At some point, every adult will need to face an uncomfortable truth when planning their financial futures: your assets will outlive you. While this fact can be slightly anxiety-provoking, it also provides an opportunity to define and establish your legacy. And while it’s critical to ensure you save enough to see you through retirement, it’s perhaps equally important to articulate your goals for the assets you leave behind.
That necessitates some important honest conversations: with yourself, with your spouse or partner, and with the family members or other individuals who stand to inherit.
Conversation with yourself
Before you begin speaking with anyone else about your legacy, you first need to take stock of your own feelings. Money is personal, and that’s true whether you’re spending it on a vacation, college tuition, retirement, or your children and grandchildren.
As you seek to define your legacy, ask yourself the following questions:
What’s most important to you? How do you want to be remembered? What are your values?
Your answers to these questions will help determine how you want your assets to be spent once you’re gone.
Many of our clients draw inspiration from their own upbringings in their legacy planning. Often, clients who received gifts or inheritances that allowed them to start off on the right foot in their educations, careers, or family lives may feel compelled to “pay it forward” to the next generation. People who are particular champions of a specific cause or charity may also want to allocate a portion of their assets to a philanthropic organization of their choosing.
There is no “right” answer when it comes to establishing your financial legacy. Rather, there is only the “right” answer for you, your loved ones, and the causes you support.
Conversation with your partner
If you’re in a committed relationship, knowing what you want your legacy to be isn’t enough: you need to check in with your spouse and ensure you’re both on—or can arrive at—the same page. In our decades of advising couples and families, we’ve often seen disagreements emerge between spouses. One partner may want to leave 100% of the couple’s assets to their children, for example, while another may want to divide funds among children, grandchildren, and charitable organizations. Sometimes, if one partner is hesitant to give, it may be because they’re worried about their own financial security for the remainder of their lives.
It’s important for you and your partner to be open and honest about your concerns and desires, and then to share that information with your financial advisor. A financial planner can help you understand what you really have to work with and help you both feel more confident as you plan your desired legacy.
Conversation with your inheritors
For most people, the first and truest part of their legacy is their family. As you define your legacy, it’s important not just to decide whether and how much to give your children and grandchildren, but also to involve the younger generation in the wealth transfer process.
It may sound counterintuitive, but inheriting can be overwhelming—especially when the younger generation of inheritors have not previously been involved in their family’s financial decision-making. To facilitate a smooth transfer of wealth and to ensure your inheritors understand your vision for your assets, frequent honest conversations are key.
As you plan wealth transfer with your family, consider the following:
Have you designated key family members for emergencies? Are you having monthly reviews and accountability meetings? Does the younger generation understand your vision? Are they excited about living out your values?
These questions apply whether you plan to leave the vast majority of your assets to your children, establish education funds for your grandchildren, or create a family foundation that the next generation will be managed.
These important conversations can be tricky to navigate. At K&B, we often serve as the bridge between the current and future generations, and we help ensure that everyone involved understands your plan.
Conversation with your financial advisor
Like many aspects of financial planning, defining your legacy can feel overwhelming—but it needn’t be. When you work with a trusted financial advisor who takes the time to learn your preferences, values, and goals, the wealth transfer process can be exciting and enjoyable.
Our process, which focuses on personalized plans generated through honest conversations, helps us serve you as you seek to define your legacy. We pride ourselves on knowing our clients intimately—and our close relationship helps us help you ascertain both how much you can give and the giving options for you and your circumstances.
We’ve found that determining how much to give is often the hardest part of the process for our clients. Our insights and analysis can help make you understand the size of your financial pie, and our personalized approach allows us to help you determine how best to serve slices of that pie to the people and organizations you care about most.
It’s never too early to begin having these important conversations. Reach out if you’re eager to define your legacy and are looking for a financial advisor who will prioritize you, your values, and your goals.
The content and views expressed in this communication has been prepared for informational purposes only. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. Investing involves risk including the possible loss of principle. Past performance is not a guarantee of future results or success. Links to third-party websites are provided for your convenience and information purposes only. K&B has no control over the accuracy or content of these other websites.
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