Death and taxes. The two most certain things in life. While planning for the tax piece of things is important, thinking about your legacy is equally, if not more important. Here are a few questions to help you think about how your family’s legacy is preserved according to your intentions.
1. Do I want to divide my assets between my heirs and my favorite charities?
Leaving everything to "the good kid" and trusting that person to make smart decisions with your assets is certainly the easiest estate-planning strategy. However, is it the most beneficial to your intentions? Once you've passed on and your estate has been settled, any number of external factors could get between your chosen heir and their best intentions.
That's why it's so important that you are as clear and specific about your wishes while you’re still of sound body and mind. Rather than burden your heirs with a decision about how much of their inheritance should go to a favored cause, make the decision for them. If you are charitable inclined, a dedicated giving strategy can also save your heirs some headaches come tax time and provide a charitable example that your family might feel inspired to follow.
2. Do my heirs have a healthy relationship with money?
Many parents and grandparents worry that leaving too much money to the kids will spoil them, while leaving too little will create unnecessary struggles.
A better way to approach this problem is to think about how your heirs currently manage their money. After all, money means very different things to different people. One of your children might look at a generous inheritance and see the foundation of a nest egg that they will continue to work hard to grow. While another child might look at that same amount of money and see a sports car without thinking of their financial future.
This is why being careful with your heirs to divide your estate "fairly” is of utmost importance. You have every right to decide what "fair" means based on what your heirs need, what they hope to achieve in their lives and careers, their willingness to pay your generosity forward, and their level of responsibility. Explaining the thinking that went into your decisions once you've signed your estate plan might make for an awkward conversation or two, but having these conversations effectively can minimize future family constraints and jealously.
3. What is our family's mission?
As important as it is to protect your assets, the best estate plans are about something more. It’s a message to your heirs that says, "This is who we are as a family, and these are the things that are important to us."
Some folks memorialize that mission by using their estate plans to create charitable organizations or trusts that they ask their heirs to manage. Others include letters or video testimonials so that they can explain their most cherished values in their own words. Families that really want to achieve alignment might even work together on a family mission statement that will guide everyone towards positive, impactful decisions as one generation gives way to the next. The more aligned your estate plan is to that established mission, the more empowered everyone will feel to carry on your legacy.
Time is of the Essence!
Don't put off making these important decisions before it’s too late. Many people view estate planning as an afterthought, but once you’re gone the lasting values that you’ve instilled in your family will live on. If you are interested in learning more let's talk soon about preserving your assets, your values, and focusing on your life and legacy.