Many people want to leave more than a list of bank and investment accounts in their estate planning. They want to leave a legacy.
Leaving a legacy means giving something that will be valued and treasured by those who survive after your death. It requires thought to ensure that any items that have meaning to you will also have meaning to those you designate to inherit them.
Leaving your legacy can also mean giving something that commemorates your life. It could come in the form of a charitable donation; trust accounts for specific purposes, such as education or insurance; sentimental objects; or writings and photos that family, friends or a community can cherish. At its best, a legacy can help make life better for those who outlive you.
Leaving money to charity
Legacies take many forms. You might consider giving a charitable bequest to a nonprofit organization. Among the possibilities are:
- Foundations dedicated to music, dance or the arts
- Community groups focused on the environment and other socially conscious issues
- Schools and universities
- Organizations that hold annual events
- Youth sports
Ways to give money
A bequest is a way to contribute a larger amount than maybe you could have when you were alive and had other uses for the money. You can name a charitable organization, friend or family member in your will so that they receive a share of your estate.
There are other ways to allocate money after your death. For example, many people give money to nonprofit organizations through charitable remainder trusts. To set one up, you transfer assets to a trust for a charity. You receive income that the trust generates while you're alive, and when you pass, the remainder of the asset value goes to the charity. A related gift is a charitable gift annuity, in which your gift to the charity generates income for you during your lifetime. Charitable remainder trusts and charitable gift annuities have different tax benefits, so they should be considered with the rest of your estate planning.
Leaving money to your family
Life insurance is a great way to make sure your family is secure in the event of your passing. You can ensure there's money for future generations' education needs or even pay off your mortgage. This is the type of situation that merits a frank decision about what would be helpful and meaningful to your descendants.
Many people have objects that have intrinsic or sentimental value - often the same item has both. Do you have things such as jewelry or rare coins that your family members and friends might want? A grandnephew might appreciate furniture, and a close friend might treasure your books. In addition, you may have items that would be of interest to your alma mater's archives or to your local historical society.
However, remember this can be a sensitive issue. Speak with family members to ensure that such gifts, particularly to outside organizations, don't bruise anyone's feelings. A family member may prefer to keep an item within their circle.
There are also personal ways you can share memories with your family members and friends. For example, you could record an oral history or compile a photo book. Send cards and letters to the younger members of your family. Tell them your stories. Spend time with them now. These types of sentimental gifts may be the most meaningful legacies.
As you weigh how you may want to leave your legacy, think about the combination of money, objects and memories that matter to those around you. But also think about the financial ramifications. Learn how life insurance can protect your family financially.