Few things are as important as financial legacy planning. As individuals accumulate wealth over time, it becomes increasingly important to ensure that their values and assets are preserved for future generations. This requires careful planning and consideration, as well as involving the next generation in the legacy planning process.
Let’s explore the most important financial legacy planning steps individuals can take to preserve their wealth and values. By following these guidelines and seeking the advice of professionals, individuals can help ensure their legacy is carried on in accordance with their wishes well into the future.
About Financial Legacy Planning
Preserving wealth and values is important for several reasons. It can help preserve the financial stability and security of future generations. By preserving wealth, individuals can pass on assets, resources, and opportunities that can support their loved ones’ well-being, education, and future endeavors. Legacy financial planning provides a solid foundation for their financial security, enabling them to pursue their dreams and aspirations with the gift of a head start.
In addition to financial considerations, preserving values is equally vital. Values embody a family’s principles, beliefs, and ethical standards. They shape the way individuals live, make decisions, and interact with the world.
Preserving values ensures that future generations inherit a moral compass, guiding them in making ethical choices and contributing positively to society. Financial legacy planning can also help maintain a sense of identity, heritage, and continuity across generations, fostering a strong family bond and a shared sense of purpose.
Steps for Ensuring Wealth and Values are Preserved
There are a few vital steps in the financial legacy planning process that individuals may want to undertake to help ensure that wealth is preserved.
Create a clear and detailed financial plan
Developing a comprehensive financial plan is the foundation for wealth preservation. It involves assessing your current financial situation, setting goals, and outlining strategies to achieve them.
Establish an estate plan:
An estate plan is crucial for preserving wealth and ensuring its proper distribution. This includes having the necessary documentation in place, such as:
- A will
- A trust
- Powers of attorney for financial decisions
As we’ll discuss more specifically, circumstances and family dynamics change over time, so it’s essential to review and update your estate plan every 3-5 years.
Involving the Next Generation in Legacy Planning
Involving the next generation in the legacy planning process is vital for a smooth transition. Holding a family meeting and imparting values to family members allows individuals to express their wishes and explain the rationale behind the estate plan.
As the St. Louis Business Journal explains, “Estate plans are frequently designed to create a legacy that extends beyond a single generation. For this reason, if you are creating an estate plan, you may wish to consider the characteristics of the younger generations.” This can help to make sure that the priorities and values are clear.
Educating the younger generation about financial literacy is also crucial, as it equips them with the necessary knowledge to handle inherited wealth responsibly. Additionally, it is important to emphasize the importance of seeking professional assistance, such as hiring experts in investments, taxes and estate planning, to maximize the potential of the inheritance.
Ensuring a Legacy Plan Remains Relevant and Effective
To ensure that a legacy plan remains relevant and effective over time, regular reviews are essential. Estate planners recommend reviewing the plan every 3-5 years, as circumstances and family dynamics can change.
It’s important to update beneficiary designations on bank accounts, insurance policies, trusts, and other assets. In some cases, these beneficiary designations outweigh those in an individual’s will. Regular updates can help keep the estate plan aligned with current goals and prevent unintended consequences. Failing to review and update the plan might result in assets going to the wrong individuals, highlighting the importance of regular assessment.
Depending on your circumstances, you may choose to establish a trust as part of your legacy plan. A trust allows for greater control over the distribution of assets and can include spendthrift provisions to safeguard against destructive behavior.
A spendthrift provision is a legal mechanism that can be included in a trust to protect the trust’s assets from being mismanaged or quickly depleted by the beneficiaries. It sets certain restrictions on how the trust funds can be accessed or used by the beneficiaries.
Staying up-to-date on changes to estate planning laws, tax laws, and other regulations is critical for maintaining an effective legacy plan. It is advisable to reach out to relevant professionals in the field and stay informed about the latest news and developments. By remaining knowledgeable about the evolving legal landscape, individuals can incorporate any necessary changes into their legacy plans and ensure compliance with the law.
One part of financial legacy planning that you may not have considered is the creation of a checklist for important documents. Putting in writing where your will, trust documents, life insurance policies, investment accounts, real estate deeds, and other important documents are can help others in an emergency. A list of passwords, locations of safe deposit boxes, and other means of access can help as well.
If you move states from where your original estate plan was created, it would be wise to consult with an estate planning attorney in the state you are moving to so that you confirm you are in accordance with local laws. It is often possible to continue working with your current wealth management firm or financial advisor, but it is a good idea to come to understand any nuances in the law.
Financial legacy planning is important and can be complex. Working with an experienced professional can make things easier.
Important Disclosure Information
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Dechtman Wealth Management, LLC [“DWM”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from DWM. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. DWM is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the DWM’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.dechtmanwealth.com.
Please Note: DWM does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to DWM’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.
Please Remember: If you are a DWM client, please contact DWM, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently.
Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.
"*" indicates required fields