One of the goals of working with a financial advisor is to maximize your time on Earth. But what happens to your assets after you’re gone? Answering tough questions like this is a necessary part of stewardship. A financial advisor is a key resource for understanding what you have, what you should plan for, and how to make it all work together in the end.
To get you started, here are a few common confusions about wills, trusts, and leaving a legacy.
1. “My loved ones can deal with things once I’m gone. Why do I need to set anything up ahead of time?”
Legacy planning applies to everyone, even if your loved ones get along well and know what to do. The best way to think of it is as an act of kindness. Why risk unanswered questions, confusion, and tension for those you care about? At the very least, make sure you accurately list beneficiaries on your bank accounts, retirement accounts, and insurance.
2. “I don’t know an appropriate amount to leave behind.”
There's no flat number that applies to everyone. A financial advisor will help you think through your goals and narrow in on what makes the most sense. How much (if any) you choose to leave is up to you. Think through your priorities, values, life stage, and who and what you’re leaving behind. Do you have someone depending on you in this stage of life? Does a certain organization or charity mean a lot to you? Would you rather use your resources for something specific now?
3. “What’s the difference between a trust and a will, and do I need both?”
A will is a legal document that outlines how your assets will be distributed after you pass away (think: legacy roadmap), while a trust document outlines how a trustee manages and distributes assets transferred into a trust (an asset holding and distribution instrument) on behalf of your beneficiaries. While it’s still a part of legacy planning, a trust is an arrangement that can be effective before or after your death. There may be an overlap between the goals of a will and a trust, but not having one or the other can leave a gap in your estate plan. Talk to your advisor to know what you need.
4. “I don’t need to think about legacy planning until I’m well into retirement, right?”
Retirement is a financial milestone, but it does not need to precede legacy planning. In any season of life, it’s essential to outline what you want for the people, assets, and liabilities you’re leaving behind. This could include designating guardianship for dependents, choosing an advance directive/living will, selecting a power of attorney, and updating beneficiaries listed on your accounts. A legacy plan helps your loved ones make decisions when you’re not able to.
5. “I created a will years ago so I wouldn’t have to worry about it anymore. I’m all set!”
It's great to address legacy planning early, but revisit your will, trust, and legacy plan regularly. You might be surprised at all of the changes you want or need to make in light of new family situations, health diagnoses, or sales and purchases. At Credent, we review your goals yearly. Consider using this time to review your legacy plan as well.
Legacy planning can be sobering, but it makes tomorrow easier. An estate planner is key, as is your financial advisor. We've helped clients pivot once a medical diagnosis necessitates extra protection, preparation, and planning. We’ve guided those on the receiving end of a legacy plan to take the best course of action. No one should have to do this alone.
If you have additional questions about wills, trusts, or leaving a legacy, reach out to our team at email@example.com
Investment advice offered through CX Institutional, a registered investment advisor.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.