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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.

a family meets with a financial advisor to discuss legacy planning

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.

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Jordan Dechtman

A financial services professional for over three decades, Jordan Dechtman’s mission is to help clients live better with more opportunities for fun and family time. Ideally, his goal is to help them achieve their dreams. Jordan brings a unique set of skills and experiences to the industry. His work ethic and drive to improve both himself and those around him have been honed during his 30+ years as a high net-worth private wealth advisor. Jordan holds a BS in Finance from the University of Arizona. Through his memberships in both the Financial Planning Association and the Financial Services Institute, he is dedicated to championing the financial planning process. Based on assets under management, Jordan has consistently been recognized by Securities America as being among the top 1% of over 1900 registered representatives.