How to create a legacy plan

Created date

August 6th, 2018

You worked hard for your money, and you want to be sure it is spent wisely, right? During your life, you can control that. But after you pass, your assets will probably be in the hands of your heirs. A will and an estate plan are the first steps—but they may fall short when it comes to ensuring your money is used in ways that align with your values. That’s where legacy planning comes in.

“Traditionally, estate planning has been all about the assets. Grow them. Protect them. Transfer them with minimum loss to taxes,” says Phil Cubeta, assistant professor of philanthropy at the American College of Financial Services (theamericancollege
.edu). “Legacy planning goes beyond that to transfer both meaning and money. It means leaving the right amounts, at the right time, in the right way to help the family flourish across generations.”

So, how do you create a legacy plan? Well, the answer can be different for different people.

If, for example, you place a high value on education, you might want to set up 529 college savings plans for your grandchildren. Or, if you are an entrepreneur, you may want to use your legacy plan to encourage your heirs to follow in your footsteps.

“In my case, I have different amounts set aside for my kids based on certain life events,” says Minnesota financial planner Brett Anderson ( “If one of them wishes to start a business, there is a specific amount set aside for that. If school is in the picture, costs will be covered there too.”

Philanthropy is often an important part of legacy planning as well. If you want to leave money to a specific organization or cause, you can establish that in your estate plan. But you may want to take it a step further and create a legacy plan that encourages your heirs to continue your good work.

“I worked with a client who wanted their children to form the habit of giving to charity,” says North Carolina investment advisor Alex Sutherland ( “The parents put money in a fund and upon their death, the control of the money went to the children with one rule—the money must go to charity. The children then could make the decision on which charities received the money.”

Not just for the rich

“Legacy planning” may sound like something reserved for the very wealthy, but Sutherland says that’s not necessarily true.

“Everyone should consider legacy planning. It’s not just for those with high net worth. It’s for anyone who wants their resources to have a purpose when they are gone,” he says. “The question to be asking yourself is: When things are all said and done, what about your money is important to you?”

To that end, he recommends starting the process with some soul-searching as well as honest conversations with your spouse and family. That will help you identify what really matters to you.

“Would you like to see a scholarship in your name? Is there a particular charity that is meaningful to you?” Sutherland says. “Once you identify what is important, a financial professional can guide you on how to accomplish these goals.”