What is Legacy Planning, and Who Needs It?

There are a lot of misconceptions around legacy planning, who needs it, and what’s included. A 2023 Wills and Estate Planning Study by Caring.com found that only 45% of Americans over age 55 have a will, and while 6 in 10 people have retirement accounts, only 1 in 3 have a complete estate plan.

In my experience over the past 30 years in financial services, many families end up waiting until an unexpected crisis or situation occurs and they’re forced to have a discussion around next steps. However, this can be a risky approach and unfortunately not everyone may get the chance to make decisions before it’s too late.

Even after I personally had been working in the trust industry for over 15 years, it wasn’t until my father passed and my mother started to decline that she finally agreed to let me in on the basic details of where her assets were saved, whether she had enough money to cover the costs of her care, and who would become power of attorney. She was a strong-willed person and miraculously pulled through a major injury, but in that moment, she realized we needed to have some serious, transparent discussions as a family.

Born in the 1920s, my parents lived through the aftermath of the market crash and were left with no faith in banks. They had spread their money across a large number of banks over the years, and it took quite some time for me to collect, consolidate, and account for everything they had. Although my mother was hesitant to give up some level of control, she understood the cost of care was not going to be cheap and she couldn’t quite manage everything on her own. We didn’t want her to outlive her assets, so we moved quickly to meet with a financial advisor, obtain a lawyer, draw up the necessary documents, and agree to a plan.

At Citadel, we really urge people to have those conversations as early and often as possible regardless of age, income level, or current health. When handled the right way, a lot of the tension and uncertainty can be eliminated, so parents, dependents, beneficiaries, and all family members can feel prepared and secure. In some strange way, it can even bring the family closer when everything is out in the open.

Legacy Planning vs. Estate Planning: What’s the Difference?

Understanding the differences between legacy planning and estate planning is a good place to start.

Estate planning addresses assets like property, money, debts, and family heirlooms. It helps determine who can make decisions on your behalf, who takes care of your dependents, and how to avoid unnecessary taxes and waiting periods.

Legacy planning also accounts for non-financial capital, like family values, traditions, and philanthropic goals. Together, they cover any decisions that can arise when a person dies.

Each plan may differ slightly from one person to the next based on the level of assets, number of beneficiaries, and the level of complexity around the estate, but everybody should have at least a basic plan and a few key documents.

Common Estate Planning Documents

• Your will (or “last will and testament”) outlines how you want your assets handled and distributed when you die. As part of creating a will, you’ll need to define an executor to be the person who’s legally obligated to administer the distribution to your beneficiaries.
• Your beneficiaries should also be clearly defined so your loved ones are aware of any inheritance and/or responsibilities they may receive upon your time of death. Depending on your situation and the age of your beneficiaries, a trust may also be necessary or helpful to hold assets for a certain amount of time until your beneficiaries are ready to receive it.
• Your power of attorney gives authority to someone else, like a spouse, child, or loved one to make financial, legal, and business decisions on your behalf if you become ill or your situation changes.
• Your living will states your preferences regarding health care decisions, such as whether you want life-extending treatment, how you want to manage long-term care, what procedures you do or do not want, and other end-of-life matters, as well as who can act on your behalf in those decision making processes.