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Legacy planning avoids financial pitfalls

On Behalf of | Nov 5, 2020 | Estate Planning |

Having a will may not guarantee that your wishes are carried out or that your heirs’ needs are assured. Estate planning should include asset transfer strategies, such as legacy planning, that helps future generations use your wealth wisely.

Legacy planning

Legacy planning is intended to assure that your children use your wealth for financial freedom or within certain restrictions. It can help direct your assets to a charitable cause or somewhere it will have lasting impact.

You need to determine how much wealth is enough for the children, the age that money should be transferred to them and whether money should be transferred when certain incentives are met such as college graduation. Some parents may want to put restrictions on massive assets to encourage their children to finish their education and engage in a profession.

Legacy planning also protects children from events outside their control such as creditors seeking their inherited assets. Establishment of an irrevocable trust can place inherited assets outside the reach of creditors and encourage conduct by making those funds available for starting a business or going to college.


A revocable living trust is a key document. This is also known as a family trust and its creator keeps full control of assets titled to the trust during their lifetime and directs how assets are passed on after they die.

Pour-over wills are usually used with revocable living trust and direct assets to the RLT which are titled in the RLT’s name. A durable power of attorney authorizes an agent to make financial and legal decisions for you if you become incapacitated.

A living will and durable power of attorney for health care contain your health care wishes. Living wills contain directives to physicians concerning pain medication, artificial hydration and nutrition and resuscitation if you are unable to communicate them. A health care power of attorney appoints a person to make health care decisions when you are incapacitated.


Further planning may be needed to reduce estate taxes. A large estate may also have substantial estate and gift taxes. Illiquid assets such as real estate or a closely held business may complicate the payment of estate taxes.


Assets bequeathed to a charity or charitable structure such as a private foundation or donor advised funds are not covered by estate or gift taxes. There are many ways to donate assets to charity after your death which depend on your goals.

Attorney can provide options on managing your assets and assuring they are effectively use. They can also prepare documents that carry these wishes out.