If you’re hoping to leave a financial legacy for your loved ones, it’s important to have a plan in place. The following steps can help you leave your mark in supporting future generations of family.
Articulate Your Goals and Values
The first step in leaving a multigenerational legacy is taking time to document your specific goals and articulate the values you’d like to hand down. These are the guardrails that keep you from letting small things derail you from your larger focus. Considering your responses to the following questions can be a great place to start.
• What core principles guide my life?
• What are my important ambitions?
• How do I hope to be remembered?
• What values do I hope to instill in my children and grandchildren?
• What unique family circumstances exist that may require extra planning?
Establish a Comprehensive Plan
One of the best ways to take control of your financial legacy is by establishing a plan to guide your decision-making. Your plan should incorporate all the various aspects of your financial life, including investments, retirement planning, savings strategies, strategic tax planning and, of course, estate planning.
This plan serves as a blueprint to help guide your financial life, and it can help you gain an understanding of your current financial situation in relation to the legacy goals you’re trying to achieve. This can be used to inform your financial decisions throughout life, which all have an impact on your ability to fulfill your legacy goals.
Protect Yourself From Risk
All the savings and investments in the world can’t support your lifestyle if you lose those assets to a lawsuit, accident, injury, natural disaster, etc. That’s why it’s important to take steps to protect the wealth you’ve worked so hard to build.
Based on your goals, you may need to add risk-management strategies, which could include a combination of:
• Life insurance
• Homeowners/renters insurance
• Disability insurance
• Auto insurance
• Umbrella insurance
• Malpractice insurance
• Professional liability insurance
Have a Family Discussion
Communicating your legacy wishes to your loved ones is an effective way to make sure everyone is on the same page, which can help prevent conflicts and resentment after your passing. However, this can also be the most difficult step in the legacy planning process. Not only does the conversation require everyone involved to consider the reality of your eventual death, but it can also bring up sensitive topics, such as who will take over the family business or who will inherit what.
Prioritize Time With Your Loved Ones
The most valuable legacy you’ll leave isn’t a financial one; it’s an emotional one. Prioritizing time with your loved ones allows your family to make lasting memories they’ll cherish for a lifetime. This may involve taking an annual family trip, sharing holiday traditions, or finding ways to be involved in each other’s daily lives. Whatever you enjoy doing together, prioritizing experiences over material possessions can help you establish the most important, longest-lasting legacy of all.
Remember the goals and values you articulated in step one, and be sure to let them guide both your life decisions and your financial decisions.
AJ Kratz, CFA, CFP, is a Private Wealth Manager and Partner with Creative Planning. Creative Planning is one of the nation’s largest registered investment advisory firms, providing comprehensive wealth management services to help align all elements of a client’s financial life, including investments, taxes, estate planning, and risk management. For more information, or to request a free, no-obligation consultation, visit creativeplanning.com.
This commentary is provided for general information purposes only, should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.