Most people spend years thinking about their finances in practical terms. They save for retirement, buy homes, support their children, make investments and try to build a measure of security in life. What receives less attention is what will eventually happen to everything they have built and whether the plans they made years ago still reflect the people and priorities that matter to them today.
That is an important part of a person’s financial legacy. It is not only a question of who receives property after someone dies, it also involves who will manage those assets, who can make financial decisions if the need arises, how children or other family members will be provided for and whether some portion of an estate should continue supporting institutions or causes that have been meaningful during a person’s lifetime.
Estate planning provides a framework for making those decisions. A will or trust can direct how property is distributed, while other documents can determine who has the authority to act when someone can no longer manage financial or personal matters independently. The people chosen to serve as executors, trustees or agents may ultimately carry significant responsibility, so those choices deserve careful thought.
They also deserve to be revisited from time to time. Families rarely remain exactly as they were when an estate plan was first prepared. Children grow up. Grandchildren are born. People marry, divorce, remarry, retire, acquire new assets and experience the loss of relatives or close friends. As those circumstances change, an estate plan that once made perfect sense can gradually stop reflecting a person’s life.
Divorce is one example of a change that should prompt that kind of review. Many married people build their estate plans around their spouse, naming that person as a beneficiary or placing them in a position of responsibility. When a marriage ends, it is worth considering whether those decisions should change as well. The same is true after a remarriage, the birth of a child, a major change in finances or other events that reshape a family.
Children can make planning especially important. A parent may want a son or daughter to inherit but may not believe that receiving a large amount of money outright at a young age is the best approach. A properly structured trust can allow assets to be used for a child’s education, health care, housing and other needs while providing for someone else to manage those assets until the child is ready to assume greater responsibility.
Choosing the person who will oversee that money can be just as important as deciding how it will be used. A relative or close friend may know the family well, but managing a trust can require years of attention and financial judgment. In some circumstances, a professional trustee may be a better fit. What matters is that the decision is made deliberately rather than allowing an old designation to remain in place because no one thought to revisit it.
A financial legacy can also reach beyond one’s immediate family. Many people spend their lives supporting religious institutions, schools, hospitals, community organizations and other causes that reflect their values. Estate planning can provide a way for that support to continue.
Charitable giving may be incorporated into a will or trust, and certain financial accounts may allow a charitable organization to be named as a beneficiary. For someone who has spent decades supporting a synagogue, an alma mater, a local institution or another cause, including that organization in an estate plan can be a natural extension of the commitments made during life.
These decisions are ultimately connected. A financial legacy reflects not only what a person has accumulated, but also what that person wants those resources to do. Some assets may provide security for a surviving spouse. Others may help children or grandchildren build their futures. Still others may support an institution or cause whose work the individual hopes will continue long after they are gone.
Building financial security takes years of work. Protecting the legacy created by that work deserves attention as well. Thoughtful planning can help make sure that the people entrusted with important responsibilities are still the right people, that loved ones are provided for in the way intended and that the organizations and causes a person values can remain part of the story.
Because these decisions may carry legal, tax and financial consequences, individuals should work with appropriate professionals when creating or revising an estate plan. No plan can anticipate every change the future will bring, but a well-considered one can help ensure that a person’s financial legacy continues to reflect the life, relationships and values behind it.
This article originally appeared as a column for the Cleveland Jewish News.