Leaving a legacy is about more than money. Thoughtful planning, financial education and open family conversations can help shape what you pass on to the next generation.
For most people, leaving a legacy is not about making the history books. It is about passing something meaningful to the next generation, whether that is money, wisdom or a combination of both.
According to Northwestern Mutual’s latest Planning & Progress survey, 31% of Americans expect to leave an inheritance. Among those who do, most plan to leave it to their children and grandchildren.
“Many Americans are placing a high value on leaving a legacy,” says Kamilah Williams-Kemp, chief product officer at Northwestern Mutual. “Gifting to the next generation is a deeply personal and important financial goal that requires thoughtful planning at every stage of life.”
But a legacy does not have to be financial. The time you spend with loved ones, the values you pass down and the lessons you teach can be just as meaningful. The key is to be intentional about what you want to leave behind.
Start with an estate plan
Estate planning is not only for wealthy families. A plan can make clear who should receive your assets, who can make financial or medical decisions on your behalf and what you want for minor children if you die before they reach adulthood.
Putting your wishes in writing can also make a difficult time easier for the people you love. Even a straightforward plan can provide clarity and help reduce uncertainty.
Teach the next generation about money
A financial legacy is not limited to the dollars you leave behind. Helping children and grandchildren understand how to manage money can have an impact that lasts for generations.
Conversations about money are not always easy, especially within families. But teaching the basics, including responsible credit use, paying for college, budgeting and managing money, can help young people build a stronger financial foundation.
If you work with a financial advisor, you may also consider including your children in some meetings so they can hear financial concepts and planning discussions firsthand.
“Many adults feel like they can’t leave a legacy tomorrow without sacrificing their goals today,” Williams-Kemp says. “But the silver lining is this: with comprehensive financial planning, it’s very possible to do both.”
Keep family communication open
As families grow and circumstances change, conversations about money, aging and future plans can become more sensitive. Having those discussions openly can make them more productive and help everyone better understand each other’s needs, goals and expectations.
If you plan to leave an inheritance, know what you have
Start by creating a clear picture of your finances. List your income sources, assets, loans and other debts. This can help you and your advisors determine whether a will, a trust or a combination of both may be appropriate for your situation.
Be specific about who should receive what
If you plan to pass down money, property or valuable possessions, your will can document who should receive those assets. It is also important to revisit your plan periodically because finances, relationships and family circumstances can change over time.
Consider how life insurance fits into the plan
Life insurance can play different roles at different stages of life. For younger families, it can help replace lost income and provide funds for expenses such as funeral costs, taxes and outstanding debts. Later in life, a policy’s death benefit may be used as part of a broader legacy strategy for heirs or charitable giving.
Depending on your circumstances, tools such as survivorship policies or variable universal life insurance may also be considered as part of estate and legacy planning.
Think about charitable giving
A legacy can also include support for organizations and causes that matter to you. That might mean leaving part of your estate to a nonprofit, funding a scholarship or supporting an institution that has played an important role in your life.
Get a professional perspective
If leaving a financial legacy is important to you, a financial advisor can help you look at the full picture, including money, property, family priorities and the memories and values you want to pass on. An advisor can also help facilitate family conversations and identify the financial implications of major planning decisions.
Ultimately, legacy planning is not only about what you leave behind. It is about being deliberate about the impact you want to have on the people and causes that matter most.
