OC Elder Law
Understanding the Difference Between Estate Planning and Legacy Planning
An estate plan and a legacy plan are two very different processes, but they are sometimes used in conjunction with each other to ensure that a comprehensive plan is in place prior to one’s death. Fortunately, most estate planning attorneys can explain how the two plans work and how they differ from each other. Below are some essential facts about legacy planning and why it is different from conventional estate planning:
When a traditional estate plan is created, it is typically focused on real estate, bank accounts, and other tangible assets and how they will be distributed in the event of a person’s death. This is because those who have worked hard their entire life, saved wisely, and invested prudently almost always want to pass down their tangible wealth and assets to future generations. To ensure that a person’s property and possessions are distributed according to his or her wishes, a proper estate plan must be created and put in place while the person is still living.
However, many people feel they have much more to pass along to friends and loved ones than merely items of monetary value. Such individuals generally benefit from a legacy plan.
Passing on Values and Philosophies
Most people have formed philosophies, beliefs and values throughout the course of their life that ultimately contributed to their success. Therefore, a person may wish to pass these down to children, grandchildren, and other beneficiaries upon his or her death. Legacy plans were designed for this purpose.
For instance, certain individuals have a desire to be remembered for their generosity. If this is the case, such a plan may include acts of charitable giving. A person who greatly values education may wish to set up a trust fund for the specific purpose of paying college tuition for worthy individuals. Others may hold the entrepreneurial spirit in high regard, in which case they may wish to include trust terms in the legacy plan that motivate a beneficiary to become an entrepreneur or a small business owner.
Legacy planning may also include something referred to as an “ethical will.” The latter date back to biblical times, when many individuals shared spiritual and moral values as part of their legacy after death.
Heirlooms and Mementos
Some individuals also write a diary or record their personal memoirs when creating a legacy plan. The goal of such activity is to offer friends and relatives a record of one’s formative experiences so that those who survive the person’s death can experience personal enrichment from these memories.
Legacy planning may even involve a specific outline for the distribution of family heirlooms. Such items often showcase a family’s history and as such, are highly meaningful to certain individuals. Therefore, a person may wish to designate the way specific heirlooms are transferred to friends or loved ones and may even attach a personal message to each one.
Those who were philanthropists during their lives sometimes choose to continue giving through their estate plan, according to the objectives outlined in their legacy plan. Not surprisingly, in some ways, both the traditional estate plan and the legacy plan work together to reach a common goal.
Each person’s legacy is unique to him or her, and a well thought out legacy plan allows all individuals to pass along more than just money and real estate to their friends and loved ones. Making a legacy plan part of a comprehensive estate plan may be the best way to accomplish this goal.