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Estate planning vs legacy planning

Mr. Turner or someone,

What's the difference between estate planning and legacy planning?

Re: Estate planning vs legacy planning

Reply #1
Thanks for asking, Rick! It seems like they're similar (and to some degrees) they can overlap.

You see that estate planning tries to coordinate one's personal and business wealth/assets into a dependable organized plan to protect the estate from unnecessary taxes, attorney fees, and related "probate" costs and expenses, delays, public record, theft, and family feuds (the in-fighting; not the tv show).

Some attorneys believe that establishing a will and a durable power of attorney (DPOA) is a comprehensive estate plan; I disagree. In Hawaii, it's possible to be probated while you're alive (guardianship), die, and then be probated again! This is how people of great wealth die as paupers.

Guiding as much of your residual estate around probate involves the use of  various "Inter - vivos" trusts (aka) Living revocable and irrevocable trusts. Estate planning strives to provide a cost effective and time saving blend of legal tools, documents, Life Insurance/Annuities as the means of transfer to the Heirs and/or charities. Reducing the taxable estate is also important especially if there isn't a lot of cash wealth ("Land rich, cash poor") and these estates require liquidity to avoid selling off the valuable assets of the estate at pennies on the dollar. Charitable Trusts ("remainder" and "lead") are important strategic tools that are used to accomplish reductions of estate value for tax purposes while allowing the sale of highly appreciated assets (e.g. real estate, appreciated common stock, aand qualified plans (IRA's) to be converted into tax favored income streams that can also be used to fund legacy plans such as large life insurance policies that can remain outside the valuation of the estate and provide liquidity and inheritances without triggering taxes. This is an example of how estate planning and legacy planning can overlap.

"Legacy" planning involves a more detailed look at providing for your Heirs, and may also involve providing for those things dear to your heart. Perhaps it involves building your monument to your life's works, and dedicating your wealth to the means of expanding and carrying it forward for those in the future (who may or may not be of your blood lines). Perhaps you want to fund (or help fund) an engineering department at your Alma Mater. Or, direct wealth to research of some dread disease, perhaps your church or elements of your faith, mission work, orphanages, and on, and on, and on. If you've ever watched PBS and they play the names of the numerous family foundations and charitable trusts before the show? You've seen legacy work in action. Many times, legacy funds can be paid in perpetuity, or for finite amounts of time based upon the management objectives established in the building of the legacy projects. The Donor has that capacity to determine how long the funds may be paid; fiduciary wealth managers (like me) make investments that help achieve those ambitions.

Commonly, personal legacy planning is involved when someone has a child with issues who may need extraordinary care. Or, a wayward child who hs always struggled with keeping themselves safe and fed. It could be as simple as deciding which of your Heirs should get your gold watch, or your "Honus Wagner" baseball card or coin collection or arrow-head broach, or the means of distributing the residual estate to the children...When we leave a legacy, we leave behind us those reasons for others to remember our presence here on this earth after we've left it.

Estate planning works out the "how?"; Legacy planning works out the "how much" and the "Whom?"

Great question, Rick. thanks for dropping by.

If you would like to talk about your special interests, or see how what we do can work for you, feel free to reach out to me - 808 464 5292. We can meet and enjoy good conversation and great coffee (or, tea). Call now!