Preserving Your Legacy: A Comprehensive Guide to Estate Planning

Are you one of the 67% of U.S. adults who don’t have estate planning documents prepared?

Legacy and estate planning are crucial in securing financial well-being and emotional peace for you and your family. But it’s more than just transferring wealth and assets; it’s about shaping a legacy, safeguarding loved ones, and creating a lasting impact. Preparing a thoughtful estate plan allows you to make meaningful decisions that honor your values, provide for future generations, and offer clarity during life’s transitions.

In this guide, we’ll define the differences between legacy and estate planning, three components they share, and tax-efficient strategies you can implement to maximize your estate.

What Is Legacy and Estate Planning?

While similar, legacy planning and estate planning are two different processes. Let’s break it down:

• Estate planning involves preparing tasks to manage an individual's asset base in the event of incapacitation or death. It primarily revolves around all financial matters, including legal documents, wills, trusts, investments, and other assets.
• The legacy planning process involves the personal, familial, and philanthropic values you want to pass on. Legacy planning is about preparing for how you want to share your wisdom and life lessons with future generations.

Estate planning ensures that your assets are distributed according to your wishes, minimizing family disputes and financial burdens. A well-structured plan supports continuity, clarity, and often substantial tax savings, leaving more for heirs or charitable causes.

Legacy planning may seem less important because it doesn’t directly impact your wealth, but your legacy is more than just the assets you pass on. It’s an opportunity to tell your story and extend values, such as philanthropy, to your loved ones.

That’s why both are critical for your financial journey. Estate planning allows families to maintain their financial stability across generations, while legacy planning shapes how your heirs approach their lives and careers.

3 Key Components of Legacy And Estate Planning

As you prepare your legacy and estate plan, you should focus on three key components: wills and trusts, beneficiaries, and power of attorneys.

1. Will and Trusts

A will is the cornerstone of your legacy and estate plan. A will establishes clear instructions for distributing assets, naming guardians, and specifying other personal wishes. It’s a foundational document that prevents the complications of intestate succession.

There are two primary types of trusts:

• Revocable Trusts offer flexibility, allowing adjustments as your life and financial needs evolve.
• Irrevocable Trusts provide tax benefits and asset protection, often shielding assets from creditors and legal claims.

2. Beneficiary Designations 

Beneficiary designations are a crucial aspect of estate and legacy planning because they determine who will receive specific assets directly, bypassing the probate process (which can be lengthy and costly).

After you name your beneficiaries, remember to review them annually. Regularly updating beneficiary designations ensures that they reflect your current wishes, especially after significant life changes (e.g., marriage, divorce). 

3. Power of Attorney and Healthcare Directives 

You never want your finances or health care decisions from someone who doesn’t understand your wishes. Assigning a power of attorney (POA) ensures a trusted individual can make financial and legal decisions if you become incapacitated. Healthcare directives can further guide medical professionals and family members, ensuring your healthcare wishes are respected.

How To Minimize Taxes To Maximize Your Legacy

You can never avoid taxes, but there are strategies you can implement to minimize taxes to enhance your legacy. To lower the value of your estate to minimize taxes, consider gifting or charitable giving.

1. Gifting: Gifting assets to family members while alive can help reduce your taxable estate and allow recipients to benefit sooner. For 2024, the annual gift tax limit is $18,000 for individuals and $36,000 for married couples. You can also use your annual gift tax exemption to fund a 529 plan for an heir’s college education.
2. Charitable giving: Charitable donations benefit both the receiving organization and your estate. Strategic charitable giving, such as creating donor-advised funds or charitable trusts, offers tax benefits and strengthens your legacy’s positive impact.

Note: High-net-worth individuals will need to be aware of the federal estate tax exemption, which increased in 2024 to $13.61 million for individuals and $27.22 million for couples. In addition to federal taxes, states can require an additional estate or inheritance tax. Ohio does not levy an additional tax, but Oregon taxes estates worth over $1 million.

Family Dynamics and Legacy Planning

Death and money are two of the most challenging conversations to have with your family. Still, even though it may be uncomfortable, having legacy and estate planning conversations with your loved ones is crucial.

Creating an open, honest, and transparent environment is essential to navigate these conversations. The goal is to unite the family and minimize the chance of future conflicts. To succeed, take this opportunity to share your values and beliefs and remind your loved ones that your legacy isn’t just about financial assets but guiding principles.

Your Legacy Begins Today

Legacy and estate planning encompasses practical and deeply personal decisions, securing your vision for the future. Proactive planning ensures peace of mind, clarity, and continuity for loved ones, but it can be complex. Don’t let tax implications or complicated laws stop you from planning your future. A financial advisor can bring insights on taxes and work with you to create a plan that aligns with your financial goals and maximizes your estate.

Contact our team here to take the first steps to protect your assets and instill a powerful legacy.