A lot of people associate the word legacy with the wealthy, but the truth of the matter is, planning for the legacy you want to leave is something that transcends your bank account balance. It’s about directing your assets — no matter the size of your estate — the way you see fit.
For many, this means giving to a charity or cause they support. Others just want to dictate how their money, or belongings, are distributed among friends and family. And often it’s a mix of both. Creating a legacy plan is how you accomplish this. Here, some advice for putting yours in place.
Get started. Sounds simple, but as with wills, this is an area that has many people dragging their feet. We don’t like to think about death. But a legacy plan is about life — you’re dictating how you’ll live on through what you leave behind. The earlier you create a plan, and share it with those you love, the better.
If you want to leave money to a specific charity, let the charity know. This is important, not only if you have special requests — setting up a scholarship in your name, perhaps — but also because the charity may have stipulations you need to follow or limitations as far as how they can accept your gift. Most charities will be extremely receptive to your desire to include them in your legacy planning. Be sure, too, to be specific. If you’d like your money to go to the local chapter of the Red Cross, for example, rather than the national organization, make that known.
A side note, here: Be sure to research the charity if you haven’t already. True, most people leave money to charities that they’ve long supported, but that doesn’t mean they’ve done adequate research. All too often, someone was solicited by a charity long ago, began making regular donations, and never did much digging into how the money is used or the operation run.
Keep your beneficiary designations updated. These are separate from, and trump, the information that is in your will, meaning that if the beneficiary on your 401(k) is an ex-husband, the account will go to him, even if your will states that all assets should be passed to your current husband. The same goes for life insurance policies. And if you want to leave a lump sum to a charity, you can always name that group as the beneficiary of a life insurance policy or a trust.
Communicate with your heirs. Leaving your children money in equal amounts certainly makes things easier. But if you can’t, or don’t want to, do that, at least explain your reasoning. And name them all as beneficiaries if you’re distributing a life insurance policy or trust, instead of naming one and asking him or her to divide it up. This way, you’re keeping the power in your hands and eliminating potential arguments.
Make a list of valuable items. It’s helpful to write down, and share with your heirs, a list of items in your home that hold value, whether they’re actually worth money or they’re merely sentimental. Otherwise, that $5,000 painting may get sold in a garage sale (and you’ll see your story on the local news.)