5 Estate Planning Tools You Can Use for Your Legacy

You’ve spent your life building wealth and creating meaningful relationships. It makes sense that you’d want to pass along some of the things you’ve been able to create to the ones you love when you leave this earth. But without proper estate planning, your legacy might not unfold the way you envision. 

Here are five very important estate planning tools and strategies that give you more control over your legacy:

1. Last Will and Testament

According to Kreisher Marshall & Associates, LLC, “A will is one of the most common estate planning tools. It is a legal document that outlines an individual’s final wishes, including the distribution of assets and property. A will can also be used to name beneficiaries to your estate, guardians for your children, and the person who will be in charge of carrying out your final wishes. Without a legal will, you lose the power to dictate your legacy.”

Your will provides instructions for important things like distributing property, naming guardians for minor children, appointing an executor to manage your estate, specifying funeral preferences, and making charitable bequests. This foundational document ensures your wishes are clear and legally enforceable.

However, wills have limitations that you need to understand. They go through a court-supervised process (known as probate) that can take months or years and consume significant estate value in fees and costs. Wills become public record, meaning anyone can access information about your assets and beneficiaries. And wills only control assets titled in your name alone – jointly owned property, accounts with beneficiary designations, and assets in trusts pass outside the will.

Despite these limitations, wills remain important. Even with other estate planning tools handling most assets, you need a will to address anything not covered by other mechanisms and to name guardians for minor children. Think of your will as the safety net catching anything your other planning tools don’t specifically address.

2. Revocable Living Trusts

Revocable living trusts avoid probate while maintaining your control over assets during your lifetime. You transfer property into the trust, serve as trustee managing those assets, and name successor trustees who take over if you become incapacitated or die. Upon your death, assets are distributed to beneficiaries according to trust terms without court involvement.

One of the biggest benefits of a trust is that it provides the kind of privacy that a will cannot. Trust distributions happen privately without public probate proceedings, protecting your family’s financial information from public scrutiny. They also provide continuity if you become incapacitated. This means your successor trustee can immediately manage trust assets without requiring court-appointed guardianship.

Trusts do require more effort and expense to establish than simple wills. You’ll pay attorney fees to create the trust document and must actually transfer assets into the trust through retitling property and changing account registrations. (Property not transferred into the trust doesn’t receive trust benefits, so you have to be very thorough.)

3. Beneficiary Designations

Many assets pass to beneficiaries through simple designation forms rather than wills or trusts. Life insurance, retirement accounts, bank accounts with payable-on-death provisions, and investment accounts with transfer-on-death designations all bypass probate and distribute directly to named beneficiaries.

These designations are powerful because they’re simple, free, immediately effective, and supersede wills. If your will says one thing but your beneficiary designation says another, the beneficiary designation controls.

Make sure you’re very strategic about beneficiary choices. Naming minor children directly as beneficiaries often requires court-supervised guardianship of inherited funds. Naming your estate as beneficiary forces those assets through probate. Instead, consider naming trusts as beneficiaries for minor children or when you want control over distribution timing and conditions.

4. Powers of Attorney

Powers of attorney aren’t strictly legacy planning tools, but they’re key for protecting your estate before death. These documents authorize trusted individuals to make financial and healthcare decisions if you’re incapacitated and cannot act for yourself.

Financial power of attorney allows your agent to do a number of things, including manage property, access accounts, pay bills, and make financial decisions when you cannot. Without this document, your family must petition courts for guardianship, which is an expensive, time-consuming process that involves complicated court oversight.

5. Charitable Planning Tools

If charitable giving is important to your legacy, specific tools can maximize the impact while potentially providing tax benefits. 

• Charitable remainder trusts allow you to receive income during life while ultimately benefiting charities. 
• Charitable lead trusts provide current charity support while preserving assets for heirs. 
• Donor-advised funds create immediate tax deductions while allowing flexible timing of actual charitable distributions.

Consider how different charitable tools fit your overall goals. If providing for family comes first with charity as a secondary consideration, simple bequest provisions in your will might suffice. If charitable impact is one of your primary legacy goals, you’ll probably need more sophisticated planning.

Building Your Complete Plan

It’s important that you see these five tools as working together, rather than as independent choices. The right combination depends on your specific situation and legacy goals. But whatever you do, don’t ignore legacy planning. 

While it can be expensive and time-consuming, the alternative is much more costly to those around you!