What to Avoid When Creating
Your Legacy Plan

Ensure your wealth is passed down to the Next Generation

By your golden years, you have spent a lifetime gathering wealth, and now it is time to ensure this wealth is passed down to the next generation. Planning the details of how your wealth and assets will be divided is done through creating an estate plan, now more commonly referred to as a legacy plan. 

Legacy planning can be an emotionally draining process, as it will require you to reflect on how life will be after you are gone, which is why there are some common mistakes made in the process. We have created a guide of 4 things to avoid when you’re creating your legacy plan.

  1. Not Having Key Documents On Hand

Most people forget what documents are essential when planning their legacy. Even if some documents are not essential to your specific case, they may still come in handy. Usually, the following documents are required:

  • Revocable Living Trust: This is a trust that certain assets will be under and you can direct where the assets are distributed when you pass away. The trust will be released once you pass.
  • Pour-Over Wills: This will be used in combination with your Revocable Living Trust to direct your assets not titled in your name to the trust.
  • Durable Power of Attorney: This will show who is allowed to make decisions for you if you are incapacitated. 
  • Health Care Directives: These documents outline your wishes for medical care if you cannot communicate them.
  1. Not Updating Your Legacy Plan Regularly 

Legacy plans should be reviewed every three to five years. Laws change and life events happen. An outdated legacy plan can cause a significant delay in how the distribution process is handled. 

If any of your finances change over the years, it can also change how you may choose to divide your assets. It is also important to ensure that your titles for a piece of property are all correct and all of the heirs are still a significant part of your life. For example, you most likely wouldn’t want your ex-son-in-law to receive an inheritance if he doesn’t associate with the family any longer.

  1. Avoiding Tough Conversations

Don’t avoid tough conversations when you are creating your legacy plan. Legacy is about more than money. You want this money to be put towards good things in life, not things that don’t align with your beliefs. 

Make it a plan to have a conversation with your heirs about how you would like this money to be spent. This will be an opportunity for you to have a lasting impact on your heirs and their financial decisions. 

  1. Not Putting Safeguards In Place

Safeguards are an important aspect of many legacy plans. A safeguard may be a touchy subject with family, but it will prevent misuse of your inheritance. The last thing you want is for your fortune to be mishandled. A safeguard will give you peace of mind, especially if one of your heirs has significant debt, financial vulnerabilities, or special needs.

Some common safeguards include:

  • Releasing the inheritance in small amounts
  • Releasing large amounts of inheritance on specific milestones
  • Release of the inheritance upon college graduation
  • Release of the inheritance upon turning 18
  • Release of the inheritance upon getting married

It is also important to note that it is best to contact a financial advisor before and during the creation of your legacy plan. They can lead you to make the best choices and help your recipients pay the least amount of taxes possible. To set up a legacy planning consultation, contact West Financial Group today.