Chestnuts roasting by the open fire, endless sweet treats, and peppermint hot chocolate during a snowy evening set the scene for the holidays.
As you gather with your family to celebrate, conversations often turn to shared memories, traditions, and plans for the future. But it’s also a time to reflect on legacy—what we hope to leave behind for future generations and how we can provide security and guidance for loved ones even after we’re gone.
Legacy planning is more than a financial exercise; it’s an opportunity to share values, create understanding, and ensure our wishes will be honored. Discussing legacy plans with family members can strengthen bonds, prevent future misunderstandings, and bring peace of mind.
To make legacy planning effective and meaningful, here are essential conversation topics you should consider having with your family.
What is Legacy Planning?
Legacy planning involves determining how you wish your assets to be distributed and ensuring your personal, medical, and financial wishes are known and respected after your passing. It is a comprehensive approach to securing your legacy.
There are three primary components of a well-rounded legacy plan:
- Wills: A will is a legal document that outlines how your assets will be distributed. It is one of the most fundamental tools in legacy planning, providing clear instructions to prevent confusion.
- Trusts: Trusts help manage and distribute assets in specific ways. They can offer tax benefits, protect assets from certain legal challenges, and simplify the transfer of assets to heirs.
- Health Care Directives: These directives provide specific instructions about your medical care if you become unable to communicate, including living wills and health care proxies.
Why Discuss Legacy Planning with Family?
Wills, trusts, and healthcare proxies aren’t your average conversation topics with your family around the holidays, but they are critical for your legacy. Your family is the foundation of your legacy; having these conversations about your values, principles, and goals is the only way to ensure your legacy is safe.
There are 3 main reasons why you should discuss legacy planning with your family:
- Transparency and clarity: Sharing your legacy plans ensures that family members are aware of your wishes, reducing the likelihood of surprises or misinterpretations.
- Avoid conflicts: If there are concerns about how you want your legacy lived out, it’s best to address them sooner rather than later. Proactively identifying and resolving these issues can help maintain family harmony. If needed, you can take the feedback from your family and adjust your plan to reflect a sense of equity among family members.
- Involve loved ones: Your legacy plan is uniquely yours. However, including family in your legacy planning allows them to understand your decisions and ask questions, making them feel valued and heard. Take this opportunity to listen to family members’ insights—their input may influence, or even enhance, your legacy plan!
Key Conversations to Have About Your Legacy
Your estate is likely quite extensive, but it’s best to keep these conversations focused on asset distribution, family dynamics, and end-of-life decisions.
Be specific about how you want your assets to be allocated, particularly any items or funds that may have sentimental value or personal significance. If you have special instructions for heirlooms, personal mementos, or property, sharing them can prevent misunderstandings or disputes later on.
No one knows your family better than you, but you may be surprised at what each family member has to say. These conversations can reveal things you may not have been aware of and guide you in making decisions that align with family expectations. When you have these conversations up-front and early one, you can avoid any tension that can hurt your legacy later on. Now is the time to resolve any potential issues.
Your health care and end-of-life wishes are one of the more sensitive topics. Clarify your preferences regarding medical treatments and interventions to allow your family members to understand and respect your wishes. Take this time to assign roles, such as health care proxy or financial power of attorney, to specific family members, providing them with guidance on how to act in your best interest if the need arises.
How to Start the Conversation: 3 Key Considerations
Legacy planning conversations should be intentional and thoughtfully planned. We don’t recommend just ‘winging it’! Consider the following best practices:
- Timing is everything: Choose a comfortable, private setting to ensure everyone feels at ease discussing sensitive topics. Don’t try to start the conversation right in the middle of game night or during a heated discussion at the dinner table.
- Be honest (with yourself and your family): Approach the conversation honestly, sharing your intentions and reasoning to help your family members better understand your decisions. You want to create an environment where everyone, including yourself, feels comfortable sharing their thoughts and asking questions.
- Involve professionals: Finalize legal documents with your financial advisor to ensure your wishes are clearly outlined and legally binding. If needed, your advisor can facilitate the discussion and lead a more in-depth discussion regarding the financial aspects of your legacy plan.
Planning Documents You Need to Prepare
Before any legacy planning discussions, you need to make sure you have all of your key documents on hand. These include:
- Wills and Trusts: Ensure they are updated and reflect your current wishes.
- Power of Attorney: A power of attorney designates someone to make financial and health decisions on your behalf if you become incapacitated. The same person can hold these positions if you wish, but consider the strengths and weaknesses of the person or people you appoint.
- Insurance Policies: Gather your life insurance, long-term care insurance, and other policies to ensure they are up to date with the appropriate coverage.
- Investment Accounts and Assets: Compile a list of all of your assets so your family gets a complete understanding of your estate. Include everything from bank accounts to real estate to stocks.
Merry, Bright, and Prepared For The Future!
This holiday season, consider taking the first steps in discussing your legacy with your family. Legacy planning is crucial to your estate plan, ensuring your wishes are honored, and your family is well-prepared. By discussing your plans openly and honestly, you can provide clarity and prevent misunderstandings.