Now that you have built your wealth through hard work, disciplined investing, and careful stewardship, the time has come to focus on preserving the wealth you have created. With planning, you can maximize this opportunity to pass along your wealth as you see fit. For most of our clients, multi-generational wealth transfer is a top-of-mind priority. When done well, wealth transfers create outsized impact for both heirs and charity while providing you with the peace of mind that your wishes are followed.
On the other hand, wealth transfers that are poorly planned (or simply not planned) can create family strife and difficulty during a particularly sensitive time when losing the patriarch or matriarch of the family.
To help you get started on the path to planning your legacy, we wanted to share five important strategies.
Five Wealth Preservation Strategies for Effective Legacy Planning
1. Communicate your wishes clearly
At the most basic level, an estate plan starts with communication. Through your estate plan your wishes are documented leaving your heirs with no room for guesses. A Will, beneficiary designations, Power of Attorney documents, advance healthcare directives, and appropriate trusts are important components of your estate plan. Your estate plans should be reviewed frequently and updated as needed and you should inform the individuals named in your estate plan of their roles and responsibilities.
2. Schedule a family meeting
A structured family meeting with a trusted professional is a great opportunity to discuss your financial goals and long-term wealth transfer plan in a meaningful way. Advisors at Greenspring have facilitated these meetings with families and will often coordinate with tax professionals and attorneys to ensure a unified approach. An organized and professional meeting yields better outcomes for preserving wealth than an informal or emotionally charged family exchange.
3. Incorporate strategic tax planning
Taxes are one of the largest lifetime expenses we will pay. Strategic tax planning is required to minimize tax implications for both you and your heirs. Appropriate account titling and knowledge of state-specific tax laws create lasting impact when it comes to preserving wealth. Tax efficient investing, charitable giving, dynamic withdrawal and Roth conversion strategies are also important considerations.
4. Adhere to a comprehensive financial plan
A written financial plan which includes your spending goals like purchasing a second home, selling a business, or leaving a charitable legacy profoundly changes the way we view wealth and opens new possibilities that were not previously considered.
5. Put capital to work now
In addition to saving for a future goal like retirement, wealth preservation also includes directing dollars to shorter-term goals. For example, saving for children’s or grandchildren’s education, starting a business, or allocating additional funds to investments are ways to ensure that your legacy and wealth remain intentional for the benefit of future generations.
Planning for current and future generations is a profound responsibility. You don’t have to tackle this alone! A financial advisor can help you put the pieces of your legacy plan together.
