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July 13, 2024
Legacy Planning: Preserving Your Wealth and Values for Future Generations
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July 13, 2024
Wealth is more than just money—it’s a legacy that carries your values, dreams, and the impact you want to leave on the world. For many high-net-worth individuals, legacy planning is not just about transferring assets; it’s about ensuring that their wealth benefits future generations in meaningful ways. It involves thoughtful planning, strategic decision-making, and a deep understanding of both financial and personal goals.
Legacy planning goes beyond creating a will or a trust. It’s a comprehensive approach that includes estate planning, philanthropic giving, family governance, and preparing the next generation to steward the wealth responsibly. In this blog, we explore the art of legacy planning, the tools used to preserve wealth across generations, and the importance of passing on not just financial assets but also values and principles.
Meet Robert and Susan, a successful couple in their early 70s who built a thriving real estate empire over the past four decades. They have three grown children and five grandchildren, all of whom they hope will benefit from the wealth they’ve created. But for Robert and Susan, their legacy isn’t just about passing down money; it’s about ensuring their family continues to thrive, uphold the values that guided their success, and contribute to society.
Robert recalls his modest beginnings and the lessons he learned from his own parents: hard work, integrity, and the importance of giving back. As he and Susan meet with their wealth advisor, they express their desire to embed these values into their legacy plan.
“We want our children to be responsible stewards, not just recipients of wealth,” Robert says. “We’ve seen too many families torn apart over money, and we don’t want that to happen to ours.”
Their advisor listens carefully, knowing that successful legacy planning begins with understanding the family’s unique dynamics, aspirations, and concerns. With a plan that goes beyond the numbers, Robert and Susan embark on a journey to ensure their wealth is a force for good, today and for generations to come.
The cornerstone of any legacy plan is estate planning. This involves setting up the legal structures necessary to transfer wealth efficiently and minimize taxes. For Robert and Susan, this means creating a comprehensive estate plan that includes wills, trusts, and powers of attorney, ensuring that their assets are distributed according to their wishes.
Establishing Trusts for Control and Protection
One of the key tools in their plan is the use of trusts. Trusts offer a way to manage and protect assets while providing flexibility in how wealth is distributed. Robert and Susan set up a family trust that will provide for their children and grandchildren while incorporating stipulations that reflect their values.
For instance, distributions to their grandchildren are tied to educational achievements, incentivizing them to pursue higher education. The trust also includes provisions for matching charitable donations, encouraging the next generation to embrace philanthropy.
“We want to support our family, but we also want them to earn their success,” Susan explains. “These trusts are not just about handing out money; they’re about guiding our family’s values.”
Philanthropy plays a crucial role in legacy planning, offering a way for families to give back and create a lasting impact on causes they care about. For Robert and Susan, supporting education and healthcare is deeply personal, and they want to ensure their charitable contributions continue long after they’re gone.
They establish a charitable foundation, funded with a portion of their estate, which will provide scholarships for underprivileged students and grants to medical research. Their children are appointed to the board, responsible for overseeing the foundation’s activities, making decisions about donations, and upholding the family’s charitable vision.
The family’s involvement in the foundation fosters a sense of responsibility and connection, allowing the younger generation to experience firsthand the impact of giving. It also serves as a platform for family discussions about values, priorities, and the importance of contributing to the greater good.
“We’ve worked hard to build this wealth,” Robert reflects, “and it’s important to us that it continues to do good in the world.”
Legacy planning is not just about the financial structures; it’s also about preparing heirs to manage and grow the wealth responsibly. For Robert and Susan, this means involving their children in the planning process, educating them about the family’s investments, and creating a governance structure that ensures smooth decision-making.
They hold regular family meetings, facilitated by their advisor, where they discuss the family’s financial position, investment strategies, and the responsibilities that come with wealth. These meetings provide a forum for open communication, allowing family members to express their ideas, ask questions, and build their financial acumen.
The advisor also introduces financial education sessions tailored to each family member’s level of understanding, from basic budgeting and saving for the younger grandchildren to investment strategies and estate planning for the adults. This comprehensive approach ensures that each family member is equipped with the knowledge and skills needed to be good stewards of the family’s wealth.
While the technical aspects of legacy planning are critical, there is also an emotional component that cannot be overlooked. For Robert and Susan, planning their legacy brings a mix of pride, nostalgia, and anxiety. They are proud of what they’ve built and excited to see their children and grandchildren carry on their work, but they also worry about the challenges that wealth can bring.
Their advisor understands these emotions and emphasizes the importance of open communication and clear expectations. By involving the family early and often, they can address potential conflicts before they arise, fostering a sense of unity and shared purpose.
“We want our legacy to be about more than just money,” Susan says. “It’s about our family, our values, and the impact we want to have on the world.”
Legacy planning is about more than just wealth transfer—it’s about shaping the future and leaving a positive mark on the world. For families like Robert and Susan’s, a well-crafted legacy plan preserves not only financial assets but also the values, principles, and dreams that define who they are.
Through thoughtful planning, strategic giving, and preparing the next generation, wealth can be a powerful force for good, bridging the past, present, and future. For those embarking on their own legacy planning journey, the message is clear: start early, communicate openly, and remember that the greatest legacy is one that reflects your heart and values.
