In the financial planning world, “legacy” often means leaving behind a financial inheritance when you’re gone. Whether that’s real estate, personal belongings, or a retirement account, what you’re passing on to the next generation defines your legacy. However, there are different types of legacy (in addition to the traditional finances) you can build — and even enjoy as you do so.
Building a Meaningful Legacy Now
Passing down a legacy is not just about money. Our legacy is also how we’re remembered, and what we’ve built that will live long after us. What will someone think, feel, say, or remember when they hear your name? How will you have contributed to the world during your time? What kind of a footprint will you leave behind?
Leaving a lasting legacy doesn’t necessarily mean you’ll change the world. For many, a modest, fulfilling legacy means being remembered in a positive light by people who knew you in some way. How can you pass on a great legacy like this? First, you have to define your legacy.
How do you do that?
Define What’s Important to You
Once you know what you want your legacy to be, you can start focusing on what matters now. You’ll be able to build your legacy by living in the way you want to be remembered. Your day-to-day life will be influenced by your legacy, making your actions meaningful and purposeful.
Ask yourself questions like these to help clarify your legacy:
How do you want to be remembered?
What will people miss about you when you are gone?
What lessons do you want to pass on to future generations?
How do you want to impact your community?
What do you want to leave behind? Real estate, stock, prized possessions, an inheritance?
By asking yourself these questions, you’ll get clear on ideas for leaving behind a legacy you’re happy with. You can then narrow your focus and figure out how to start building your legacy. And of course, if money or possessions are part of your legacy and what you want to leave behind, it’s important to know the different types of traditional legacy options out there.
Traditional Legacy Options
While many of us want to leave a legacy that goes beyond money, there’s no denying that money is still part of your planning. Financial legacies can take a number of forms, so you can choose the one that fits your needs and what you want to provide.
These options can include (but aren’t limited to):
The “safety net” legacy. Life is unpredictable and having backup funds when the unexpected happens can be a huge relief. A safety net also shows those who are important to you that you want to support them through the hard times even after you’re gone.
A meaningful, specific gift. You might leave behind money for your heirs that will go towards paying for a home, a college education, or something else specific to them. This kind of legacy is meaningful and practical, ensuring that your descendants’ needs (and dreams) are met.
Opportunity funds. With an opportunity fund, your loved ones have the chance to do something they may not have been able to do: go on a family vacation, take an extended leave from work to raise a baby, start a business, invest in a startup, and more. The opportunities are endless, and it’s all thanks to your commitment to your legacy.
A social impact fund. This goes beyond impacting your loved ones and touches on the larger community, allowing you to support causes that are important to you. For example, someone passionate about education may bequeath money to a nonprofit like Stand for Children. You can give money to nonprofits through either charitable remainder trusts, charitable gift annuities, and even donor-advised funds, all of which have unique tax benefits.
Note: There are countless other options to leave behind a financial legacy, including inheritance and trust funds. To know which option is best for you, it’s always best to create an estate and legacy plan with your financial planner and/or estate attorney.
Don’t Leave Your Legacy Unplanned
Leaving a meaningful legacy behind is not just important, it’s emotionally fulfilling. Your legacy sums up your life’s work, your passions, your values. Take the time to discover what’s important to you now — whether that’s financial security, caring for others, supporting your community, or pursuing your passions. Then, you’ll be able to write a story that will live on after you’re gone.
If you need assistance with your legacy planning, Guiding Wealth can help. Contact us now.