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Volume XV, Number 2 Summer 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 later this year. Since this caused me to organize my thoughts on an important subject, I offer the first half of my chapter to you here. The second half will be my Fall 2018 newsletter.
What are the key considerations in crafting your legacy?
What is the legacy you have already created? How will you be remembered? Do you like it?
Why would you even care about your legacy? You’ll be gone, right? Yes, when your legacy comes into sharp focus, you will be gone, probably recently gone. So, what is it you care about as you consider your legacy?
For almost everyone, the answer is values. Most of us care passionately about passing on our values. If we can pass on substantial financial capital, this reflects our values. And if we can pass on values that we consciously and intentionally associate with our financial capital, so much the better. In fact, many people care about these values above the financial legacy. Whether it is hard work, entrepreneurial spirit, a love of learning, family unity, service to God, service to others, a love of numbers or words, or whatever it might be that you value, this is where you can sharpen your focus now.
How can you enhance your legacy to exemplify your values and priorities better? Many years ago, when I taught Stress Management, I learned the most basic formula from Emmett Miller, M.D.: 1. Identify your values; 2. Prioritize them; 3. Base your actions on your priorities.
This three-step method is the perfect approach to identify what is important to you and to begin your legacy management. There are many exercises available on the Internet to help you identify and clarify your values. Most of these exercises will get you started. On pages 33-34 of my book, Beyond Gold: True Wealth for Inheritors, there is an excellent Values Identification and Clarification Exercise that you can use for this purpose. You can also find this exercise on my website, thayerwillis.com, by clicking HERE.
After you have identified and clarified your values, you can write your personal mission statement. When you define your own personal mission statement, you will see your top values come to life. Your mission statement is a chance for you to identify how you want to spend your precious time.
These two steps, values identification and clarification, and writing your personal mission statement, will show you how much work you have to do on crafting your legacy.
Your legacy is the character, qualities and deeds that come to mind when people remember you. Your legacy is not your estate plan. Your estate plan is a legal and financial arrangement that governs how your assets pass to others when you die. You can manage your legacy by making your estate plan support it and reflect it.
To illustrate how easily this can go wrong, let’s say you have worked hard in your life to be fair to your children, taking care to give both of them support for their hopes and dreams. And let’s say your daughter has squandered opportunities, has been deceitful, and has failed to exemplify the values you modeled for her. Your son has behaved well, has gratefully pursued opportunities, has been open and honest with you, and has developed a lifestyle you respect. You decide to leave everything to your daughter “because she needs help” and nothing to your son because he is self-sufficient. Ultimately, this estate plan does not reflect your values or the legacy of fairness you intend. Most of us would not want to reward the bad and punish the good.
Another example of your estate plan failing to reflect your values is to teach your children that you expect them to complete education and training, and find their way in the world making a purposeful life and a living wage for themselves. Then you give them substantial financial wealth in their early twenties. Most young adults cannot weather this kind of gift well. It shows up as cross-purpose and, at best, it is confusing. At worst it leads to self-destruction. This is in direct conflict with the legacy you intend.
Once in a great while I have seen successful young inheritors who receive financial wealth when they are in their twenties. The most successful among them are the ones who had the wisdom to create a foundation and devote themselves to work for which they are passionate. This is extremely rare and cannot be successfully mandated. Your estate plan will not create your legacy. It is up to you to take charge of your legacy, and then work to create an estate plan that supports what you intend.
If you find, as many do, that you still have work to do on shaping your legacy, following are the rest of the considerations:
Have an individual, in-person meeting with each of your heirs.
Ask each heir, family member, key friend, cause and charity to describe to you your legacy. What do you think of what you are told? If you like it, great. If you don’t, fix it.
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.
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.
Though there is a full second half to the chapter in which I have organized the work of legacy management into steps, this is plenty to get you started. Here is a summary of the first three steps:
Identify and clarify your values.
Write your personal mission statement.
Have an individual, in-person meeting with each of your heirs.
If you will attend to these first steps now, you will be poised and ready for the six follow-up steps to arrive in the September Navigator. Or you are welcome to contact me for them if you are ready sooner.