Ways to Leave a Financial Legacy

What to consider if you’re planning to leave an inheritance

While only about a third of Americans plan to leave an inheritance, the reality is that there’s likely to be at least something left over when you pass away.

“Whether you’re just starting your financial journey or you’re well into retirement, having the right tools in place—like a will, trust or life insurance—can help provide stability and protection for your loved ones now and in the future,” says Williams-Kemp.

Whether you plan to leave behind a lot of money and assets or just what’s left over, here are some things to consider.

Document what you have

You don’t need a lot of money to have a plan but it is a good idea to create a comprehensive personal financial statement to assess what you have. To do this, make a list of all of your income sources and assets as well as any loans or debt you may owe. This information will be essential to helping you figure out if it would be better for you to put a will or a trust in place—or possibly both.

Identify who should get what

If you are planning to leave an inheritance behind in the form of monetary assets, property or valuable possessions, your last will and testament is a legal document that will ensure that whatever assets you do have will be passed down to those you want to receive them. It should name everyone on your list—such as children, other family members, close friends and business partners—and exactly what you wish for them to have. This could include everything from your family vacation house to a vintage coin collection. It’s a good idea to update your will on a regular basis—as your finances and your relationships may change significantly over the years. This can help simplify probate—the legal process designed to settle the estate of a person who has died—and save your beneficiaries time and money.

Use life insurance to protect your legacy

When you’re younger, a permanent life insurance policy can provide you with peace of mind that the people who depend on you won’t have to struggle if you pass away too soon. It can replace lost income for your family and also provide cash to cover funeral expenses, taxes, outstanding debts and other immediate financial needs.