August 23, 2018
If you are beginning the legacy and estate planning process, your first concern may naturally be how to maximize what you give to your family and favorite charities by minimizing what you pay in taxes. However, your legacy is not just about increasing the financial wealth that you hope to pass on to future generations. While this objective can usually be met through careful and collaborative planning, oftentimes the more challenging part of the process is preparing your family for the wealth they will receive.
Through years of experience working with high net worth families, we have learned that the best approach is more than just financial education for the rising generations—it also involves a cross-generational understanding of what wealth means to individual family members and to the family as a whole. To effectively understand the values attached to the wealth you have created, it can be helpful to ask and answer three fundamental questions.
What does the family want to do with the wealth that has been created?
Whether you have near-term cash flow priorities, long-term wealth transfer plans or philanthropic goals that will span generations, identifying your objectives is the first step when creating a legacy plan. Often, the best way to do this is through open and honest discussions with family members and trusted advisors. Good communication is critical to a healthy family life and equally important for preserving wealth. Generally, families that succeed through generational transitions of their legacy have developed real trust—and that trust is built through compassionate and candid conversation.
How do I combine values and wealth to create a lasting legacy?
Every family has values that guide them, but these values are not always easily articulated. You may find it helpful to ask yourself and your family members certain questions and carefully reflect on the answers before determining what you want your legacy to be. Think about which causes are most important to you—perhaps there are issues in your community that could benefit from your assistance or a charitable organization that you wish to support. Discussing your values and aspirations with those important to you can help you develop a detailed wealth plan that aligns with your legacy goals.
Legacy Planning: Getting Started
Strategic planning aligns your values and goals with your overall investment strategy and wealth plan. Sometimes starting with a simplified picture of your wealth—in other words, understanding what’s already in place—can help identify what changes need to be made to reflect your vision. Families who are successful in implementing their desired legacy and transitioning wealth to the next generations typically follow two best practices: developing family wealth goals and discussing planning options with select advisors to determine what strategies will best meet those goals. Since legacy planning is a collaborative effort, you may find that coordinating strategies with multiple specialists who address different, but related, issues can be advantageous.
Legacy planning is an opportunity to assign meaningful value to the wealth you have created and determine what wealth and success truly mean to you and your family. Successful planning often hinges on having open and honest discussions with your family members and advisors, identifying your family’s values and objectives for your wealth, and developing a strategy that closely aligns with your goals. With proper planning, you can create an enduring legacy that spans generations.
Cathy Schnaubelt is a senior wealth strategist for CIBC Private Wealth Management's Houston office, with more than 35 years of industry experience. In this role, Cathy is responsible for the development of integrated wealth management solutions and provides comprehensive estate and financial planning services to high net worth clients.
This article originally appeared on Forbes.com on July 18, 2018.
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