Legacy Planning

Written by True Tamplin, BSc, CEPF® | Reviewed by Editorial Team

Updated on January 04, 2023

A legacy is a gift of money or property left to someone in your will.

It can also be something more intangible like memories, stories, or advice you want to pass on.

Legacy planning is about how you want to make that legacy better for the people who are reading it after your death.

It is a process that helps you think through your legacy and how you want it to be remembered after death.

A legacy plan encompasses everything from your last will and testament, which governs what happens to your assets after you die, to naming a legacy charity as the beneficiary of an IRA or other financial account.

Estate Planning vs Legacy Planning

Estate planning is different from legacy planning. Estate planning focuses on how to distribute your assets after you die.

A legacy plan also addresses asset distribution, but it also considers what memories or lessons are most important to pass on.

Why Do People Create Legacy Plans?

People create legacy plans to ensure that as many people as possible benefit from their legacy.

A legacy plan can be as simple as leaving your dog to a friend or as involved as creating a legacy trust.

Your legacy plan could include:

  • Verbal legacies, such as stories you want to pass on
  • Tangible items, such as personal keepsakes and family heirlooms you want to leave behind
  • Money or property you want to give as a legacy
  • How you would like your legacy assets to be distributed upon your death

Why Do People Choose to Create a Legacy Plan?

Legacy planning is not just for the rich and famous.

It's a smart choice for anyone who wants to pass on their legacy to future generations.

If you're not sure how to create your legacy plan, consider the following:

  • Have you named any legacy recipients? How are those people related to you? Why do you want to leave legacy assets to them?
  • Do you have any legacy items that hold special meaning for you? What are they, and why are they important to you?
  • How will your legacy be remembered by future generations? Consider legacy recipients' ages when creating your plan. 

The Importance of Having an Up-to-Date Will

Having a will is the first step toward legacy planning.

However, without proper estate planning, your heirs could run into numerous legal and financial problems down the road, such as:

  • Conflicts of interest among heirs
  • Lack of specific legacy instructions, which could lead to infighting among heirs
  • Accidental disinheritance of intended legacy beneficiaries. If you forget to include someone in your will or trust, that person won't receive any legacy assets after your death.
  • Liability for estate taxes. You can pass along legacy assets without triggering any estate taxes, but you need to get the timing right.

How to Make Your Own Legacy Plan

Legacy planning can be complex, especially if your legacy is particularly large or complicated.

You may want to work with a lawyer who specializes in legacy planning to ensure that your legacy plan is legally sound and reflects your wishes.

Legacy planning can be as simple or involved as you want it to be.

However, the more effort you put into creating a legacy for future generations, the more meaningful your legacy will be for those who inherit it.

The Bottom Line

Legacy planning can be as simple as writing down a legacy letter outlining your legacy wishes to the grandkids, or as involved as creating a legacy trust.

The more effort you put into creating a legacy plan, the better off future generations will be.


Legacy Planning FAQs

What is a legacy?

Legacy is most simply put, anything that you leave behind after death. Some legacy items are most important for sentimental reasons while others have a monetary value.

What is legacy planning?

Legacy planning refers to the process of setting up your legacy wishes/beneficiaries, legacy items, and legacy life insurance policy before becoming unable to do so.

Why do we need legacy planning?

We need legacy planning because we must transfer our legacy and heritage after death to others so they can inherit and use it.

What is legacy insurance?

A legacy (life) insurance policy transfers the policy proceeds to your legacy trust after you pass away. The legacy trust will then payout to your legacy beneficiaries over time.

Where can I create a legacy plan?

You can create your legacy plan in the United States at a financial or legal service provider. There are providers that offer do-it-yourself legacy planning systems for you to use in creating all of these legacy documents.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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