I have been thinking a lot about this question recently. It reared its head again a few nights ago at a CAGP Calgary Leave a Legacy event where a friend, advisor to some of our clients, and fellow Rotarian, Penny Leckie a Chartered Accountant, presented her legacy story. What makes her story interesting is that she is a single woman with no children and is a successful entrepreneur. Penny represents a growing demographic in North America. Yet, legacy plan marketing and advisory services, tend to focus on heterosexual, married couples, where the wealth is created by one spouse or inherited. So what does legacy mean for those who do not fit that description? This article explores what a legacy looks like when you don’t have children and you created your own wealth.
What is a Legacy Plan?
A legacy plan is your stated intentions for how you want to be remembered when you are gone, AND how you want to demonstrate your social vision while you are alive.
Too often we talk about leaving a legacy for when you are no longer around to witness the impact that you created in your lifetime. An effective legacy plan accounts for your social purpose when you are gone AND in the present while you can still enjoy seeing the fruits of your labour.
A legacy plan also takes into account long-term tax planning and wealth management. There are a variety of products and tools available to you to help with this:
- Philanthropic Giving Vehicles – A comparison chart explaining the difference between the different types of philanthropic accounts;
- Life insurance – A policy designated to a specific charity or your foundation as either an owner or beneficiary in whole or in part;
- A planned gift through a bequest – Gifts to a charity or your foundation in an absolute dollar amount, a specific asset, or a percentage of your estate;
- Donation of RRSPs, RRIFS or 401Ks;
- Wealth replacement insurance;
- Gifts of securities – Donation of securities can offset your capital gains taxes depending what is donated.
- Charitable Remainder Trust
- Collectables, Real Estate, and other non-cash assets – It is important to note that for some artifacts you may have to get them assessed by the Canadian Cultural Property Export Review Board.
That’s the purpose of a well thought-out legacy plan – to support your wishes now and into the future and effectively mitigate the “What If…”
Since more people are living longer, living solo, and have no children the “What If” planning scenario may include questions like, “How much is enough for me to leave for my nieces and nephews?” or, “Who should be responsible for managing my philanthropy program when I am gone?” or “What does a management structure for my foundation look like? Should their be paid staff/Trustees/Advisors?” and “What are the conversations I should be having with the charities I want to support?”
The “What If…” is not just about the inevitable planning of your death, it is about generating the social impact you want to see realized today and into the future.
As Penny shares in her personal philanthropic journey, “Optimal tax efficiency is achieved over the course of a donor’s lifetime when the donor’s giving objectives are understood and the timing of the donor’s gifts are matched with the appropriate income levels during the donor’s lifecycle.”The Empower of 10 – A Giving Project,
Managing the “What If…” – Three things to consider in your planning process
How do you manage the “What If…” especially when you are no longer around to answer questions and guide the decision making?
- Set goals – Be clear about your intentions for your philanthropy and the expectations you have of the recipients of those funds. Provide some guidelines for your Trustees and/or Executors so that they understand what the expectation is, not just on the use of proceeds, but also the ripple effect of those donations.
- Engage others – The social issues you want to support were not created overnight, and not by one person. As such, the solution be that you choose to fund include others with different perspectives. Seek out information from others who are funding these issues and a multitude of agencies who are addressing the problem. Some might be looking at the issue from a perspective that you didn’t consider beforehand, and your support might amplify the donation of others who are already at the table.
- Focus your giving – Too many charities on your list of possible recipients may make it hard for your family or advisors to really grasp what effect you want to have in your community. Hone in on the issue you want to solve and how you want your assets to drive towards that solution. Consider your philanthropy the same way you would an investment portfolio, you want to have enough diversity of organizations so that you can mitigate the risks of projects that fail, but not so much diversity that you can’t actually see if you have accomplished anything.
There are three things that we hope you take away from this article:
- Regardless of your family-make up and lifestyle – legacy planning should be about today and tomorrow
- Make sure your intentions are clear and that others know what the expectations are, not just from the disbursement of funds, but the intended results of those funds
- Where you are in your lifecycle and wealth-cycle will determine the philanthropic vehicles best suited to achieve your social and financial objectives. These may change over time and so you should be routinely updating your philanthropy plan just as you would your financial plan.
Questions about how to get started on your philanthropy and legacy plan? Drop us an email to set up a conversation – firstname.lastname@example.org. We look forward to hearing from you.