We spent a lifetime building and creating wealth; but what do we leave behind? Our wealth has been useful to us but will it be useful to others once we die?
We should turn our attention to preserving and transferring our wealth to our family and community so that the maximum benefit can be derived from our life long efforts.
We all know what is at stake for us; whether we are poor or wealthy, young or old, education or business savvy, we have not planned for our departure from this world.
We make many plans; to buy a car, to buy our dream home, and so on and so forth - but most of us have not planned to face death whereas your death is certain. Planning for our departure generates little interest for most of us. After all, who enjoys contemplating death?
Poor planning can lead to stressful situation for our family
So we put off planning for this; but inaction, procrastination or improper planning will cause a big headache for our family members. They might be left to face a financially uncertain future.
Our wealth may be frozen in the event of our death and our loved ones will be facing problems during the transition period immediately after our death until they are able to continue with their lives. This transition period is crucial as at times families who are used to good life will find themselves in dire straits as the deceased money is frozen pending the courts decision or otherwise.
In other cases, many are forced to sell or possibly sacrifice the family's home to pay their debts or estate duties.
Many of us make a mess of being a parent; in fact many would feel inadequate and hope that our children know that we love them. This feeling of inadequacy is perennial; and the older we get the more we feel the need to make amends.
We can however, overcome this feeling of inadequacy by planning a legacy as defined by one of the participants above to our family.
What then is legacy planning and what are the components?
Diagram 1 below gives an overall view of a legacy plan and its components.
The first component of legacy planning, depicted by the bottom left quadrant, involves estate planning.
Under estate planning, one leaves one estate, made up of various types of assets, to one's family. The typical instruments used are insurance, wills and trusts and includes other considerations such as guardianship matters, medical and the like. This is the first priority in legacy planning; that is to leave wealth for one's family and relatives. Although this may sound selfish, it it practical especially of one does not have much wealth.
If one has more wealth than is needed by one's family or relatives, one can proceed to the bottom right quadrant. This component of legacy planning is planned charities that can either be of short term or long term use.
Short term charities can be in the form of small gifts that is given for specific purposes and long term charities are usually in the form of philanthropic gifts or endowments. Most people, whether they are rich or poor, famous or otherwise, are forgotten when they are no longer alive except if they leave legacies such as the above.
If one does not have wealth, one can still leave a legacy of good values for one's family. There are many people who are poor but they leave good values behind and their children not only survived when they are gone from this world, but these children become successful not only financially but inspire others to do good as well, such as what happened to Konosuke Matsushita. This quadrant is reflected in one's beliefs and morality.
However, another important aspect of legacy planning is one's involvement in society and instilling good values through an endowment, foundation or similar vehicles. This may involves leaving behind the spirit of involvement in society, volunteerism through and good neighborhood character.
All the four components of legacy planning should be sheltered by a trust as many legacy planning programs cannot be effectively administered without it. Therefore, he role of a trustee is of paramount importance for some legacy plans.