Although many people equate legacy planning with generational wealth transfer, a holistic approach to legacy planning can address financial, legal, and personal aspirations in a cohesive plan. It can take into account your unique relationships, values, philanthropic goals, and family governance. As a high earner with a substantial level of assets, structured family legacy planning can address your unique challenges—like tax minimization—and help ensure your wealth is distributed following all of your wishes.
What Is Legacy Planning?
You have an opportunity to build a lasting impact not only during your lifetime but for generations to come. Legacy planning can help you do that. The core pillars of legacy planning are:
Financial Legacy: Take care of your family after you’re gone. Assist with minimizing their tax burden and give clear directions for asset distribution. This can help ensure that you pass along as much as possible to the people you want to benefit and in the way you believe will be most beneficial.
Family Values and Traditions: In addition to expressing your values and wishes in the way you distribute your money, you can pass along wisdom, family traditions, a family scrapbook, a storybook, or a cookbook as part of your written legacy. This can help younger generations feel more strongly connected to the past as well as teach them important life lessons.
Philanthropic Legacy: Charitable giving through your estate can be a way to extend your values beyond your immediate family and leave a positive impact on the world. Involving the family in your charitable activities is a practical education for future generations on the value of giving back.
How to Build a Lasting Family Legacy
Key Steps in Family Legacy Planning
As with any other area of wealth planning and management, there are specific steps that can make your legacy planning more effective.
1. Define Your Family’s Core Values
You may have a general idea, but it’s helpful to take the time to sit down and think about what matters most to you and how you want to express that through your legacy.
2. Educate and Involve the Next Generation
Your legacy begins while you are alive, so it’s important to initiate discussions. Talk to your heirs about what you are doing and why, as they may also have ideas and concerns that impact your legacy plan.
3. Structure Wealth Transfer Wisely
It’s important to prepare the right legal documents to make sure your money is distributed as you wish and to structure your wealth transfer to help minimize tax liabilities.
4. Engage in Philanthropy
You can continue to assist the causes and organizations you’re passionate about even after you’re gone. Be sure to include them in your estate planning documents and, if necessary, set up the proper legal structure to carry on your financial support.
5. Maintain Strong Family Governance
To enhance communication, preserve family harmony, and create stability, it can be important for the family to agree on a set of principles and processes for communication, decision-making, and transition planning.
Essential Components of a Legacy Plan
A legacy plan can contain as many components as you wish, including personal letters and videos, but some are essential to the process. Basic estate planning documentation usually includes wills, trust agreements and certifications, beneficiary designations, and financial and healthcare powers of attorney in case you become incapacitated during your lifetime.
Other important components of a legacy plan include strategies to minimize estate and gift taxes, a charitable giving plan, and, for family business owners, a business succession plan that designates how and to whom your business shares will be transferred to preserve the health of the company.
When Should You Start Legacy Planning?
It is never too early to begin thinking about your legacy, but it’s also true that lives and circumstances change continuously, and the plan you make today may not be the perfect plan tomorrow. That’s not a reason to delay planning—it’s simply a reason to review your plans regularly so they evolve with your life. Most professionals suggest reviewing your plan every three to five years, but certain key life events can also signal that it’s a good time to update your legacy plan:
Marriage/divorce
Addition or loss of family members
Starting a business/changing careers
Children reaching adulthood
Relocation
Significant increase or decrease in assets
Retirement
It’s also important to review your plan when estate or tax laws change. They can have a significant impact.
Get Professional Guidance on Legacy Planning
Legacy planning is an important part of your wealth management. Professional legacy planners or financial advisors can be helpful in creating and executing a legacy plan. With insights and experience in wealth preservation, family governance, and sophisticated solutions to legacy legal and financial challenges, they can assist clients to:
Create asset distribution plans that align with your wishes
Prepare and verify documents
Facilitate family discussions
Keep you informed of tax and legal changes
Help ensure that your legacy plan aligns well with other parts of your financial plan
Initiate ongoing reviews and updates to keep your plan in step with evolving family needs
Family legacy wealth management is an important aspect of your financial life. Your advisor can help ensure you’re covering all the bases and using the right strategies to pursue your goals.
To be custom-matched with a fiduciary you can trust to provide personalized planning and support, take advantage of our advisor matching program today.
All information herein has been prepared solely for informational purposes. This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel.
Investment advisory services offered through CWM, LLC, an SEC Registered Investment Advisor. Carson Partners, a division of CWM, LLC, is a nationwide partnership of advisors.
Carson Wealth: 6910 South Cimarron Rd, Suite #210, Las Vegas NV 89113 (702) 405-0415