Legacy Planning: How Does One Achieve That Lofty Goal?

Legacy planning is only one dimension of looking at your goals, but it’s a unique exercise in many ways.

Risk, to many investors, is the potential of not achieving your goals

This is a very different take on investor risk than the standard technical definitions, which usually look at measures of price volatility or maximum loss for a particular investment. It’s a much more emotional definition, which connects to the central role that wealth plays in our lives. Money is emotional, like it or not. When we talk about our long-term wealth goals, they tend to be all of the things that humans are: multi-layered, aspirational, sometimes conflicted or messy.

Nowhere is this emotional component more apparent to us than in the legacy planning process. Legacy planning is only one dimension of looking at your goals, but it’s a unique exercise in many ways. Not only does it force us to reflect on issues of mortality, it requires us to zero on in our deepest values, and the ways we would like to see those realized or acted upon in the world.

Common Threads

When we go through this exercise with clients, we hear three common themes again and again:

• “I want to support my family.” The desire to support loved ones is often first in line. But that can take different forms depending on your values and your family’s unique situation. For some families, that means designating wealth to pay for education, while others might wish to support heirs with more openended gifts to use for buying a home or starting a business. Still others might need to set up a highly structured plan to navigate difficult family relationships. While the intent is usually the same, the execution is always personalized.
• “I want to support my community.” Another top-ranked desire is the wish to achieve something in the community, whether that means supporting an institution like a university or faith-based group, giving to specific arts programs, helping those afflicted by a specific issue—the possibilities are endless. These community aspirations often deepen as we get older and spend less time at work and more time involved with the people and causes around us.
• “I want my family’s values to endure.” We also see a strong desire among families to ensure that their values are carried down to future generations. Often, one generation has actually built the family wealth through a business or investment, the product of hard work and determination. While they want future generations to benefit from that wealth, they also worry that younger family members may actually be disadvantaged by being given too much. Involving children in the legacy planning process is one way to make sure they understand and share responsibility for family values. In some cases, we see families involving younger generations in charitable giving decisions to explore and instill those values together.

An Evolving Process

The other piece of the puzzle is that as we go through life, our relationships to our family and community are always evolving. Often, this plays into an evolution in legacy planning, too. For instance, one family may aspire to leave a $1 million endowment to an institution to support scholarships or particular programs. But later in life, they have a special-needs grandchild, and their priority shifts to create a wealth vehicle to support his needs.

Ultimately, the process is deeply personal. If you’ve been considering how these issues fit into the plan for you and your family, your advisor is always ready to work through the process together to establish a vision for your legacy.