What Is the Difference Between Legacy Planning and Estate Planning?
Estate planning and legacy planning. Don’t they mean the same thing? Maybe you’ve heard these terms used in financial settings, often interchangeably. Many people think of “legacy planning” as a softer name for “estate planning” because estate planning has become synonymous with death.
But the two actually mean different things.
What is estate planning?
Most people are familiar with estate planning. Traditional estate planning is focused on building a roadmap to guide the distribution of your tangible, material assets after you pass. An estate plan protects your wealth and even allows it to grow once you’re gone.
That’s great, but you might be thinking, “Hey, I’m more than my tangible assets!” And you’re absolutely right. That’s where legacy planning comes in. Legacy planning is not meant to replace estate planning, but to complement it.
What is legacy planning?
Whereas estate planning only focuses on tangible material assets, legacy planning ensures that your intangible assets are handed down, as well. And those intangible assets—your faith, philosophies, morals, and values—inform the way your assets are handled.
A great way to start thinking about your legacy is to ask yourself what you believe. Ask yourself questions like
What do I believe and why?
What are my values?
How does my faith or spiritual beliefs color the way I look at and interact with the world?
What do I think is important in life?
What are my financial beliefs?
What do I want future generations to know about me?
Once you’ve answered these or similar questions, you’re ready to begin planning your legacy. Some financial advisors are able to help you with legacy planning. However, to incorporate your legacy into your estate plan, you will likely need to speak with your attorney.
What can you do with a legacy plan?
Three ways that you can express your beliefs and values in a legacy plan are through direct gifts, charitable trusts, and foundations.
Direct gifts are one-time donations to charitable organizations of your choice. Charitable trusts are a way to control how your assets are used and distributed. You have the power to create the trust terms that say how, when, and for what intentions your assets can be used. You can also create a foundation that will allow you and future generations to give toward groups you believe in.
Both legacy and estate planning are essential to have in place, and the sooner you put them in place, the better. If you’re interested in speaking with an experienced Chartered Financial Analyst (CFA®), Peter J. Brunton and his Strategic Wealth Partners can help you or your loved ones rest assured that your tangible and intangible assets are tended to according to your wishes.
