A family legacy can have multiple aspects. It can include much more than heirlooms. It may also include guidance on what to do with the gifts that are given.
What are your “legacy” assets? Financially speaking, a legacy asset is something that may outlast you, something that might produce income or wealth for your descendants.
To help these financial legacy assets endure, an appropriate legal structure may be necessary. The goal is to have a structure that may permit reasonable management of the legacy assets – not just five years from now, but long into the future as well.
For example, imagine that 40 years from now you have 12 heirs to the company you’ve founded. Would you expect all 12 heirs to manage the company together?
Probably not. Some of those heirs may not be old enough to handle such responsibility. Others may be reluctant or ill-prepared to take on the role.
Values are also crucial legacy assets. Early on, you can communicate the importance of honesty, humility, responsibility, compassion, and self-discipline to your children and grandkids. These virtues can help young adults do the right things in life and guide their financial decisions. Your estate strategy can articulate and reinforce these values, and perhaps, link your children or grandchildren’s inheritance to the expression of these qualities.
Make sure to address the basics. Is your will up to date? How about the beneficiary designations on your retirement accounts? Creating a trust may be a smart move. But remember, a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with the rules and regulations.
Think about the legacy you are leaving. Your thoughtful actions and guidance could help your children and grandchildren enter adulthood with good values and a promising financial start.