A lasting legacy consists of more than just passing along assets. Imparting your wisdom, values, and work ethic upon your heirs is possibly the most valuable inheritance since those virtues can enrich lives for generations to come.
Thankfully, there are ways you can share your values with your beneficiaries including sharing your story and clearly defining your wishes.
If you’ve achieved financial success through your own hard work, you have likely also experienced essential life lessons along the way. Because of your achievements, your children may have had a comfortable upbringing. Consequently, the grit, resilience, and do-or-die determination that drove your career trajectory may not be as pronounced in your heirs.
If those values or others are important to you and you’d like to see them continue to be a hallmark of your family’s legacy, keep them in mind as you create your estate plan.
An estate plan includes a blueprint for passing assets to heirs after you die. But it's more than instructions for asset allocation. A comprehensive estate plan also involves preserving and strengthening family relationships by providing unmistakably clear instructions to prevent any guessing or bickering over what your wishes might have been.
You know your heirs. Will they adhere to your approach to life and business? Do they share your faith or devotion? Are they as committed to education or philanthropy? Will their money mindset match your own? Certainly, you can opt to pass along your assets without conditions or explicit direction. Or, you can use estate planning tools to continue to guide the use, enjoyment, and timeline of the wealth distributed to the people or causes you care about.
Here are some tips and steps individuals can take to integrate their values into their estate planning and wealth transfer strategies.
Take an inventory of all your tangible and intangible assets as well as any liabilities including heirlooms, real estate, business interests, investments, and financial accounts. Then, create a comprehensive list with professional assistance. Be sure to draw up properly executed estate plan documentation that will stand up to legal scrutiny.
Trusts and conditional inheritance parameters can help manage tax implications as well as schedules for asset distribution to heirs at age- or stage-appropriate milestones such as upon the receipt of a college degree, marriage, or other momentous occasion. It’s important to regularly review and update plans, ensuring they reflect current laws as well as family structure and personal circumstances.
Openly discuss your plans and expectations with your heirs to avoid unexpected surprises. Be sure to explain what’s important to you and why, as it may afford you an opportunity for your children, grandchildren, and others to understand and adopt your values in a meaningful way.
Consider establishing a family mission statement that aligns with your legacy goals. If you own a business, bring family members into its operation to promote continuity and shared responsibility. Establish a clear business succession plan so you can be an active part of the transition while also affording your employees the security of knowing what to expect.
Teaching your heirs about financial literacy and involving them in discussions with tax and financial planning professionals can also help prepare them to make smart money decisions in the future.
Impart your charitable values on your heirs so the organizations and causes you care about can continue to be supported well into the future. Explain why you care deeply about those issues, and use it as an opportunity to share the family’s history, immortalize traditions, impart wisdom, and share ethics, values, and morals. Remember that an inheritance consists of more than money.
You can also detail your desires and intention for philanthropic spending after your death in your will and estate planning documentation. In the event that your beneficiaries simply don’t share the same ideals as you when it comes to your wealth management, this can ensure the funds you set aside are put to the right causes at the right times.
You will also want to outline who can speak for you as an advocate in the case of your incapacitation. Get together all the applicable legal documents such as a living will, healthcare directive, durable power of attorney, and guardianship designation to specify your wishes and identify the person or people to make important decisions if you’re unable to preside over your own affairs. Make sure you discuss these plans with whoever you intend to be your advocate so they are clear regarding your desires before the need arises.
To create a comprehensive, legally sound estate plan, you’ll need to enlist a team of professionals including experienced financial advisors, estate planning attorneys, and other knowledgeable professionals. You may also designate an executor/executrix or trust administrator from outside the family. Be sure your heirs know who to contact in the event of your death.
Estate planning is a multi-part process that should be established in total and reviewed annually or more frequently if a significant change such as a marriage, divorce, birth, or death occurs. Though some people find thinking about their own passing to be macabre, you’ve worked too hard for too long to allow your assets and your loved ones to be subjected to the long, public probate process where the government will help itself to a sizable chunk of your assets. Unfortunately, that can be what happens if you don’t have a proper estate plan in place.
The process of creating and sharing the reasoning behind your comprehensive estate plan gives you an opportunity to tell your story. Perhaps you’ve never discussed the hard parts of your journey to success with your children or grandchildren. Do they know why you made the business choices you made, or how you may have faced a crossroads and were uncertain about which path to take? These lessons and others can help the next generation understand the complexity of successes and failures and how both are woven together into a life story and family history to be proud of.
You have built something worth protecting both personally and professionally. Now is the time to speak with a financial advisor and make sure you have all the legal and financial pieces in place to pass along your legacy in a way that will make the most valuable impact.
This article is provided for general informational purposes only. Neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.
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