Legacy planning and estate planning are two different things. However, you may have noticed recently that the two phrases are being used interchangeably. Let’s clear up any confusion right now.
First of all, let’s clear this up: “legacy planning” is not the same thing as “estate planning” in estate planning legal circles. The technical definition of a legacy is a gift or bequest made in a will, which is part of an estate plan. Forbes takes an interesting approach in a recent article, “Three Common Misconceptions About Legacy Planning.” It defines legacy planning as a proactive approach to defining and ideally, achieving, a legacy that an individual wishes to leave behind.
Here are some frequent misconceptions about legacy planning:
I’m not vain enough to have such plans. For some, the idea of creating and leaving a legacy is uncomfortable. They think they haven’t or won’t accomplish anything significant enough to be preserved. They also think that preserving their legacy means preserving their individual name and story. That can feel like they’re putting themselves on a pedestal and saying, “look at how great I am.” It sounds kind of egotistical. However, legacy planning starts with a simple notion that everyone is entitled to a happy, fulfilled life that is achieved through striving to become your best self and accomplishing your greatest success. It is about health, wellness and balance. As far as what happens when you die, your legacy plan is less about preserving who you are as an individual and more about preserving your life’s work.
Ruling from the grave? Really? This suggests that you’re controlling your heirs and future generations as far as the family legacy. Control isn’t really the main point of legacy planning. It’s about the freedom to find and become your best self and to achieve your greatest success. When it comes to protecting the wealth and assets through which your legacy lives after your death, your plan should empower those in charge to be intentional and purposeful in carrying your purpose forward.
Only truly wealthy people leave a legacy behind. Everyone leaves behind a legacy, whether it is made up of the stories that are handed down from one generation to the next, or if it’s a scholarship fund that sends four generations of needy children to summer camp. Legacy planning is about taking an active role in deciding what matters to you and how you would like to share those values when you are gone.
Reference: Forbes (November 15, 2017) “Three Common Misconceptions About Legacy Planning”