You’ve worked hard to build your wealth. You’ve saved, invested, and made countless decisions to create financial security for yourself and your family. But building wealth is only half of the story. The other half – the one too many people put off – is deciding how to pass it on.
That’s where legacy planning comes in. You have to ensure your assets, values, and intentions live on in a way that aligns with what matters most to you. The challenge is, most people don’t know where to start. Talking about wealth transfer can feel uncomfortable, and even when you do, it’s easy to miss critical details that affect how efficiently your estate is passed on.
But you don’t have to have all the answers. You just need to start the right conversation – and your financial advisor is the perfect place to begin.
Here’s how to begin the conversation and start planning.
1. Start With the “Why”
Before diving into details like trusts, taxes, or beneficiaries, take a step back and think about your goals. Legacy planning isn’t one-size-fits-all. For some people, it’s about ensuring their family is taken care of. For others, it’s about supporting charities, funding education, or leaving a business in good hands.
When you sit down with your advisor, lead with your “why.” Explain what legacy means to you. Maybe you want to make sure your children have financial security without losing their work ethic. Or perhaps you want to pass down property that’s been in the family for generations. It’s different for all of us.
Remember, your advisor can’t design a plan that reflects your intentions if they don’t know what drives you. Framing your goals first gives them the context they need to create a legacy plan that’s both efficient and deeply personal.
2. Discuss the Big Picture, Not Just the Balance Sheet
Legacy planning ultimately comes down to creating a sustainable, long-term structure for how those assets will be used. Your financial advisor should help you think beyond the immediate “who gets what” and focus on the how.
Ask your advisor to walk you through how your current investments, accounts, and insurance policies fit into an overall estate strategy. Discuss questions like:
- How are my assets currently titled, and will that create problems later?
- Which accounts will be taxed upon transfer, and which can pass tax-free?
- How can I reduce estate taxes or probate delays for my family?
This is where your advisor can bring in other professionals – like your CPA or estate attorney – to ensure every angle is covered. A well-structured legacy plan involves collaboration between these experts, especially when it comes to managing the tax side of wealth transfer.
3. Explore Trusts and Gifting Strategies
Trusts and gifting strategies are some of the most efficient ways to transfer wealth. These tools can help you control how and when your assets are distributed while reducing taxes for your heirs.
Ask your advisor to explain the types of trusts that might fit your situation. For example:
- Revocable living trusts let you maintain control of your assets while simplifying distribution after your death.
- Irrevocable trusts remove assets from your taxable estate, which can significantly reduce estate taxes.
- Charitable remainder trusts allow you to donate to a cause you care about while still providing income to your beneficiaries.
You can also ask about annual gifting strategies, which allow you to give a certain amount each year to family members or loved ones without triggering gift taxes. This can gradually transfer wealth over time rather than all at once, reducing the tax burden on your estate later.
If you own a business, bring that into the discussion, too. Business succession planning often requires special strategies, such as setting up trusts for ownership shares or creating buy-sell agreements to ensure a smooth transition.
4. Address the Tax Question Early
Few topics are more important in legacy planning than taxes. You might have an impressive portfolio, but if your plan doesn’t account for tax efficiency, your heirs could lose a significant portion to the government.
Your financial advisor can help you understand which assets will be taxed most heavily upon transfer – for instance, registered accounts like RRSPs or 401(k)s – and how to structure withdrawals or conversions to minimize that impact. They can also coordinate with your CPA to model different scenarios, showing how various strategies (like Roth conversions or charitable giving) could reduce your long-term tax exposure.
Don’t wait until later to have this discussion. Tax efficiency isn’t something that happens automatically – it’s built through deliberate planning and, often, gradual changes over time.
5. Bring Charitable Giving Into the Conversation
If philanthropy is part of your legacy, your advisor can help you build a giving strategy that aligns with both your values and your tax goals. Charitable donations, endowments, and foundations can all serve as vehicles for leaving a lasting impact while reducing the taxable value of your estate.
Ask about donor-advised funds, which let you set aside money for charitable causes while still receiving an immediate tax deduction. These funds allow flexibility – you can decide where the money goes later, while the assets continue to grow tax-free in the meantime.
6. Know What to Expect From Your Advisor
A great financial advisor will help you think through the emotional and logistical sides of legacy planning. They’ll ask about your family dynamics, your priorities, the future you envision, etc.
Your advisor should also act as a project manager, helping you coordinate with other key professionals, including your CPA and estate attorney.
Most importantly, they should help you revisit your plan periodically. Life changes – so should your legacy strategy. Marriage, divorce, new grandchildren, or changes in tax law can all affect how your plan functions.
Working With a Financial Planner for the Full Picture
If you don’t yet have a financial planner, this is the time to consider one. A qualified planner looks at all aspects of your financial life and ensures they work together in harmony.
When you have someone qualified guiding this process, you’re not leaving your legacy to chance. Instead, you’re able to shape it with clarity and intention.
