Legacy Planning

How should affluent families control the value of their legacy over generations?

Everyone possesses two kinds of wealth. Personal wealth consists of your income, assets, and earnings-which creates the lifetime financial plan to achieve your personal goals. Social wealth is that part of what you earn over your lifetime that goes to the common good-which most people abdicate to the government's financial plan. 
Like most families, you have strong ideas about controlling the legacy of your personal wealth. But you probably don't realize that you can also control the legacy your social wealth achieves in your name. You take control by managing three components of comprehensive, integrated wealth transfer planning. . . 
  • Reassign or reduce value of assets to control the value of the taxable estate.
  • Manage the distribution of your assets during lifetime and after death to control the direction of the legacy.
  • Leverage payment method to discharge tax liability at the lowest cost. 

Questions affluent families should ask to control their legacy.

  1. Do you understand how the government will value and collect its share of your legacy? Are you satisfied to also let government control how this legacy is spent?
  2. Are you relying on your Will to make sure your assets will be transferred at the time and in a manner that matches your goals with the needs of your heirs?
  3. How will you handle the particular tax problems that apply to retirement assets?
  4. How will you prepare your children to inherit unearned wealth?
  5. You have completed a Will, but has your planning missed opportunities to control personal and social wealth by not also considering . . . 
  • Durable power of attorney? Durable power of attorney for health care?
  • Living Will? Revocable Living Trust?
  • Marital, family, and children's trusts? Qualified Terminal Interest Trust?
  • Annual exclusion gifts? Gifts of the available exemption equivalent? Gifts requiring payment of gift tax?
  • Charitable Remainder Trust? Charitable Lead Trust?
  • Testamentary charitable planning for Income in Respect of a Decedent?
  • Family foundations? Family Partnerships?
  • Grantor Retained Interest Trusts? Grantor Retained Annuity Trusts? Grantor Retained Unitrusts?
  • Private Annuities? Dynasty Trusts? Qualified Domestic Trusts?  


How should affluent individuals protect their financial achievements & assure their long term goals?

Personal risk management seemed relatively simple in the days when the worry was all about replacing income. The standard advice was to save enough to make it through an unexpected cash flow crisis and insure against long or permanent losses of income.
Today that leaves a lot out of the picture, including some conflicting goals, like . . .
  • Eliminating debts
  • Creating emergency funds
  • Building investment funds
  • Meeting major expense commitments
  • Assuring retirement income
  • Funding personal medical and elderly care
  • Funding parental elderly care
  • Settling transfer tax liabilities and creating a family legacy
Add to this the wide diversity of risk management and investment tools to achieve these goals-life insurance, disability insurances, medical insurances, critical illness insurances*, long term care insurance, and a host of investment strategies and products. Sustaining your risk management plan and retirement plan requires dedicated and ongoing focus and the help of a team of professional resources.

Questions high-income families should ask to help achieve financial control.

  1. What planned or hypothetical events do you foresee that could create the most pressing cash needs? Can you quantify the financial impact?  
  2. In the future, what do you see as the most important financial decisions for you and your family? What is your time frame for making those decisions?
  3. What have been the most important factors in achieving your quality of life goals for you and your family? What would happen to those quality of life goals if you or your spouse were to become disabled or die?
  4. What age do you project for your retirement? Are you aware that retirement assets could be subject to tax erosion? If your experience in retirement demonstrates that you will not need to distribute all your retirement assets for income, would you preserve the tax-deferred growth for future generations? 
  5. What potential risks do you consider when evaluating investment opportunities? Realistically, what kinds of returns do you expect from a sound investment? What is your time horizon for achieving those returns? What do you consider the best and worst investment decisions you have made?
*Please be sure to consult your tax advisor and attorney regarding your particular situation.