There are a lot of misconceptions around legacy planning, who needs it, and what’s included. A 2023 Wills and Estate Planning Study by Caring.com found that only 45 percent of Americans over age 55 have a will, and while six in 10 people have retirement accounts, only one in three have a complete estate plan.

In my experience over the past 30 years in financial services, many families end up waiting until an unexpected crisis or situation occurs and they’re forced to have a discussion around next steps. However, this can be a risky approach and unfortunately not everyone may get the chance to make decisions before it’s too late.

Even after I personally had been working in the trust industry for over 15 years, it wasn’t until my father passed and my mother started to decline that she finally agreed to let me in on the basic details of where her assets were saved, whether she had enough money to cover the costs of her care, and who would become power of attorney. She was a strong-willed person and miraculously pulled through a major injury, but in that moment, she realized we needed to have some serious, transparent discussions as a family.

Born in the 1920s, my parents lived through the aftermath of the market crash and were left with no faith in banks. They had spread their money across a large number of banks over the years, and it took quite some time for me to collect, consolidate, and account for everything they had. Although my mother was hesitant to give up some level of control, she understood the cost of care was not going to be cheap and she couldn’t quite manage everything on her own. We didn’t want her to outlive her assets, so we moved quickly to meet with a financial advisor, obtain a lawyer, draw up the necessary documents, and agree to a plan.

At Citadel, we really urge people to have those conversations as early and often as possible regardless of age, income level, or current health. When handled the right way, a lot of the tension and uncertainty can be eliminated, so parents, dependents, beneficiaries, and all family members can feel prepared and secure. In some strange way, it can even bring the family closer when everything is out in the open.

Legacy Planning vs. Estate Planning: What’s the Difference?

Understanding the differences between legacy planning and estate planning is a good place to start.

Estate planning addresses assets like property, money, debts, and family heirlooms. It helps determine who can make decisions on your behalf, who takes care of your dependents, and how to avoid unnecessary taxes and waiting periods.

Legacy planning also accounts for non-financial capital, like family values, traditions, and philanthropic goals. Together, they cover any decisions that can arise when a person dies.

Each plan may differ slightly from one person to the next based on the level of assets, number of beneficiaries, and the level of complexity around the estate, but everybody should have at least a basic plan and a few key documents.

Common Estate Planning Documents

• Your will (or “last will and testament”) outlines how you want your assets handled and distributed when you die. As part of creating a will, you’ll need to define an executor to be the person who’s legally obligated to administer the distribution to your beneficiaries.
• Your beneficiaries should also be clearly defined so your loved ones are aware of any inheritance and/or responsibilities they may receive upon your time of death. Depending on your situation and the age of your beneficiaries, a trust may also be necessary or helpful to hold assets for a certain amount of time until your beneficiaries are ready to receive it.
• Your power of attorney gives authority to someone else, like a spouse, child, or loved one to make financial, legal, and business decisions on your behalf if you become ill or your situation changes.
• Your living will states your preferences regarding health care decisions, such as whether you want life-extending treatment, how you want to manage long-term care, what procedures you do or do not want, and other end-of-life matters, as well as who can act on your behalf in those decision making processes.

How a Financial Advisor Can Help

Ideally, your financial advisor is your trusted partner throughout many stages of life. They know you, hopefully they know your family dynamic, and they understand your goals and wishes. They should also have a complete picture of your finances, so they can help coach and support your decision-making around wealth and legacy planning. That includes talking through state laws, gifting limits, and taxes that may affect your plan.

Once you’re ready to have your legal documents drawn up, our CFS Financial Advisors can recommend an estate attorney and hand off your information and wishes accordingly. That way, you can spend less time (and money) recounting your plan and all your financial information to the attorney and get right to establishing the proper paperwork. If needed, our team can also connect you with other experts, like a CPA for tax planning and transfer of assets.

Your executor and any heirs to the estate should get to know your advisor as well and establish a trusted relationship at an early age. That way, they have full understanding of your situation and can turn to the advisor as needed later to locate assets, help with tax implications, and take action right away.

Who Needs Legacy Planning, and Why?

If it sounds like these plans and documents are only needed for the ultra-wealthy, think again. Parents without a college degree leave their families an average inheritance of $76,000, compared to an average of $92,000 from parents with a college degree, according to the Federal Reserve. And more than one in three people without a will say they don’t believe they have enough wealth to leave behind — but that’s just not the case.

Everyone needs some form of legacy planning to protect their loved ones and their valuables from getting stuck in the legal system or argued by family members who may unfortunately act selfishly. And often it comes down to more than just cash. Your plan will account for debts, pets, family heirlooms, burial wishes, healthcare wishes, furniture, and other items of varying value. Sometimes it’s purely sentimental items that cause the most family drama after a loved one has passed.

For that reason, I often recommend aging parents personally give heirlooms and other sentimental items to their children and family members while they’re still alive. My own father had the foresight to present me with a beautiful wooden music box from 1816 before he passed away, and no one in my family has ever questioned it. We all get to enjoy the cherished item on display in my home, and I got to share that moment with my dad when he witnessed the pride I felt in receiving it.

When to Create (and Adjust) Your Plan

In general, the earlier you can start planning, the better. Life events for each family member can affect the plan, including marriage, divorce, birth of children, moving to different states or countries, large purchases, and claiming other inheritances. It’s a good idea to check in with your financial advisor regularly along the way to inform them of any necessary adjustments and ensure your intentions are secured.

Start with a Simple Checklist

Citadel’s Legacy Planning Checklist is a great place to start. It’s a free, printable sheet that you can review together as a family to see where you stand and start the conversation. Then, you can bring it along to your complimentary consultation with one of Citadel’s CFS Financial Advisors, so we can help guide your discussions and ensure every generation is informed and prepared. We’re in this together, and we can’t wait to get to know your story.

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Sheri Perkins is Senior Vice President of Wealth Management at Citadel Credit Union. For more than 85 years, Citadel has delivered a full range of financial services, expert guidance, and innovative tools to help strengthen and grow businesses, families, and local communities. Today, with more than $5 billion in assets, Citadel proudly serves hundreds of thousands of members throughout Bucks, Chester, Delaware, Lancaster, Montgomery, and Philadelphia counties. Learn more at Citadel Credit Union.