Your Estate – Creating a Legacy Plan
Michael Leggatt, MBA, CFA
RBC Phillips, Hager & North Investment Council/RBC Global Asset Management Inc
on behalf of Langley Memorial Hospital Foundation
Creating a Legacy Plan is a more holistic approach to estate planning. It sets out definitive plan for managing your total wealth while you’re alive, distributing your estate how you choose after your death, and passing on your legacy. Your estate includes all assets of any value that you own.
A legacy plan communicates more than financial details – it expresses your values, wishes and life lessons you want to pass along. It imparts wisdom that your successor may use to guide inherited assets in the future, so that these assets may endure for more than a generation.
You will want to work with your professional advisors – lawyer, accountant, financial planner and insurance provider – to create a legacy plan that is comprehensive and addresses all the elements of your estate.
There are four key goals when creating your legacy plan.
1. Financial security
Though few people realize it, putting yourself first should be the priority of legacy planning. Establishing a legacy involves giving to or providing things (not necessarily money) for others.
Once comfortable with your financial security, you need to make important decisions for the ultimate disposition of your wealth.
2. Continuing the management and caretaking of the estate
Too many estates, regardless of their size, dwindle rapidly after the first owners pass them on. Often the successors did not understand how the assets were to be managed or did not share the values and outlook of the founder.
This issue is particularly important with small businesses. The founding owner must decide who will own the business, who will benefit from its income, and who will manage the business. A key to successful legacy planning for a business is to have a succession plan in place and to follow it.
3. Protecting the estate
This goal is particularly important to small business owners and professionals. They feel a greater need to protect assets from potential creditors and lawsuits.
4. Address the potential tax burden. Once you have established who should benefit from the wealth, you want to transfer the wealth to them in the ways to minimize the tax burden on the estate and with the lowest possible tax bill to meet your other goals.
Planning a legacy involves far more than reducing estate taxes. It is time to start determining your goals and putting your plan together.