Legacy planning can be a win-win for everyone—it strengthens relationships and allows a person’s values to accompany the wealth he or she passes on to heirs or gives to charity. In this way, legacy planning is much more than a business transaction, and reaches beyond mere tax savings.
We believe there are at least three basic, yet distinct steps in legacy planning:
1. Conduct an analysis so clients can see the probability that they will be financially independent.
2. Determine how much wealth they wish to give to heirs. Interestingly, Bill Gates and Warren Buffett have publicly stated that their kids will not inherit all of their wealth.
3. Allocate excess wealth so clients can LIVE MORE and GIVE MORE. With creative planning, estate taxes can potentially be reduced to zero.
We find that giving it all away is rarely what clients want! Therefore, legacy planning requires that they determine their primary objective. Here are some typical examples that we hear in our everyday practice:
· Maximize access to financial resources, regardless of the impact on wealth transfer
· Minimize or eliminate estate taxes
· Increase family heirs’ inheritance
· Give to charity
· Establish a specific inheritance amount, then a charitable giving amount
Once the primary objective is established, we capture our client’s values, goals, philosophy, preferences and attitudes, which takes time and thought. As family values and philosophy emerge, children and grandchildren involved in the process may—perhaps for the first time—respect their wealth, rather than take it for granted.
Wills, trusts, and other documents are the what, how, when, and “to whom”; and the family mission statement is “the why.” In essence, the family’s desired vision takes into account the values, ideals, ethics, spirituality and morals of all who have come before.
Completing the legacy planning process often gives clients a great calm and sense of relief knowing that they can plan to transfer their wealth and values according to their wishes. Sometimes we unearth major concerns and address potential problems. Many clients experience joy as they communicate their life story and important values to their children in a non-confrontational way. While children may or may not be part of the legacy planning process, they will receive their inheritance according to their parents’ wishes along with a carefully constructed spiritual will that helps them understand the reasons behind their parents’ decisions.
Greg Hammond, CFP®, CPA and Ron Ware, JD are wealth impact strategists who works with individuals, families, and closely held businesses to help them grow and preserve wealth, plan for retirement, and manage their charitable giving. For a Wealth Impact Assessment to see how you can build a legacy of your values, influence and money without sacrificing your own lifetime goals, contact Greg at (800) 416-1655 or email@example.com and Ron at (781) 489-9800, or firstname.lastname@example.org.