Estate Planning Should be Legacy Planning
What is a Legacy Plan and Why do I Need One?
For decades people have talked about ‘estate planning’ – the act of devising a plan to distribute your stuff upon passing. Increasingly, it is an outdated notion – one that is being replaced by a more powerful idea. It is called ‘legacy planning.’
Legacy planning encompasses estate planning – the distribution of assets – as well as the morals, ideals, beliefs, philosophies, and core values they would like to impress upon their heirs. It also sets the stage to craft a family narrative that speaks to much more than just the distribution of assets on death. We call it creating a ‘legacy mission statement.’
For many, legacy planning places an emphasis on philanthropy, which is driven by contemplating one’s social capital. Social capital is defined as the relationships between individuals and organizations that facilitate action and value. Luckily, Canada’s tax system is very generous in support of philanthropy; yet, most people are unaware of the rules and laws designed to encourage us to give, especially on death.
What is in a legacy plan?
Think of your legacy plan as the roadmap you carefully design to achieve your objectives and to provide important information to those who will act on your behalf when you are no longer capable or have passed away.
Here are some of the essential elements to be considered when planning your legacy:
Self-reflection and determination of your core values and beliefs as they relate to personal, family and community relationships important to you
Wills, trusts, and powers of attorney
Beneficiary and guardianship designations
Charitable foundations or donor-advised funds and your recognition preferences
Inventory of assets and liabilities
List of digital assets, computer information, social media platforms and passwords
Memberships, subscriptions and loyalty programs
Instructions for locating pertinent documents and or assets
Letters of Wishes, memorandums, care plans, living arrangement preferences, pet provisions, funeral/burial wishes
Some additional elements you may wish to include in your legacy plan are:
Medical history information
Letters or video messages for loved ones (how would you like to be remembered?)
Why do I need a legacy plan?
Without a valid power of attorney, someone will need to apply to a court for permission to act as your legal representative or guardian.
Without a valid Will, you are deemed to have passed ‘intestate’ and provincial legislation will set out how your estate will be distributed, which may not align with your wishes. You will not have the ability to appoint the executors, trustees, or guardians for your children under the age of 18. You will also not have the ability to engage in effective tax planning or provide gifts to the individuals or charities of your choice. By failing to plan, you leave your affairs in limbo, until a person or governmental body can be appointed, which results in further delay and potential increased cost to your estate.
If you are comfortable doing so, communicate your plan ahead of time to the individuals who will act on your behalf. It is also advisable to communicate your plan to your heirs when they are of an appropriate age. This will allow those who are impacted by your plan to ask questions and seek clarification from you while you are still able to provide it.
Keep your plan in a secure location (not a safety deposit box) and provide its location to those who will require access to it.
When is the best time to start planning?
Planning should be considered a lifelong activity – one that begins when you are legally able to sign documents and ends upon death.
Can you imagine if each of us decided today it was important to make a plan for the loved ones we leave behind? Imagine what could be achieved if we led by example and engrained in future generations how important it is to plan, organize, and communicate all aspects of a legacy plan. It would be empowering for our loved ones and the causes we love.
Who can assist me in developing my plan?
You can engage a legacy planning professional, wealth advisor, accountant or lawyer to assist you in planning your legacy. The TEP designation (Trust and Estate Practitioner) demonstrates the professional has an advanced understanding of trust and estates, and they take a proactive approach, working at the forefront of the latest developments in the industry.
Remember that the best planning allows for collaboration amongst all of your trusted experts. It is important to ensure your plan is reviewed regularly and updated over your lifetime, based on changes to your individual circumstances and legislation.
If you have questions about legacy planning, I’d be happy to help. You can reach me at firstname.lastname@example.org.