A traditional estate plan focuses on protecting your assets while you are alive and the distribution of your wealth after your death. While these two objectives are certainly important, and necessary, there may be more that you wish to pass down to future generations along with your wealth. Intangible concepts such as your values, beliefs, ideals, and even your faith, for example, may have helped guide you through your life. Understandably, you may want to pass those down to your loved ones as well as your tangible assets. Legacy planning allows you to do just that. As the name implies, legacy planning focuses on passing down your legacy, not just material assets.
How Does Legacy Planning Differ from Traditional Estate Planning?
The focus of traditional estate planning is centered on the distribution of estate assets after death. Your estate assets may include real or personal property as well as financial and investment accounts; however, the bottom line is that traditional estate planning is used to pass down material wealth. There is no place in a traditional estate plan for deeply held values, ideals, and beliefs. Traditional estate planning remains important, of course, because you do need a roadmap that can be used to distribute your material wealth when you die. You also need a plan that determines who will control those assets and who will make decision for you should you become incapacitated at some point in the future. All of those issues can be addressed in a traditional estate plan. What is not addressed in a traditional estate plan are the values, morals, faith, and beliefs that guided you throughout your lifetime and helped you achieve the material success you have achieved. Fortunately, legacy planning does address those issues. If you decide that legacy planning if for you, a separate plan is not necessary. Instead, legacy planning tools and strategies are woven into your existing estate plan.
Legacy Planning in Action
Legacy planning strategies can be bold or subtle. For example, you could simply create a Letter of Instruction, which is not legally binding on your beneficiaries, that explains your beliefs, values, and faith to your loved ones. A Letter of Instruction cannot force your loved ones to do, or refrain from doing, anything; however, it affords you the opportunity to tell that what you hope they do, or don’t do, with their inheritance and their lives in general.
If you want to engage in a bolder approach to legacy planning, a trust agreement may allow you to do so. For example, if you believe that education is the key to success, you likely want to pass on that belief to future generations. You might, for instance, create a trust agreement that stipulates within the terms of the trust that the assets held in the trust may only be used to pay for educational expenses incurred by beneficiaries. You might even require beneficiaries to attend a specific school or pursue a select area of higher education, such as medicine or law.
Charitable gifting also frequently plays a major role in legacy planning. Your church or other religious affiliation may be your reason for charitable gifting in your legacy plan. You may also wish to provide gifts to support the environment, politics, space exploration, animals, or any other cause that is important. If you engage in philanthropic gifting now, why shouldn’t it be part of your estate planning? Legacy planning makes that happen by focusing on how you can continue to give to the causes that matter to you even after you are gone. Common ways to include charitable gifting in your overall legacy plan include:
- Direct gifts – a one-time gift to a charitable organization to be used as the organization sees fit. With a direct gift you have no control over how the gift is used one it leaves your estate.
- Charitable trusts – establishing a charitable trust allows you to have more control over how your assets are used. The trust terms you create will dictate how, when, and for what purpose the assets held by the trust can be used. For example, if you believe strongly in the concept of religious education your trust terms might stipulate that trust assets can only be used by your church to build a school or an additional classroom if a school already exists.
- Foundations – creating a foundation is the ultimate way to pass down your legacy; however, it requires a rather hefty donation in order to get a foundation off the ground. If you have the means though, a family foundation can be an excellent tool for passing down your values and beliefs to future generations.
If you have additional questions about legacy planning in the State of North Carolina please contact the experienced estate planning attorneys at Kulas & Crawford. by calling 772-398-0720 to schedule an appointment.