“My father wrote me a lovely letter before he died. It is the most cherished thing I own,” a woman whom I was advising about passing on non-financial assets told me on the phone. I’ve heard similar statements from many others. I’ve also heard the opposite: “I wish I had taken the time to ask my mother about her life before she died,” or “It’s sad; I didn’t really know my grandparents, and they left nothing behind but a few photos.”
Oftentimes, people don’t think about the intangibles they should pass on to their heirs. Estate planning is so wrapped up in transferring financial assets that this becomes the focus. Once your financial team hands you your estate plan, you think you’ve got all your bases covered: You’ve got life insurance, a trust to avoid probate, an appointed executor and so on.
But what about your wisdom, beliefs, values, important family traditions and stories? What about passing on crucial knowledge about your business, money management or other skills? These questions bring to mind an African proverb: “When an old man dies, a library burns to the ground.”
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Don’t let your possessions become the only representations of your life. Whether you decide to take on a big project, like writing a memoir or producing an autobiographical documentary, or keep your documentation process simple and write a short letter detailing your principles and feelings, these representations of your thoughts, heritage and life journey are extremely valuable. They become the foundation upon which your family members build their lives.
Studies conducted at Emory University have shown that kids who know about their family’s past are more empathetic, have better coping skills and have higher self-esteem. There are other benefits to passing on your life stories as well, from decreasing depression in older adults to connecting with family and building trust to increasing the likelihood of a successful wealth transfer.
Your Three Asset Types
Your assets can be broken into three categories:
- Character assets: Your meaningful relationships, values, health, spirituality, heritage, purpose, life experiences, talents and plans for giving.
- Intellectual assets: Your business systems, alliances, ideas, skills, traditions, reputation and wisdom.
- Financial assets: Your physical wealth, investments and possessions.
Financial assets are relatively easy to pass along because they are already contained in a physical form and the legal vehicles — such as trusts or foundations — used to transfer them to heirs are well established.
The challenge with character and intellectual assets is giving them the same kind of physicality that financial assets are given. Even though your mother’s love, memories of summers at your grandparents’ house and lessons you’ve learned throughout your life may be more important to you than your car, there’s still the problem of turning those feelings, thoughts and insights into something that can be passed on to others.
That’s where legacy vehicles come in.
Packaging Up Your Legacy
Legacy vehicles are the physical structures that enable you to pass on your non-financial assets. Some examples include biographies, memoirs, specialty books, letters, videos, blog posts, audio files and artwork. The significance of these items is emphasized by how artfully you capture your essence and craft it into something that is meaningful and exciting for your family to discover.
There’s a reason great literature, masterful artwork and thought-provoking film are so valued. It’s that artistic component that helps an audience interpret events and connect with emotions. Your legacy vehicles should be crafted with the same care.
You’ll want to include key legacy vehicles as a part of your estate plan and determine how they will be passed on, archived and preserved over time.
Four Tips for Creating Your Own Legacy Vehicles
1. Identify your goals.
Determine why archiving stories, defining your values and passing on wisdom are important to you. Motivations for developing a legacy typically fall into these three categories: 1) to make a greater impact on your community, 2) to pass on knowledge and wisdom to your family and 3) to create a more meaningful life and improve your connection with loved ones. Decide what motivates you and what legacy vehicles you’d like to create that will convey your non-financial assets. If you haven’t done anything to capture your legacy yet, one of the easiest, most impactful pieces to begin with is a legacy letter in which you describe your principles and feelings.
2. Take inventory.
After you’ve decided why creating a meaningful legacy matters to you, take inventory of what you’ve already got. If you want to pass on family stories or wisdom, list everything that’s available to you, such as photos and letters from your parents. Then figure out what you need to collect. You could, for example, interview your parents about their lives or write up an article about your daughter’s birth. Get specific.
3. Make a plan.
Once you know what you’ve got and what you need, now it’s time to put together a plan that details how you’re going to produce the content you need. Make sure to include how you intend to distribute it (and to whom), and how it will be archived and included as a part of your estate plan. You don’t want the book of your life’s stories lost in an attic somewhere because someone misplaced it.
4. Take the simplest step.
A legacy is one of those things that is important but rarely urgent until it’s too late. By taking proactive steps and starting with the easiest-to-create projects, your legacy will come to life. For example, let’s say you’d like to write a memoir but haven’t quite gotten around to it yet. Consider breaking this task into smaller parts, or start with something simpler, such as writing a short article about your childhood or filming a two-minute video about your wedding day. When you see the results of these smaller projects, it inspires you to create more.
-
2025 Tax Reform: Will the SALT Deduction Cap Be Repealed?Tax Deductions Some lawmakers say it’s time to end the $10,000 cap on state and local tax deductions.
-
Affordability Crisis: Florida Votes to Increase Property Tax BreakState Tax Property taxes have skyrocketed nearly 60% within the last five years in Florida, and its constituents are finally doing something about it.
-
Three Charitable Giving Strategies for High-Net-Worth IndividualsIf you have $1 million or more saved for retirement, these charitable giving strategies can help you give efficiently and save on taxes.
-
The Wealth-Building Powers of Health Savings Accounts (HSAs)Health savings accounts could be the most underutilized wealth-building tool out there. Here’s who should use them and how to maximize their benefits.
-
Seven Ways to Be an Absolute Jerk as a LawyerHere's what law students need to know about damaging their relationships with other lawyers and judges and running up the bill for clients.
-
One Good Way to Withdraw Retirement Assets (and a Bad One)Don't withdraw retirement assets haphazardly. Managing distributions intentionally can lower your taxes, conserve your wealth and reduce Medicare premiums.
-
What Is Capital Gains Tax Deferral?Spoiler alert: It's the secret weapon of savvy real estate investors. Here's how it works and details about the tools you need to do it.
-
Don't Leave Your Heirs an IRA Tax BombYour traditional IRA has served you well, but when your heirs inherit it, watch out. Consider some of these strategies to minimize their tax burdens.
-
Five Ways to Maximize Your End-of-Year PhilanthropyTo do the most good, pick the right charity, be smart about how you donate and consider giving something just as valuable as money: your time.
-
Three Options for Retirees with an Old (Forgotten) AnnuityDid you buy an annuity in the 2000s? If it’s been out of sight and out of mind since then, it's time to dust it off and start making it pay for your retirement.
