Steve Lear

Legacy planning is challenging because it forces you to confront your mortality. But it can bring clarity to you while alive. You are not going to be here forever. So how do you start financially planning for death while living your busy and hopefully fulfilling life?

Create a Legacy Plan

Many people will reach the finish line with money left over. If you want to be one of them, you need a legacy plan. Consider the following scenario:

You have reached age 100. While you will die soon, you have lived a long, exciting, and contented life. As your financial advisors, we’ve come to say goodbye and thank you for allowing us to help you with your finances and life planning. We’ve brought along your net worth statement. As you imagine this, think about the following question:

What net worth will leave you feeling great about your finances with no regrets?

Your answer today clarifies what you need to do tomorrow.

When to Start Planning Your Legacy

You are ready to begin when the following three conditions exist:

1. You accept that you won’t be here forever.
2. You will have money left at the end of your life.
3. You are committed to helping the next generations.

What Will Be Your Legacy?

Here are the most common responses people give when I ask this question:

1. I wish to leave my family with a negative net worth.
   Not many people choose this option. Those who do are typically faced with a sad situation; there is no one in the second generation that they love, trust, or respect.
2.  I wish to leave my family as much money as possible.
   These people have never answered the question How much is enough? You’ll never achieve financial satisfaction if you can’t answer that question.
3. I wish to leave my family with just enough money to settle my financial affairs.
   Depending upon your circumstances, this amount might range from $10,000 to $250,000 to pay most final expenses, including administrative costs, etc.
4. I wish to leave my family with a certain dollar amount or percentage of my net worth.
   There is no right answer. That’s what makes the life of a financial advisor or legacy planner so interesting!

How Do I Begin the Planning Process?

Before you can start drafting a legacy plan, you need to answer two more critical questions:

1. How do you define an heir?
   It might be a blood relative. But it might also be someone who shares your values or has shared amazing moments in your life. Maybe it’s people in need or a community organization you support that puts mission above money.
2. How much is enough?
   The best way to answer this question is to go through the following financial independence planning exercise:
   • • Set your financial goals. (including how much money you want to have at age 100)
     • Review your net worth and savings rate.
     • Determine the probability of successfully reaching your goals.

Knowing that you are on track to achieve your financial goals—including the legacy you want to leave—will greatly reduce your stress level and the stress of family members in future generations who will be caring for you.