Legacy Planning
The process of arranging how your wealth, values, and assets will benefit heirs or charitable causes.
What is Legacy Planning?
Legacy planning is the comprehensive process of deciding how a person's financial assets, personal values, and life experiences will be passed on to future generations or charitable organizations. It extends beyond basic estate planning to include not just the legal transfer of assets through wills, trusts, and beneficiary designations, but also decisions about values, family business succession, charitable giving strategies, and the preservation of personal stories. Key tools include revocable and irrevocable trusts, donor-advised funds, charitable remainder trusts, family limited partnerships, and life insurance designed to transfer wealth tax-efficiently. Legacy planning is most effective when undertaken well before death or incapacity, while the individual has full capacity to articulate their wishes.
Example
An investor with a $5 million estate uses legacy planning to structure annual gifts at the $18,000 annual exclusion limit to three children and five grandchildren ($144,000 per year), establishes a donor-advised fund at a community foundation for charitable giving, and funds an irrevocable life insurance trust (ILIT) to provide a tax-free death benefit to heirs. Together these strategies reduce the taxable estate by $1.4 million over 10 years while fulfilling charitable and family objectives.
Source: IRS — Estate and Gift Taxes