Most estate planning attorneys do a fantastic job helping their clients set up the proper legal structures to transfer financial assets, but they often don’t consider the intangibles. That’s where legacy planning comes in. Legacy planning goes beyond your financial assets and considers your impact on your family and the world.
7 Components of a Non-Financial Legacy
Consider including these intangible components in your estate planning process:
1. Beliefs, Values and Vision
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The first step is identifying what you believe in. I recommend writing a Personal Legacy Statement to serve as a compass to living in a way that creates the impact you desire. If your children are younger or you have a close multi-generational family, you may also consider creating a joint family mission, a family coat of arms or brand, and family rules.
For example, you could gather your children together in a family meeting and discuss what “family” means to you. Is there a mantra that represents your family? (For example,. “No one left behind”; “Stay curious”; “Always show up.”) What values are important to you? What rules are important to follow? Matthew McConaughey, for instance, says that he and his wife established three rules for their children: 1) No lying. 2) No saying, “I can’t.” 3) No saying the word “hate.”
Consider writing your rules and posting them somewhere in the house. To take things up a notch, you can involve your kids in designing a coat of arms that represents your values, motto and rules. This can be simpl e —like having your kids grab crayons and drawing their own version on a piece of paper — or more complex — like hiring a graphic designer to create a professional symbol.
2. Master Stories
Some experiences affect you more than others do. These are what Jewish theologian Michael Goldberg has termed “master stories.” Master stories transform and shape who you are and form the way you think about the world. Everyone has different master stories depending on the events of their lives and how they processed them. For example, one of your master stories might be about how you met your spouse, or how hard you worked to get your college degree, or the time you and your brother spent a summer taking care of a bird. The story itself can be rather simple; the key is to capture how it marked a turning point in your perception.
My husband tells a story about how a bottle of peanuts changed everything. He was 15 years old and at a big picnic with his family. Someone threw a bottle of peanuts at his family. Everyone ducked, but he instinctively reached up and caught the bottle. His father looked at him and said, “I can’t believe you caught that. I would have never thought to do that.” It was then that my husband realized that he was capable; he didn’t have to follow his father’s footsteps; he could be his own man.
These stories are important to capture (in writing, audio or video) and make available to your family. To get started, check out Five Stories All Parents Should Tell Their Kids.
3. Experiential Bonds
Experiential bonds are significant one-time events or repeated experiences that are remembered with fondness. These special events often mark important life milestones and give structure to our journey through life. They are different from master stories in that they are active experiences. They should be planned and put on your calendar. The entire point is to be with your family, build relationships, celebrate each other and grow closer.
What traditions or events have special significance to your family? Consider ways you can immortalize these meaningful experiences. This can be as simple as posting pictures on social media or as heartfelt as writing a special letter to commemorate a wedding, graduation, birth, etc.
4. Family Heritage
Your family’s biological roots give you an anchor, establishing your identity and helping you to understand what family behaviors you can build upon or learn from. Doing some basic family research can be incredibly rewarding. There are a variety of free resources online. You should try to find out where your family originated from, going back at least three generations. See if you can locate photos, documents and stories about key ancestors. You may also consider doing a DNA ancestry test to give you more insight into your origins and health history.
5. Community Impact
There are limitless ways to serve, but only a handful will fit with your giving personality. Spend some time thinking about which causes you would like to align with and how you’d like to help.
Charitable giving can be a wonderful way to involve your family in giving back to the world or helping those who are less fortunate. Philanthropy is one of the best ways to teach humility, gratitude and responsibility.
6. Systems for Living
Systems for Living refers to systems you’ve put in place to ensure a productive family, fulfilling personal life and legacy of significance. An example of this is holding weekly family meetings.
You may also consider creating a family brain trust. It’s common for heirs to be unprepared to receive an inheritance. Consider what your heirs need to learn in order to thrive. Do you need to teach them how to manage your investment property? What about your business? What do they need to learn to take over?
“Softer” skills are important too. You, for instance, could teach your grandson how to make your grandmother’s famous carrot cake.
7. Public Presence
Your public presence is how you are viewed by the world. It includes your personal reputation (both online and offline), media coverage and your public message (in the form of books, websites, blogs or videos). A strong public presence can lead to greater business or networking opportunities, greater approachability, higher resiliency in the face of a PR disaster, creation of a well-respected family name, the ability to effect change and the ability to keep in touch with friends, colleagues and acquaintances.
Intangible Effects on Your Financial Situation
To have the greatest effect, your non-financial legacy should be accompanied by a solid financial strategy. Separating your family’s philosophical vision from your financial structuring may make sense for some family members not involved with your finances, but for those who are privy to financial decisions, your family dynamics, values and communication play significant roles in how the family fortune is managed and in your heirs’ financial competence.
I strongly suggest involving your wealth advisory team in creating governance processes based on personal and family principles you define as a part of your legacy vision.
-
Seven Surprising Reasons Retirees Are Going Back to WorkSure, money is a big reason to come out of retirement, but it's not the only reason retirees are doing it.
-
Dow Gains 617 Points as Rate Cuts Near: Stock Market TodayWednesday's economic data didn't shift Wall Street's expectations that the Fed is preparing for a rate cut at next week's meeting.
-
Four Clever and Tax-Efficient Ways to Ditch Concentrated Stock Holdings, From a Financial PlannerHolding too much of one company's stock can put your financial future at risk. Here are four ways you can strategically unwind such positions without triggering a massive tax bill.
-
Beyond Banking: How Credit Unions Serve Their CommunitiesCredit unions differentiate themselves from traditional banks by operating as member-owned financial cooperatives focused on community support and service rather than shareholder profit.
-
Answers to Every Early Retiree's Questions This Year, From a Wealth AdviserFrom how to retire in a crazy market to how much to withdraw and how to spend without feeling guilty, a financial pro shares the advice he's given this year.
-
The Risks of Forced DST-to-UPREIT Conversions, From a Real Estate ExpertSome new Delaware statutory trust offerings are forcing investors into 721 UPREIT conversions at the end of the hold period, raising concerns about loss of control, limited liquidity, opaque valuations and unexpected tax liabilities.
-
I'm a Financial Adviser: You've Built Your Wealth, Now Make Sure Your Family Keeps ItThe Great Wealth Transfer is well underway, yet too many families aren't ready. Here's how to bridge the generation gap that could threaten your legacy.
-
Want to Advance on the Job? Showing Some Courtesy and Appreciation Could HelpTwo business professors share their insights about the impact of digital communication on the social skills of some in Gen Z and the importance of good manners on the job.
-
From Job Loss to Free Agent: A Financial Professional's Transition Playbook (and Pep Talk)The American workforce is in transition, and if you're among those affected, take heart. You have the skills, experience and smarts that companies need.
-
A Financial Planner's Top Five Items to Prioritize When Your Spouse Is IllDuring tough times, it's easy to overlook important financial details, but you'll be so much better off if you take care of these things right now.
