Cultivating a Sound Legacy Plan

It’s never too soon to plan your exit, especially if you want to leave a legacy behind. After seeing how easily our presumed security can falter over the past two years, legacy planning has become the new hot topic.  As the familiar saying goes, “One generation plants the tree and the next generation enjoys the shade..”  That is a good synopsis of why a conversation about legacy planning can be important.

In fact, 44.5 million individuals are having a conversation around it for the first time in their lifetime. But what exactly is a legacy plan?  Is it different from your retirement plan? What are the core elements of your family legacy? For those who have never investigated legacy planning, getting the basics clarified could be a game-changer.


Legacy Planning vs. Retirement Planning

The first thing to understand is that legacy and retirement planning are not the same. A legacy plan manages your total wealth when you’re alive, sets up an orderly distribution of your estate after you’ve passed, and ensures the continuity of your legacy. 

That deals with all the assets you own, regardless of their value. By contrast, a retirement plan focuses in a more limited sense on your quality of life after retirement. It often consists of savings, investments, and other passive income. 

The goal here is to distribute money after you’re done working so you can be financially stable and secure. Sometimes legacy planning may include retirement planning, but it’s never the other way around.


What Should Your Monthly Retirement Income Be?

Your monthly retirement income is one of the most vital elements in both retirement and legacy planning. As of 2021, the median average retirement income for American households aged 70 and older was about $47,000 (or $4,000 per month).

Your retirement income should at least cover your…

  • Debt, including mortgage, car, and other payments
  • Living expenses
  • Entertainment
  • Medical expenses

Therefore, to figure out what your monthly retirement should be, start with tracking your monthly expenses. 

Then decide where you can save money to bring that number down. Budgeting is a great way to reduce the monthly amount you need to live comfortably after retirement.


Do You Have a Health Care Proxy?


What if something happens? That’s the question everyone asks when doing legacy planning. The goal of end-life planning is to make sure you and your loved ones are both taken care of.

Health is one of the major concerns as we age. We can’t predict what might happen in the future. The best we can do is prepare for the possibility that we might become too ill to make decisions on our own.

One trusted way to ensure your healthcare decisions are made with compassion and respect is by setting up a healthcare proxy. Also known as a durable power of attorney for healthcare, it is a document that allows a designated individual to make healthcare decisions on your behalf.


Durable Power of Attorney (Financial)

Making provision for orderly health care decisions is of little value if financial decisions are in a state of disorder because you become incapacitated.  It is therefore also critical to name one or more individuals who hold the authority to deal with necessary financial details such as keeping bills paid, incoming money properly deposited, and requirements like tax returns dealt with on a timely basis.

This provision can be made easily through the preparation and execution of a Statutory Durable Power of Attorney by a qualified attorney.


Legacy Planning vs. Estate Planning

The central focus of legacy planning is what happens after you have passed.  Because of this, people tend to confuse legacy planning and estate planning. While the two share many similarities, they focus on unique elements of your overall plan. 

Generally, your legacy plan takes a more holistic approach when considering your assets. Estate planning focuses solely on the monetary aspects.

Both a legacy plan and an estate plan should contain key documents outlining how your wealth will be distributed after you’re gone. These could include wills, trusts, insurance policies, and beneficiary designation planning.

However, a legacy plan tends to have more context, such as

  • Family values and life lessons
  • Heirlooms of high sentimental value
  • Letters, video messages, and photographs
  • End-life expectations, such as the type of funeral

Many people also tend to associate estate planning as a matter only of concern to high-net-worth individuals.  That is not necessarily true; therefore, legacy planning is a necessity for everyone regardless of asset values.


Is Last-Minute Planning Too Late?

No matter how early you started estate planning, it is inevitable that there will be loose ends left to be tied when the end is almost here. This is often known as last-minute planning.

It focuses on ensuring your peaceful exit out of the world and a smooth transition of your family’s legacy. Last-minute planning is the final chance to go through your plan for your loved ones. This final round often consists of several key steps, including…

  • Creating a balance sheet
  • Reviewing your life insurance and beneficiary designations
  • Reviewing your wills and trusts
  • Consider a “family meeting” to discuss your plans and wishes with loved ones
  • Considering Charitable giving and last-minute tax planning

Basically, it’s best to treat last-minute planning as a comprehensive review. Visit each piece and try to identify what’s missing, especially if you plan on modifying your wills. This is also a great time to prepare your loved ones for your departure.


Important Things to Consider

Understand that your legacy goes beyond financial assets. Therefore, don’t forget the intangible elements of your heritage: Your life lessons could be just as valuable to your loved ones as they navigate through their lives. 

Emotional assets also include heirlooms, photographs, and other sentimental items. And let’s not forget about your own needs. When doing legacy planning, it’s common to focus solely on those left behind. 

But you’re also at the core of your legacy plan! So, be sure in your planning that you adequately provide for your retirement expenses. Set funds aside for medical emergencies and final stage needs, such as cremation or funeral cost. 

After all, you deserve to spend the last days of your life as happily as possible.


Finding a Legacy Planner


Legacy planning has many moving parts. Plus, looking death in its face is not the easiest thing to do. 

Most individuals lack the professional knowledge required to conduct legacy planning. Additionally, following a DIY legacy plan you find on an internet search engine is possibly worth what you are paying for it.

When looking for a legacy planner, pay attention to the demographics they work with. Make sure you go with someone experienced in planning for individuals like you. 

If you have a complicated asset portfolio or a large family, you might want to work with someone used to creating comprehensive legacy plans. These differ from those that mostly work with nuclear families.


Download Your eBook Now >>

Jessica Banitt, CPA, CFP®

Jessica Banitt, CPA, CFP®

Jessica Banitt is a Director and Wealth Advisor at Linscomb & Williams.

Read other posts

Investment Advisory Services are offered by Linscomb & Williams, an SEC registered investment adviser, and a subsidiary of Cadence Bank. Linscomb & Williams (L&W) provides financial planning, investment management, and retirement plan and investment consulting services. L&W is not an accounting firm, and does not provide tax, legal or accounting advice.

Information expressed herein is based upon opinions and views of L&W and information obtained from third-party sources that Linscomb & Williams believes to be reliable, but Linscomb & Williams makes no representation or warranty with respect to the accuracy or completeness of such information. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice.