Financial Planning - Leaving A Legacy

Hey Fellow Knowledge Seekers,

The Unfussy Scholar here once again.

And I’m excited to conclude the 4 stages of the financial planning series with this blog post. I’ve already discussed the last 3 stages in more detail in previous blog posts.

For this one, we’ll be talking about the final stage, which is the Leaving A Legacy stage.

Leaving a legacy stage is the final stage in financial planning. It’s the stage where you’re about to retire or are already retired and living life freely.

There might still be some milestones you want to achieve, maybe not for you, but for your kids. But for the most part, there’s no financial goal or objective on your part.

Of course, if you were not able to prepare for retirement, things would be different. But that’s a discussion for another day.

If you have prepared properly for retirement, then you’ll be able to enjoy your golden years and not worry too much about anything.

But this doesn’t mean your financial obligations are done. There is still one thing that you need to do, and that’s estate planning.

It’s the act of preparing certain actions to manage your assets in case of death or incapacitation. This is important, especially if you have assets that you will leave behind.

Estate planning will make sure that your assets will be distributed properly to the right people when you die or they’re properly managed when you become incapacitated.

Estate planning is an extensive process and you must talk to a lawyer and/or estate planner for this endeavor.

But I will discuss some of the things that you’ll likely focus on when you’re planning your estate.

1. Assigning an Executor

An executor will act as the legal representative who will oversee what happens to your estate after you die. The executor is also in charge of paying off debts and taxes you owe.

They will also execute other necessary final paperwork, as well as pay other necessary fees. Once all obligations are completed, their job is to distribute whatever is left based on your last will.

Make sure the executor you’ll assign is someone who is very trustworthy and will ensure all your obligations and wishes will be followed. Make sure he/she will also respect the wishes of your beneficiaries.

2. Estate Tax Planning

Another important aspect of estate planning is addressing estate tax. Yes, there will still be tax that you need to pay after you die.

It’s a tax that gives you the right to distribute your estate to the rightful heirs/beneficiaries after you die.

The amount of taxes you’ll pay will depend on the country you’re in. In the Philippines, the tax is six percent (6%) which is “based on the value of such net estate determined as of the time of death”, according to the Bureau of Internal Revenue (BIR). This will be “composed of all properties, real or personal, tangible or intangible less allowable deductions.”

Make sure you address this properly when creating a plan with your lawyer and estate planner. It’s important to pay this on time to avoid getting penalties that you’ll have to pay.

3. Writing the Will

Of course, writing a will is going to be part of estate planning. Your last will will act as your final communication to your loved ones.

It’s important to have a will because it legally outlines how you want your assets distributed. You can also include how you want your young children and pets (if you still have them) taken care of after you die.

In case you don’t have a will, each country will have its processes on how they go about distributing your properties.

In the Philippines, there’s intestate succession, which means that your assets will be distributed to the beneficiaries who are entitled to receive them according to the Civil Code of the Philippines.

You can read more about it here.

Estate planning can be a complicated endeavor. And there are more details that I haven’t covered in this post. 

I am not an expert on this subject, I just provide some important information regarding estate planning. This is why I recommend that you talk to a lawyer and/or estate planner for this one.

You must make sure all necessary aspects of your estate will be taken care of when you die. You would want your assets to be distributed to the proper beneficiaries once you pass.

“Estate planning is an important and everlasting gift you can give your family. And setting up a smooth inheritance isn’t as hard as you might think.” - Suze Orma

Keep On Learning,

The Unfussy Scholar

P.S. Please share this post to your family or friends who might benefit from reading it. 🙂