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  • Legacy planning is a financial strategy used to create a plan for your estate after you die.

  • A kind of financial service, legacy planning is often created with a financial advisor.

  • Legacy planning can help mitigate tax issues by discussing various tax scenarios that could impact your estate or beneficiaries after your death.

How Legacy Planning Works


Legacy planning is important to consider before a person passes away. After a person passes away, their wealth and possessions are passed on to next of kin or to people or charities specified in a will.

If you don't have a plan in place for your estate, its management might go against your wishes once it is passed on. Legacy planning is especially important for those with small businesses or other assets that require maintenance.


Financial Advisors and Legacy Planning


Just as with writing a will, it's important to start planning your legacy early so that when the time comes, your affairs are in order. A financial advisor provides advice on how best to prepare your legacy and assist with any questions or special requests that might come up.

First, the financial advisor guides you toward reaching a level of financial security that will both provide you with a comfortable life and allow you to leave wealth as a part of your legacy. Many people forget that they cannot leave a financial legacy if they weren't financially secure enough to amass that legacy in the first place.


If you own a small business or farm, or any other assets that require ongoing maintenance, legacy planning is often an important financial tool.

After addressing the issue of financial security, the financial advisor gives advice on how to ensure that your affairs are managed and continue to prosper after they've been passed on. The advisor usually recommends setting up a meeting with your next of kin to discuss how to manage your estate, so there are no surprises.


The meeting allows you to communicate any preferences or wishes you have in how it should be managed or what should become of it. It's always useful to have these wishes in writing, such as in a will. The financial advisor can also assist you in donating any portion of your wealth to charity.

If you own a small business, for example, you might also be worried about protecting your estate from legal issues or creditors. Financial advisors can provide advice on how to take steps to ensure that your assets are protected after they've been passed down.

Estate Taxes

In addition to assisting with the estate's development and management, the financial advisor will discuss any taxes that might affect your estate. Taxable assets include life insurance policies, individual retirement accounts (IRAs), and annuities. Many people don't realize how high taxes on their estates can be, and they often don't realize the true value of their assets, so it's key to meet with a financial advisor during the planning process to make sure that all potential tax scenarios are taken into account.

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