’s heirs may be enough for many individuals, you may also wish to leave some of your assets to a charity or charitable structure. Under current tax law, any assets bequeathed to a charity are not subject to gift or estate taxes. Once any goals are defined, there are a variety of ways to choose from how to distribute the assets (think of the Bill & Melinda Gates foundation or the Walton Family Foundation). This part of legacy planning can allow you to have a positive societal impact for many years to come.

“Legacy planning should be an integral part of your estate plan and your future goals,” says Pamela. “You may not realize this but moving into a Life Plan Community like Kendal on Hudson can play an integral role in your legacy plan, too. Our not-for-profit structure along with current tax and estate laws allow you to protect a portion of your estate while also getting tax breaks and benefits. For more information about how Lifecare can help you protect your wealth and provide peace of mind, I encourage you to contact us and speak to one of our expert advisors.”

Together, Transforming the Experience of Aging.®

Founded on Quaker principles and guided by our values and practices, Kendal on Hudson provides a vibrant, active and social senior lifestyle on our 25-acre campus next to the historic Hudson River. As the only Lifecare community in Westchester County, we offer five levels of service for our residents: Independent Living, Assisted Living, Memory Support, Skilled Nursing and Rehabilitation.

Kendal on Hudson is a not-for-profit 501(c)(3) organization led by a volunteer Board of Directors. Kendal on Hudson is an affiliate of The Kendal Corporation, a system of communities and services for older people based in Kennett Square, PA. We support diversity, inclusiveness, and independence and support the values and practices of Kendal by remaining focused on healthy aging. Located in Sleepy Hollow, New York, just 35 miles from New York City, we offer a vibrant lifestyle, cultural programs, continued learning and health care for life.

 For more information, please call 866-KENDALNY.