Holistic Legacy Planning: It's About More Than the Money

Finances and items of value get a lot of attention when it comes to estate planning, but don’t forget family traditions and important life lessons.

(Image credit: Alistair Ber)

Planning your legacy can be a complicated process. Navigating how to pass on financial assets, real estate and possessions can be stressful, and some people end up putting it off due to concerns about difficult conversations with family, confusion around addressing a complicated topic, or even fears of confronting their own mortality.

But when planning your legacy and what you’ll leave behind, remember that financial assets and real estate are just part of a person’s legacy. While finances are an important aspect of planning, deserving plenty of time and thoughtfulness, your legacy includes much more, such as family traditions, fond memories and meaningful valuables to the loved ones you leave behind.

Here is an easy checklist that covers everything from finances to personal items of value to get you thinking about what your personal legacy will be and how to plan ahead for what you’ll leave behind.

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1. Personal possessions and items of value

When we lose a loved one, often their personal possessions hold the most meaning and offer a fond memory for loved ones. But personal items left behind can also be a source of conflict for family when there isn’t a clear plan for who gets what.

Start the conversation early by asking loved ones if there are any mementos or personal items with special meaning that they might like to have once you are gone. Soliciting input and having an open conversation where everyone can have a say is a great way to get ahead of potential conflicts down the road. Once you’ve determined who will receive which possessions, put it in writing — or even label things — so there is no question or confusion when the time comes to divide up these important items.

2. Final wishes and instructions

One of the most important things you can do as you begin estate planning is to create a health care directive and a living will, and to assign someone to be your health care proxy. To remove much of the burden from your health care proxy, make your living will as specific as possible. This will help ensure your wishes are known so there are no gray areas concerning your end-of-life decisions.

In addition to outlining what you want to happen in a medical situation, it’s also important to think through things like necessary insurance to cover costs and potential changes to your living arrangements as you age, and to be as clear as possible when documenting your wishes and needs.

In addition to your will, provide clearly written instructions for the executor or close family members outlining your preferences for funeral arrangements, burial, cremation and preferences for the funeral service. Make sure family members know where you keep these instructions as well as passwords for important websites and accounts. This can help alleviate stress for loved ones during an already emotional and challenging time.

3. Memories, life lessons and personal values

When thinking through your personal legacy, you likely have some experiences, memories and advice you want to pass along to your children, grandchildren or great-grandchildren. Take time to put pen to paper and document some of these life experiences or lessons that your loved ones can look back on. Or perhaps consider a video diary as a unique way to pass along your perspectives and life advice. Your loved ones will appreciate the thoughtfulness of a handwritten document, or the opportunity to hear your voice as you discuss some meaningful times in your life.

Also consider recording family history and traditions that you’d like to see your loved ones continue for future generations. Having the information recorded in your own words is a meaningful gift that your family and loved ones will cherish.

4. Financial legacy and other assets

When thinking through your financial legacy, you should divide things up into three buckets: items of financial value (like jewelry, heirlooms or art), real estate (current residence, as well as any vacation properties), and financial assets (savings, investments and retirement accounts).

For items of value that you want to pass along, start to outline who will receive what, as mentioned above. For other items, consider if you will donate them to a gallery or museum, or perhaps sell them and include the profits as part of your estate. Having appraisals done can also help you determine if you want to sell them or pass them on, and the best way to do so.

Real estate can be a meaningful asset to pass along as part of a legacy. Whether it is for generating income, for a main residence or a special vacation spot that has been in the family for generations, there are accompanying responsibilities to each that need to be considered. If you’re planning to pass property on, be sure that the people who will receive it are prepared to handle everything from time spent on maintenance and upkeep to ongoing costs like rising taxes or an additional mortgage.

Leaving behind financial assets like savings, investments and retirement accounts is something that many people hope to do for their beneficiaries — both loved ones as well as charitable organizations. Passing assets through a trust may provide more control over asset distribution, but that option has accompanying complexities that need to be considered. Regularly review any insurance policies to ensure your beneficiaries are up to date so that the right party (or parties) will receive the proceeds.

Tax-deferred accounts such as 401(k)s, traditional IRAs or other qualified plans are often one of the largest assets in a person’s estate. Those who want to use these proceeds to leave a legacy should explore ways to minimize the tax burden these accounts can create for beneficiaries. For example, using RMD payments to fund a designated account or financial product that provides tax deferral to be left to loved ones.

Financial assets, real estate and items of value are the parts of a legacy that people defer to when they think of estate planning, but they can also be the most complicated. Enlisting the help of financial, tax and legal professionals can help with the process.

Planning a legacy is rarely a simple process. Starting with the basics as listed above can help you think through some of the necessary steps to organizing what you’ll leave behind. At the very least it may help you feel more prepared and confident that your wishes will be fulfilled. It can also hopefully provide peace of mind knowing that your family will be able to share your important memories, traditions and mementos.

Once you have taken the steps to create your legacy plan it will need to be reviewed occasionally — especially when a major life event occurs, but that doesn’t mean you need to dwell on it. Take care of the tough stuff, and then you’ll be able to enjoy your time with your loved ones more as you have the peace of mind knowing you have provided them with increased financial security down the road.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Kelly LaVigne, J.D.
Vice President, Advanced Markets, Allianz Life

Kelly LaVigne is vice president of advanced markets for Allianz Life Insurance Co., where he is responsible for the development of programs that assist financial professionals in serving clients with retirement, estate planning and tax-related strategies.