By Dr. Stacie Rhodes
My family has experienced a significant amount of loss, providing early opportunities to navigate the financial, emotional, and mental aftermath of our loved one’s passing. Each loss has had a similar cadence yet different challenges depending on the preparation prior to their death. The unexpected losses naturally have more complexity, but those with the time and mindset to embrace this “home” as temporary are prepared differently. A well-prepared financial legacy isn’t just about assets; it’s a gift of stability, clarity, and purpose to those who come after us. Here are five essential steps for leaving a legacy of lasting financial freedom.
Communicate Openly with Loved Ones.
Open communication about your legacy plans can ease misunderstandings, clarify your intentions, and prepare family members for their roles. It can be a very difficult conversation that many avoid, but let me challenge you to press in and talk through it. While these conversations can be emotional, discussing your financial wishes with your beneficiaries—such as adult children or close friends—establishes transparency and understanding.
Talk through the “why” behind your decisions, explaining how you hope the inheritance will be used or managed. This discussion doesn’t have to be overly formal but should outline your desires and values, preparing your loved ones for a smoother transition and providing a sense of continuity and connection.
Organize and Consolidate Your Financial Records.
As simple as it sounds, organizing your financial records is one of the most important gifts you can give. Consolidating accounts and documenting all financial records creates simplicity and lessens the burden for those tasked with managing your estate. Start by ensuring your records are up-to-date and consolidated as much as possible, which may require merging multiple accounts or closing old ones.
Further, create a secure location for these records, whether a physical safe or a digital vault and include clear instructions on how to access them. A list of bank accounts, investments, retirement plans, insurance policies, loans, credit cards, and any significant assets or debts will help loved ones navigate this transition smoothly. Be sure to designate a trusted family member, friend, or professional who knows where these records are and how to access them, preventing potential confusion during a difficult time.
Update Beneficiary Designations.
One of the most common pitfalls in estate planning is forgetting to update beneficiary designations on critical accounts like retirement plans, pensions, life insurance policies, and annuities. We’ve mentioned this throughout the decades, as it cannot be overemphasized. These designations often override instructions in a will, so it’s vital to ensure they reflect your current wishes. Also, consider a “contingent” beneficiary in the event your primary beneficiary cannot inherit the assets you’ve stipulated. This small act can have an enormous impact, making it easier for your loved ones to access funds they may need without going through lengthy probate processes.
Prepare for Medical and End-of-Life Decisions.
Preparing for end-of-life care is about empowering your loved ones to make decisions in line with your wishes. Creating an advance healthcare directive, which includes a living will and healthcare power of attorney, allows you to specify your medical care preferences. Having these documents in place and preemptively discussing your wish can alleviate difficult decisions by designated family members and help ensure they’ll honor your wishes.
Consider a Gifting While You’re Still Living.
Individuals often leave a charitable gift or inheritance for distribution after their death – robbing them of the joy of seeing the impact of their legacy. Let me encourage you to choose a more unconventional route and distribute your excess wealth while still living. You not only get to experience the joy of giving but can also ensure your wishes are followed.
As we reflect on our journey of financial freedom through each stage of life, remember that a legacy is more than wealth; it’s a testament to the values, love, and foresight we pass to future generations. Take the time to organize, review, and communicate as you finalize this final chapter of your financial journey. This legacy will be your gift of freedom and security to those you hold dear, a way for your hard work and planning to continue positively impacting those you love most.
ABOUT THE AUTHOR
Dr. Stacie Rhodes serves as the Director of Training & Development for Liberty University, as well as the Executive Director of the Liberty University Center for Financial Literacy. Her passion is empowering women with essential financial education to walk confidently toward financial freedom. Stacie received her graduate degree from NC State University and her doctorate from Liberty University while holding CPA, CFP®, and CKA® designations. She enjoys building relationships with her incredible community, vacationing in places with beautiful beaches, and traveling the world with friends and family.
