If you’ve spent a lifetime building and growing assets, chances are you’ve also taken some important wealth management steps like creating comprehensive tax and estate plans and reviewing your life insurance. But did you know there’s another potentially even more impactful step—legacy planning—that many people overlook or postpone until it’s too late? Legacy planning and estate planning are closely related but aren’t exactly the same thing.
"While estate plans are critical and focus largely on the nuts and bolts of transferring assets to the next generation, legacy planning makes it possible to have an even greater and more enduring positive impact on your family and community," said Jill Garvey, Senior Vice President and Senior Wealth Strategist, Huntington Private Bank®.
Estate planning is more about the tactical mechanisms you use to transfer wealth, but legacy planning is higher level and more strategic.
"Creating a legacy plan is a very personal process. It requires answering some of life’s big questions and getting on the same page with family members which may include your spouse or partner, siblings, and grown children. Given the dynamics, it’s virtually impossible to do that by yourself around the kitchen table."
Dan Griffith
Senior Vice President and Director of Wealth Strategy, Huntington Private Bank®
At its most basic level, your legacy plan is your answer to the question: What is the role and purpose of wealth in my family? The question is short, but the answer is likely to be long. It will require thinking deeply about your values and who and what matter most to you. Ideally you can translate these values into a family mission statement that encapsulates your vision and can help guide your legacy planning. Given what’s at stake, the process of creating a legacy plan will be time well spent.
Here are some questions to consider as you start to think about legacy planning.
What is my overarching philosophy around wealth transfer?
Do I want to transfer wealth with no strings attached for heirs or other beneficiaries to use as they see fit, or do I want to attach certain conditions or guardrails?
How can I transfer wealth to my children but not rob them of motivation to forge their own path?
In addition to how much and when to pass along wealth to heirs, you may also find yourself considering whether to divide wealth equally among children or take certain factors into account such as need, or whether grandchildren are involved. You may also choose to have funds dispersed over time by age, or stipulate how certain funds can be used, such as for education.
Could making my children financially independent negatively impact the family dynamic?
Many families stick together and help each other out because their family ties create deep and loving bonds, but it’s also the case that some families cooperate in part out of necessity—for example, in some cases, individual family members may pool their incomes for the benefit of the family unit as a whole. If you are concerned that financial independence may create a situation where siblings go their separate ways, there are mechanisms you can put in place to require cooperation. For example, you may set up a charitable trust or family foundation that requires the family to periodically get together and come to an agreement on how certain resources will be allocated.
My children already know what I believe and what I want my legacy to be, so do I really need a formal legacy plan?
Even if you have discussed it with children, they may be less clear about your wishes than you think. You may also have expressed various viewpoints to different children on separate occasions, which could cause some confusion. Couples should also make sure they’re on the same page to avoid sending mixed messages to the next generation. Having a thoughtful and up-to-date plan, in writing and with the necessary legal structures in place, will help ensure you leave the legacy that you envision.
What problems do I want to help solve? What do I want my family to be known for?
You can use the wealth that you have created to do good not only for your family but for society at large. Whether in your immediate community or halfway around the world, you can create a philanthropic legacy through major gifts. A planned gift could be payable during your lifetime or at death as part of your estate plan and enable you to make a powerful and long-lasting impact that will advance causes that you care deeply about.
What if I want to transfer wealth to people who aren’t relatives?
Just as family structures have changed dramatically over time, so have people’s beliefs about who is appropriate to include in their legacy plans. Inheritance laws, however, have not kept up with societal changes and generally favor distributing assets first to immediate family members and then to distant relatives, with no recognition of, for example, a close lifelong friend whom you may consider to be family but who doesn’t meet the legal definition. People in blended families may also need to take special care if they want to leave bequests to stepchildren and step-grandchildren.
"As a neutral third party, a fiduciary, and a skilled mediator, your Huntington wealth strategist can add significant value to the legacy planning process. We facilitate conversations that help our clients define what they want their legacy to be and then help them put all the right pieces in place to make it happen," said Jill Garvey, Senior Vice President and Senior Wealth Strategist, Huntington Private Bank®.
Building a business or creating and growing wealth through a career or investments takes a significant amount of time and energy, so it would be understandable if you haven’t yet given much thought to your legacy. But you will leave a legacy, whether it’s one you choose or one that’s chosen for you.
Let Huntington help you define your legacy goals and create a plan to achieve them.
Connect with a Huntington advisor to discuss your unique circumstances. We can help you think through key decision points to create a legacy plan that reflects your personal values and objectives.
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