Why is legacy planning important for retirement?
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Why is legacy planning important for retirement?

7 Feb
7 Feb

Although many people associate legacy planning with only the ultra-wealthy battling over inheritances and business interests, in reality everyone needs a solid plan in place to manage what should happen to our assets.

What is legacy planning?

Legacy planning refers to the organisation of your personal and financial affairs to deal with the future scenario of death or possible mental incapacity. A legacy plan can also include your medical or healthcare directives so that you can ensure you receive your preferred treatment when you are ill.

Why is it important?

If you do not have a legacy plan, the management of your assets might go against your wishes after your death.

For example, your money or property could be passed on immediately to children who might lack the maturity to manage the inheritance wisely. Another possibility is your wealth being distributed to unintended third parties in the event of your children’s divorce. 

Legacy planning that includes a trust can protect your assets in such scenarios.

Moreover, legacy planning reduces the financial impact or burden on your loved ones upon your death or incapacity. 

It may also help to reduce the emotional burden on them — the absence of a will and other directives in place could sometimes stir up hard feelings and difficult conversations among family members.

How is legacy planning done in Hong Kong?

There are four main things to consider when it comes to making your end-of-life plans in Hong Kong.

1. A will

A will is a legal document that contains instructions on what happens to your assets — such as cash and property — and possessions after your death. You can write how your assets are to be distributed to the people you choose, who would be your children’s legal guardian, and who would carry out your will.

2. Enduring power of attorney (EPA)

The EPA is a legal document that allows you to appoint one or more people to help you make decisions about your financial matters on your behalf. The EPA goes into effect only if you lose the mental capacity to make your own decisions.

3. A trust

A trust is a legal arrangement whereby one person transfers property to another person, the trustee. The trustee holds the assets and manages them in the best interests of your specific trust beneficiaries.

Trusts can be used to manage a family’s wealth and protect personal assets. For instance, you can implement rules on when and how beneficiaries receive their inheritance. Setting up a trust can also help with succession planning, as the trust assets will not be subject to time-consuming and expensive probate proceedings when you pass away.

4. Advance care planning (ACP) and Advance Directives (AD)

ACP refers to the process of planning for your future health and personal care. This is so that your doctor and loved ones understand your treatment decisions and care preferences in the event you have a serious illness and are unable to express your wishes then. AD, on the other hand, documents your wish to accept or refuse specified life-sustaining treatment (LST) in pre-specified conditions when you are in an end- stage condition and mentally incapable of making health care decisions. A valid and applicable AD is legally binding under common law.

Discuss with healthcare professionals and your loved ones on the details of your ACP and AD, you may also nominate a family member to participate in future discussions when you are no longer able to communicate. These details will be documented in an advance care plan and an AD form, which will be used during an emergency.

Besides having a legacy plan in place, you can pick up other retirement strategies such as bucketing and decumulation.

If you're ready to invest, get started with Endowus here.


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This article is not intended to be relied upon as a forecast or research or investment advice, and should not form the basis of any investment or other decisions. The information contained herein is not intended, and should not be construed, as any legal, tax, regulatory, accounting or financial advice. If you would like investment, accounting, tax or legal advice, you should consult with your own professional advisors regarding your individual circumstances and needs.

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In presenting the information above, none of Endowus, its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances.

This article has not been reviewed by the Securities and Futures Commission of Hong Kong.

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