Volume XV, Number 3 Fall 2018
Recently I was delighted to be asked to write a chapter for a forthcoming book, Wealth of Wisdom, which will be a comprehensive collection of topics related to financial wealth. Publication is scheduled for this fall, and the book is available to preorder on Amazon (or Amazon.UK). Since this caused me to organize my thoughts on an important subject, I shared the first half of my chapter with you in my last newsletter. This is the second half.
What are the key considerations in crafting your legacy?
If you found when reading my Spring Navigator, as many did, that you still had work to do on shaping your legacy, you have another chance now to turn your attention to this important endeavor. I gave you the first three steps to begin the process of shaping up the legacy you currently have established:
1. Identify and clarify your values Values Identification and Clarification Exercise
2. Write your personal mission statement
3. Have an individual, in-person meeting with each of your heirs
A. Ask each heir, family member, key friend, cause and charity to describe to you your
legacy. What do you think of the response you hear? If you like it, great. If you don’t, fix it.
B. Ask each heir, “What are your hopes and dreams?” Does your legacy to this person support their hopes and dreams? It is a great topic for discussion. Think about, “How can I enhance his or her hopes and dreams with my estate planning?” Asking them each to discuss this with you will give you the chance to examine the way your legacy and your estate plan
gifts to them will be likely to affect them.
C. Ask yourself, “Am I damaging the initiative of my heir in any way?” If you worry that the
answer to this question is “yes,” alter your estate plan.
Following is a modified version of the remaining steps, 4-10:
4. Add to your legacy attitudes and behaviors you want to establish in yourself. Adding attitudes and behaviors will be easier than eliminating, so start with this. If you have found that there are qualities you aspire to which don’t show up in the reality of the legacy you have created, work on establishing those qualities better in your life. For instance, if you value your relationships with family members and this is a high priority for you, make sure your actions reveal this.
5. Eliminate from your legacy attitudes and behaviors you want to eliminate in yourself. Once you have added those you aspire to, eliminating qualities you don’t like will be easier.
6. Ask yourself, “Am I leaving heirs attached to each other legally and/or financially who wouldn’t want this restrictive arrangement?” If they don’t want it, don’t do it. It is common for wealth creators and their offspring to leave rising generations financially and legally attached to each other. The legal and financial attachment could be, for example, a family business, a family real estate investment or a family foundation.
Usually, this is a bad idea. It sounds good and could be the wealth creator’s dream, but there are just too many variables in the future. The one and only exception is the instance in which offspring are already working well together, can see benefits in pooling their resources, and have a substantial history of working out their differences well.
7. Be creative with the negativity of those in your legacy sphere. You cannot force anyone to get along well or have positive relationships if they want to be separate or engage in destructive behaviors. There is no constructive way to force anyone to do work they don’t want to do. Let your heirs find their strengths and enjoy using them. If you find that you have damaging negativity in your legacy sphere, for example family members who refuse to speak to each other, who are addicted to drugs or alcohol, who are crippled by entitlement, who won’t work, or who persistently drain family resources, take the high road and commit yourself to strengthening the family. Remember the parable of the lost sheep. Make sure your lost sheep knows you are there for him or her, looking for how you can help. Do not give up.
8. If you prefer that your unmarried and childless heirs leave their inherited assets to rising generations, nieces, nephews and cousins, tell them. Hire a patient consultant to facilitate relationships if necessary. No one has a crystal ball. If you have a preference about where your assets go beyond those in your estate plan, say so. In fact, if you don’t have a preference, it would be considerate to say this, too. Be kind if relationships are lacking. Offer to help or to hire someone to help.
9. Be fair. In some areas, there can be equal gifts, which become a part of your legacy. More importantly, fairness, especially when heirs are treated differently, can be well thought out and revealed in a timely and sensitive manner. Undocumented loans and gifts can muddy the waters and result in a lopsided legacy and estate plan. This kind of practice can lead heirs to experience resentment and enmity. Loans and gifts are easily managed by keeping careful documentation of any assets that change hands. If in doubt, err on the side of separation of heirs, clear and transparent records, and restricted resources for those practicing negative behaviors. Offspring, in particular, appreciate parents’ careful attention to this and speak of it long after their parents are gone.
10. Consult with an experienced, creative tax and estate lawyer to coordinate your legacy and your estate plan. This is a defining step which will deliver substance into your legacy.
Many people have shed tears over their legacies. It can be that the legacy each of us wants to impart has been poorly perceived or has been rejected. This makes the effort of tuning up your legacy even more important. If you can sow with passion that brings you to tears, you can reap with joy. The overall goal is to be kind.
As Jay Hughes has said many times, we want to enhance the lives of our heirs and not hurt them in any way. The qualifier is that in order to enhance the lives of our heirs, it usually takes considerable time and attention. Plus, it can be very difficult to get it right, but ultimately rewarding to know that you put everything you had into building the legacy you want.
It is entirely within your power to take responsibility for your Legacy Management. There is no reason to wait another day. Consider the steps above and you will know where to begin. Make sure your legacy is clearly based on your values, and you will know you have it right.
Questions for Further Consideration
What work do I have to do on my legacy now?
What will I tune up first and how will I organize my tasks?
Given endless possibilities, what new quality would I add to my legacy?