Broker Check

Legacy Planning for Families

| December 20, 2023

Affluent individuals often turn to legacy planning for families to ensure that they protect not only their financial standing but also their values and missions. Some of the steps they may take include designating an executor to manage the distribution of assets, writing a will, and filling out beneficiary forms on retirement accounts. However, these steps are only the start of what legacy planning for families involves. Below, we’ll share tips for building your family legacy in a way that both serves your present needs and preserves your family’s wealth for generations to come.

Understand Your Options

A surprisingly large number of families miss out on some of the most important opportunities to transfer their wealth in a way that’s secure and tax-efficient. One of the most missed key opportunities is account titles. Many spouses choose to title their assets jointly, leading these jointly titled assets to count toward their individual estate tax exemptions when they pass away. Current tax law, however, allows each spouse to own up to the state tax exemption before becoming subject to the tax. By titling assets more strategically, couples can own twice as many assets before having to worry about estate taxes.

Corporate executives and individuals who own businesses might also overlook certain beneficial wealth-planning tactics. For instance, business owners can pass their companies down tax-efficiently, but doing so requires them to begin succession planning years in advance. Executives who have stock options will want to use these options before they expire as well. 

To make the most of the available opportunities, it’s essential to work with a qualified financial advisor to understand the options available to you. A professional can point out the best strategies for reducing estate taxes while at the same time helping to make sound decisions for the remainder of your life.

Choose a Non-Family Executor

In the process of legacy planning for families, assigning the role of executor to the eldest child is a common practice. However, it’s not necessarily the best option. Depending on the size and complexity of the estate, being appointed executor can be a full-time responsibility, one that requires a significant amount of financial expertise. This may become an issue for individuals who have ownership stakes in multiple businesses or those with operations in different states where they’re required to file taxes.

Some states also require the executor to attend probate court, meaning they may have to travel. Additionally, the executor might need to turn to various real estate agents to help them sell homes. All of this adds up to a lot of time and effort.

Instead of saddling a family member with these responsibilities, choosing an institution as executor can be the better call. An institutional executor will adhere to all key state laws and protocols while keeping the family updated and helping you avoid the kind of conflicts that are common when a family member is appointed executor. 

Review and Revise Regularly

Perhaps the most common error in legacy planning for families is failing to update paperwork. It’s important to review all financial paperwork to avoid possible complications following any major life event that occurs within the family, including marriage, divorce, birth, death, and new money-making opportunities.

Even if there haven’t been any major life events, it’s still a good idea to revisit all financial paperwork with your financial advisor every three to five years. They’ll be able to point out any changes in tax laws or your personal financial situation that could impact your assets.

Opt for Customized Plans

Every family is different and will face unique challenges, making it important to have a unique legacy plan that reflects this reality. It’s particularly important for parents to think about what their children will receive, as certain concerns or obstacles may disqualify a particular child from being considered the best recipient of the family assets. For instance, if a child has substance abuse issues or mental health concerns or lacks a sound work ethic, making other arrangements may serve to protect a family’s wealth. 

Trusts are powerful tools in legacy planning for families in these instances. Some trusts will pay out funds to the beneficiary if they earn an income, with select options even paying out dollar-for-dollar amounts. These types of arrangements can help incentivize the beneficiary while preventing them from spending the assets all at once. 

Prepare Your Heirs

Money is a very personal matter, and it can be difficult to talk about the specifics of your assets and inheritance plans, even with your closest loved ones. Many people choose to withhold this information out of fear that it will curb their loved ones’ motivation to accomplish their goals or spark conflicts between family members. However, open and honest communication is an important part of preparing heirs to inherit family assets. 

A beneficiary who isn’t aware of what they’ll inherit – and is subsequently handed a complex estate, business, foundation, or other investment – likely won’t be ready to manage it. Instead of keeping your heirs in the dark, it can be helpful to give them at least a basic understanding of how to manage various family assets so they don’t make costly mistakes once they come into possession of them.

With that in mind, take your heirs to meet the family’s financial advisor as part of your legacy planning for families process. Doing so will give them not only a more thorough understanding of the family’s wealth but also someone to call on after the head of the family passes away.

Another important aspect of legacy planning is ensuring that the family’s values are respected. Addressing family history and philanthropic goals while demonstrating how they connect to family wealth helps beneficiaries understand what they should focus on in the future.

For most families, successful legacy planning for families involves offering clear family objectives. This means providing age-appropriate transparency and creating a positive learning environment so that financial literacy receives intentional focus. 

Legacy Planning for Families: Looking Ahead 

Dealing with end-of-life topics isn’t easy for anyone, which is why too many people avoid these conversations until it’s too late. If you’ve spent your entire life building your wealth, you want to do everything possible to ensure that it’s safe when you’re no longer there to manage it. That’s what legacy planning for families offers — it allows you to provide for your family while preserving your core values and passing them onto the next generation.

By turning to reliable strategies like choosing a non-family executor, communicating with your beneficiaries, opting for customized plans, understanding all of your options, and regularly reviewing your financial paperwork, you can effectively safeguard your life’s work through the legacy planning for families process.

Having a trusted and experienced financial advisor on your side to help you navigate the process of legacy planning for families can help you avoid common pitfalls while helping to ensure that your beneficiaries have the support they need at all times. With the right people on your team, you can safely pass on your values and wealth to future generations without burdening your beneficiaries or leaving your wishes unfulfilled.


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This document is for educational purposes only and should not be construed as legal or tax advice. One should consult a legal or tax professional regarding their own personal situation. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products offered by an insurance company. They do not refer in any way to securities or investment advisory products. Insurance policy applications are vetted through an underwriting process set forth by the issuing insurance company. Some applications may not be accepted based upon adverse underwriting results. Death benefit payouts are based upon the claims paying ability ofthe issuing insurance company. The firm providing this document is not affiliated with the Social Security Administration or any other government entity.