Planning Points: The ‘legacy’ plans you need to have in place

Legacy planning is often the last piece people tackle in their wealth planning because it’s the least appealing to think about.

Planning for a strong nest egg that will keep you safe, secure and fulfilled when you stop working? Deciding what to do with your assets when you’re no longer around to enjoy them? These are not the most exciting things on your to-do list, but if you put off legacy planning too long, you run a real risk of leaving behind nothing but headaches for your loved ones.

Here’s a quick checklist that will help you and your spouse outline a legacy plan to protect your assets, care for each other in the event of incapacitation and give you both some peace of mind.

Create a balance sheet

Maybe the best way to ease into this process is to set emotion aside for a moment and get the rough numbers on paper.

Start by adding up all your assets, including real estate, personal valuables (vehicles, jewelry, etc.), bank accounts, investment accounts, retirement plans (401(k), IRA, pension, etc.), business interests (ownership, equipment, etc.), and benefits payable upon death (life insurance, Social Security, etc.)

From this total, subtract your liabilities, such as credit card debt, mortgage, vehicle loans and personal loans.

This simple balance sheet should give you a rough idea of your net worth. It also will give you a list of items you’ll want to consider passing down to heirs, and a list of debts you might want to work on paying down.

Determine what plans you have and what plans you need

At the bare minimum, everyone should have:

You should get working on any of these documents that you don’t already have. If you have older versions of these documents that you haven’t looked at in a few years, you should review them to make sure they’re up to date.

Discuss your legacy wishes with your spouse

Now comes the tough part -- filling in all the blanks.

Like every other part of your retirement planning, clear and open communication with your spouse is key. If you’re having trouble opening this line of dialogue, here are some questions to get you started:

Meet with professionals

Again, these are difficult questions to tackle. Many people prefer to tell themselves, “I won’t be around, I don’t care, the kids will take care of it.”

Unfortunately, your state of residence doesn’t consider this a legal estate plan. If you don’t have all your essential documents in order when you pass, the state may settle your estate according to local law. In even the closest families, this process can get really messy once the courts start deciding where your assets will end up.

Creating a plan that will extend your legacy for years to come also will make a difficult time a little bit easier on your loved ones.

One way to achieve this goal is to work through these hard questions and then bring a “rough draft” of your legacy plan to one of your professional advisers who will help coordinate the process. This can be your attorney, tax professional or financial adviser. They can help finalize any lingering details, facilitate any challenging discussions and connect you with the other legal professionals who will make sure your legacy is executed the right way when the time comes.

Pete Alepra is managing director-financial adviser with RBC Wealth Management. Comments: (319) 368-7023; peter.alepra@rbc.com. Investment and insurance products offered through RBC are not insured by the FDIC or any federal agency, are not deposits or guaranteed by a bank and are subject to investment risks.