Your Personal Legacies

If you could write your own obituary, what would you say? Would you limit yourself to the basic facts about family members, occupation, accomplishments, and affiliations? Or would you also comment on your values and what mattered to you?

Many people are now writing the equivalent of an obituary. It is called an ethical will, or legacy letter. In contrast to the cold legalese of the formal document through which one disposes of property, an ethical will is a personal message to loved ones. It may explain why the person made certain monetary bequests to individuals and charities and how those gifts reflect values and relationships. This assures that the person’s intentions are fully understood. The author of the ethical will may also reflect on life, perhaps stating core religious beliefs or setting forth the principles that guided important decisions. If the author has any personal regrets and wants to make amends, or perhaps to reach out to an alienated family member, the ethical will can make sure that nothing helpful is left unsaid.

Some individuals, wanting to leave a more extensive story of their life, write an autobiography and have it self-published. While this might seem like excessive vanity, it can be very educational for future generations, not only in understanding their roots but also in appreciating what it was like to have lived at a certain period of history. If their forebear accumulated a fortune and passed on significant portions to them, it is important for heirs to understand how that wealth was created and how it was intended to be used. By discussing various crises and challenges, the author can import valuable lessons learned. Sometimes these autobiographies include an appendix listing family genealogies, which may prompt visitation of sites which figured prominently in family history.

An alternative to a written autobiography is a video narration. While being filmed, the individual recalls life experiences, recites anecdotes, and talks about what has been most meaningful. This has the advantage of preserving for future generations the image and voice of the ancestor. There are a number of companies that make a business of producing these life recordings.

We may suppose that only the famous have lived lives worth recording, but, in fact, there is something special about each life. During the Great Depression of the 1930s, the American writer James Agee and photographer Walker Evans were asked to produce an article about sharecroppers in the U.S. South. Focusing on three families, they created an enduring portrait of a nearly invisible segment of the American population, which was published in the classic Let Us Now Praise Famous Men. These families were anything but famous, and they had virtually no worldly goods, but each had their dignity, their dreams, and an interesting story to tell.

A living will, an autobiography or biography, or a video recording are all ways of describing a person’s intangible legacy. A tangible legacy is a gift of property by will or other conveyance at death. For example, you might leave a child a legacy of $1 million. An inclusive definition of “legacy” is anything handed down from the past, or from an ancestor or predecessor. It could be property with a dollar value, or it could be certain characteristics or conditions. In addition to money, you might leave your children a legacy of love and respect. It has been observed that what you leave in your children is more important than what you leave to them.

The fundamental question for all of us is what tangible and intangible legacies we will leave, and how we would like those legacies to be memorialized.

FOOTPRINTS

Given a choice, most of us would like to extend the life we know, especially if we can remain in reasonably good health. However, knowing that life on this earth is limited, we necessarily think of how we will be remembered and what difference we will have made. In other words, as Longfellow wrote, we want to leave “footprints in the sands of time.” That is true even if we have firm beliefs about some form of existence after death.

This information is about those footprints, which are commonly called “legacies.”

CHARITABLE LEGACIES 

In the movie Schindler’s List, Oscar Schindler laments the fact that he was unable to save more Jews from the Holocaust, but one of the persons he does rescue responds, “He who saves one person saves the world entire.” Fundamentally, a charitable legacy is improvement of the conditions of others. It could be through a donation to a charitable organization which serves them, through direct help such as Schindler rendered, or through a business whose objective is social benefit as well as earning a profit. Seeing the immensity of social problems like education, poverty, disease, and environmental degradation, it is easy, like Schindler, to feel that we have made so little difference. However, each charitable act is like casting a small stone into a pool of water. Like the ripples that spread in all directions, the deed affects individuals, who affect others, who affect still others.

Some charitable legacies are the creation of organizations dedicated to service of human kind. Examples are the Red Cross, the Salvation Army, Oxfam, and the national health organizations. Other are private foundations established by individuals to perpetuate their giving. The largest in Canada is the Lucie and Andre Chagnon Foundation, and the largest in the United States is the Bill and Melinda Gates Foundation.

Other charitable legacies are created within existing organizations such as the Winnipeg Symphony Orchestra. A common way these legacies are memorialized is through a named endowment. This is a permanent fund, usually named for the donor and or another person, or perhaps for the donor’s family. A certain percentage of the endowment’s value is expended each year for the purpose designated by the donor. In many instances, the donor has direct contact with persons who directly or indirectly benefit from the endowment. For instance, at the Winnipeg Symphony Orchestra, the musician who sits in an endowed chair may correspond with the donor or the donor’s heirs. At a health institution, there would be reports on the research or care made possible by the endowment income. The terms of an endowment and some biographical information about the donor are included in an endowment agreement. Whereas an ethical will describes the general life legacy a person seeks to transmit, the endowment agreement memorializes a particular legacy for the public good.

The endowment could be simply to continue the gifts you have been making year after year to the WSO. For example, if you have been giving $2,000 per year, you could arrange for an endowment of $50,000, and the annual income paid from the endowment would approximate what you have been giving, and the income would continue to be associated with your name.

For more information about the purposes for which an endowment can be established at the WSO and the minimum amounts required for each type, please contact us.

BALANCING FAMILY AND CHARITABLE LEGACIES

If you are blessed with considerable wealth, you are probably able to provide significant monetary legacies to your heirs and still be able to create legacies at your favorite charities. If you have more modest wealth, it may not seem possible to do both. However, some people in that situation, after considering the following, have concluded that they could, after all, leave a charitable legacy.

  • The charitable legacy could be delayed. Certain assets would be committed to charity, but first income would be paid to heirs, either for life or a term of years. Suppose, for example, that a person wanted eventually to establish a named endowment with assets totaling about $500,000 in value but did not want to deprive heirs of income from those assets. One possibility would be to designate $500,000 of estate assets to a charitable remainder trust that would pay heirs either for as long as they live or for the next 10 to 20 years, by which time they would have other sources of income. When the trust terminates at the end of the stipulated period, the remaining assets would fund the endowment. Another instrument that could be used if the donor wants beneficiaries to have fixed payments for life is a gift annuity.

 

  • The cost of the charitable legacy could be reduced through tax savings. If a charitable legacy of $100,000 reduced taxes otherwise payable by $46,400, then the total legacy to heirs would decrease by only $53,600 rather than $100,000. All charitable bequests qualify for a tax credit on the final income tax return. Likewise, gifts received by a beneficiary designation from an RRSP or RRIF, or a life insurance policy, result in a tax credit. Thus, giving some remaining retirement assets to charity and giving to heirs other property not subject to tax upon distribution might have a relatively minor effect on the total legacy intended for heirs.

 

  • The legacy to heirs is more than money. A healthy community consisting of strong educational institutions, good health care, performing and visual arts, a protected environment, opportunities for the struggling to better their condition, and religious options is also part of their legacy. Gifts to these various causes should not be viewed as depriving heirs of part of their inheritance, but rather as another form of their inheritance.

 

  • Leaving a legacy for others sends a powerful message to heirs about social responsibility and can stimulate them to follow this example.

 

  • How to divide one’s resources among heirs and charities is, of course, an individual decision, and it depends on financial circumstances. In some cases, the needs of heirs simply preclude any charitable legacies, however much the person might like to arrange them. This is understandable, especially if total net worth has shrunk considerably, for family needs must always have the highest priority. Still, many, even those with modest wealth, believe that the responsibility for sharing outside the family circle applies to their estates as well as to lifetime income, and some commit a certain fraction, 10 percent, for instance, for the wider world.