What Is Your Legacy?

Mark Wendell |

By Mark Wendell 

How should your family successfully transfer wealth to benefit not just the next, but many generations? It starts with the first step, exercising immediate and on-going financial planning; a process to grow and protect assets, covering all of your household’s present and future financial requirements. The second step, estate planning, is designing a sound legal foundation, through wills, trusts, and other legal instruments to smoothly transfer those assets to intended heirs with a minimum of complications, maximum tax efficiency, and well defined outcomes. The third step is to spend many years consciously preparing a legacy through heritage planning, a process of laying a foundation to prepare heirs to manage both financial and emotional inheritances. With proper attention, heritage planning serves as a vital step to help shape and guide the financial and estate planning of current and following generations.

At the heart of heritage planning is open communication among family members across generations. It’s difficult for eventual heirs to plan their own futures if they do not know what they will be inheriting. However, with frank and detailed information, they can not only manage their own lives and finances responsibly but prepare their own estate planning and legacy planning to benefit their children. It can be said that the greatest gift we give our children is not financial assets, but the information they need about the financial assets they will receive, together with a personal family emotional legacy that is the living human heart and soul of any inheritance.

Many people make the mistake of treating wealth transfer as one event rather than an arduous lengthy journey. Preparing for wealth transfer provides an extended opportunity to instill an emotional legacy: composing and defining values; clarifying intentions for monetary inheritances; and memorializing lifelong learned perspectives that will influence many generations to come. There is a reason families are able establish and maintain a multi-generational legacy. It is because they remain strong and close-knit across generations and have many definable elements of success in common that intentionally teaches and transmits to succeeding generations this formula as part of their legacy. Trusts and wills are precise legal statements, but they aren’t personally or sensitively worded, which can easily breed conflict among family members. Occasional family meetings and open discussions familiarize heirs in a personal manner with an estate’s legal documents, such as a trust’s intended purpose, and allow for adaptation to changing personal circumstances, and most importantly, address sources of discord as they may occur.

A system of family governance through family councils can be an effective method of preparing succeeding generations for the responsibilities they might one day bear after an inter-generational wealth transfer. Including outside professionals in family meetings, rather than being invasive, can help assure that heirs appreciate and are comfortable with expert guidance. Family members may participate in stewardship duties, such as philanthropic, mentoring and educating activities to focus on preparing the next generation. This participation in the process of building an inheritance can assure that neither its values nor the family’s ideals will fade away as it passes from generation to generation.

Most of us have a desire to pass on a legacy that’s more than merely financial assets. What we often lack is a formula for success. Heritage planning is really an on-going cycle of honest and open communications among all connected family members that begins very early in the wealth transfer process. Its goal is to transfer not just numbers on account statements and balance sheets, but also values, stories, wisdom, life lessons and intimate family traditions. To learn more about successful Heritage Planning, please contact the author.