The largest intergenerational wealth transfer in recent history will happen over the next few decades. As a result, legacy planning is becoming an increasingly significant topic of conversation. Legacy planning is a chance to define, reflect on, and express what wealth truly means to a family. That way, beyond financial wealth, a family’s core values are also passed on to future generations.
Forbes’ recent article, “3 Principles For A Successful Family Legacy,” says that frequently the failure to maintain wealth through the generations is because of a lack of communication, education and trust among generations, not a poor investment strategy or a series of economic downturns. Families who are successful at transitioning wealth from generation to generation, stick to three core legacy planning principles.
Integrating planning. Legacy planning is a collaborative effort that requires open discussion with your wealth advisor, family members and your estate planning attorney. You should first define your goals—how you want to enjoy your wealth and how you want it to benefit your family members and your community. Your legacy is about providing financially for future generations, along with how you want to be remembered. Discussing your values and ambitions to your advisors and those important to you, can help you develop a detailed wealth plan that is consistent with your legacy goals.
The creation of a healthy family wealth culture. Create a healthy culture with a shared set of attitudes, values, goals and behaviors that characterize you as a family. This is vital for legacy planning. Those families who develop a healthy attitude regarding their wealth through open and honest dialogue, are typically more likely to see their wealth preserved from generation to generation.
Develop the next generation. When developing your legacy, be sure to help younger generations understand that thoughtful spending, investing and charitable giving can add to a sense of purpose.
Legacy planning is a way of long-term thinking about what “family wealth” really means. Successful legacy planning depends on identifying your goals, communicating them effectively and creating a strategy that aligns with your goals.
Reference: Forbes (July 13, 2018) “3 Principles For A Successful Family Legacy”