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Legacy Planning, Part 1

In this two-part series, I want to explore the topic of legacy planning

Why is this overlooked practice so important? And what can we do to make it more than just a financial exercise?

Let’s start with this question…

What is legacy planning?

Most people have financial assets when they pass away. Typically, they divide those resources equally among their children. So, for example, if you have three children, each gets a third of your estate. 

To prepare for this eventuality, we create a will and sign a lot of documents, We establish beneficiary structures for IRAs and life insurance. Then, when we pass, all our financial assets pass on to our heirs. That’s typically how Americans transfer their wealth to the next generation.

But if we broaden our understanding of wealth, we see there’s much more at stake.

In addition to financial wealth, we also have intellectual wealth, social wealth, and spiritual wealth. We possess beliefs, values, character traits, customs, histories, and memories that combine to make us who we are. These are the things that form the DNA, or culture of our families. This is why we always ask our clients, “Are you transferring all your wealth appropriately to the next generation?” 

In short, when we at Christy Capital talk about “legacy planning,” we mean more than “figuring out how to divvy up the financial resources you have.” We’re really asking, “How do you pass on all of who you are?” In the deepest, richest sense, that’s your true wealth–your legacy.

This isn’t easy to pull off. We often work with clients who have amassed significant wealth. Maybe they built a lucrative business. Or maybe they enjoyed a successful career working in the federal government or in the private sector.

Typically, as they near the fourth quarter of life, they start thinking hard about handing all that off to their heirs. Yet, they struggle, wondering Have we imparted the right values? What have we modeled? Have we expressed all the things that are on our hearts?

Leaving a powerful legacy doesn’t happen automatically. It takes intentionality. It requires time, effort, and energy. In the same way that it took you years to get good at your job, it can take years to learn how to pass on your legacy. 

What role do “family meetings” play?

When parents pass away, there’s almost always a “family meeting.” Often this awkward gathering is led by an attorney. There’s a reading of the will to discover “how Mom and Dad wanted their ‘stuff’ to be dispersed.” 

Sadly, these meetings are rarely a positive experience. Add deep grief to decades of complicated family history and difficult relational dynamics, and anything can happen. When nobody knows what to expect, everybody’s nerves are on high alert.

But what if family meetings didn’t have to be this way? 

Imagine a different scenario. Instead of all these matters being a big secret to your heirs…instead of everything being kept under wraps until after you’ve passed…instead of some lawyer–often a disinterested party and a stranger–announcing a series of bombshell surprises….imagine engaging your family in a positive, proactive and ongoing way while you’re still able to do so.  Think of the advantages. You could bless your family and communicate all the things that are near and dear to your heart.

But some families are uncomfortable talking about money.

True. Though many parents teach their children the basics of budgeting and how to handle money, they don’t share details about family finances. And in some cases, that is wise. Family meetings don’t always have to be for the sole purpose of discussing specific dollar amounts. They can be regular opportunities to reiterate values and teach virtues like discipline, generosity, and discernment. 

We’ve seen how these kinds of meetings can improve relationships between the generations. Eventually, when a patriarch or matriarch passes, the children don’t have to wonder what their parents valued or ask, “Why did they set their will up like this?”

To foster these kinds of interaction, we get our clients thinking about questions like:

  • What do you want to do with your financial wealth? 
  • What other wealth (i.e., spiritual, social, intellectual property, etc.) do you have that needs to be passed on?
  • How do you want to communicate all that? 
  • Can you do that before you pass away so that at your passing any family meeting is celebratory–not stressful–because your values, intentions, and wishes have already been communicated and understood by the family?

It is good to put this writing, even in your will. It’s not just a last will and testament. It can also be a last will and testimony.

In conversations and on paper, you can talk about your faith, the values that are important to you, what you hope for the generations to come. This is a great way to be a blessing to your loved ones, not only in life but also after your passing.

This makes so much sense. Why doesn’t it happen more often?

Studies show that as much as 70% of wealth does not successfully transfer from one generation to the next. And the amount of wealth going from the first to the third generation is less than 10%. You’ve probably heard the expression “shirt sleeves to shirt sleeves in three generations.” 

Typically the first generation works hard and saves diligently. The second generation manages to hang on to some of that. Then the third generation spends what’s left and finds itself in a mess. That’s the way it happens most of the time.

And do you know the primary reason for this? It doesn’t have to do with taxes or legal fees. The number one reason that wealth fails to transfer successfully is communication

Families don’t communicate the vast majority of the time. The money gets passed on. But there are few, if any, discussions about how to manage that money well and put it to good use.

Think about the people today who are in their 70s and 80s. (This may include your parents.) By and large, they were the silent generation. They didn’t talk about anything! And so you didn’t have a roadmap for how to successfully discuss the big things that matter in your life. 

We talk to a lot of clients who say, in so many words: “One, I don’t know how to have those kinds of discussions. And two, I worry that if I do, I’ll just mess up my children by letting them know they’re going to receive wealth in the future.”

To which we say, “Look, when you pass away, they’re going to get your wealth anyway. So, is it better to talk to them and ‘mess them up’ now when you’re still alive and able to guide and influence them…or is it better to ‘mess them up’ when you’re no longer around to help?” 

Most agree that being a guiding influence now is preferable. So, having family meetings and communicating about these matters is smart. 

You may be thinking But what do I say? How do I have such conversations? 

Here’s what you don’t want to say, “Let’s have a family meeting! I want to show you all my assets and then tell you how I expect you to live your life when I’m dead.” That doesn’t work. It has to be more of a conversation about what’s important to the people in the room. It needs to be an occasion for you to speak life and love into your family members as you discuss the blessings you’ve been given, and the obligation you have to be good stewards of those resources.

If you need coaching, our team at Christy Capital is always glad to help.

What do you say to the person who feels intimidated and overwhelmed by the thought of all this?

I would say, “Start small.” Here’s a thought: What if you gave your children a part of their inheritance now? And what if you used that situation to influence them and have multiple conversations about what they might do with that money, instead of keeping it all until you pass? 

A lot of people squirm when I suggest that. They think But I need to keep all my money in case I need it one day.

It reminds me of millionaire John D. Rockefeller. He was asked once, “How much is enough?” He famously replied, “Just a little bit more.” That is the human condition–we always feel safer and more secure if we “just have a little bit more.” 

But again, part of having wealth is using it for the good of others while we have the opportunity. When you see that you do have enough–that’s a big word–it frees you up to take some of the “extra” and use it creatively to give your children or grandchildren a healthier perspective on wealth.

Earlier we asked what family meetings “typically” look like. What “might” they look like?

Family meetings come in all sorts of shapes and sizes. I know one family where the parents have decided to use some of their wealth now to teach their children about philanthropy. They get together every six months. Each time they look at different charities and non-profits they want to support.  

This is a Christian family, and they desire to further the cause of Christ with their wealth. So, they have money set aside in a donor-advised fund. Each time they meet, every family member is encouraged to bring to the table a couple of charities that they might want to support. 

This means they do research. They look to see how various nonprofits are managing their money. They will often do site visits, and see firsthand the ministry of choice. 

In that case, the father, a strong businessman, can walk around the charity and say, “What do you need?” And they will say things like, “We need new computers for the children…or a new bus…or help paying rent.” After that, the family comes back together and decides if and how they are willing to help that ministry.

This couple is teaching their children and grandchildren how to be generous, and how to wisely manage the resources they’ve been given. Together they contribute, and together they’re able to watch each ministry flourish. They’re learning the valuable lesson that to those who have been given much, much is expected.

This practice has bonded them as a family and made each member feel valued, heard, and honored.

As far as family meetings held for the purpose of discussing with your heirs, “Here’s what is going to happen when we pass away,” you don’t have to talk about specific dollar amounts. You might just say things like, “We’re looking at naming ___ as trustee or executor. Is everyone okay with that?”  

The goal is to minimize surprises, and open doors for questions and further conversations. By explaining things openly and honestly in advance, you avoid the scenario where a family member struggles the rest of their life with questions like, “Why did Mom and Dad do that? I thought ____. What did I do wrong?”

To recap: Family meetings are one simple and practical way to leave a legacy. They model the importance of good communication. You can have one that explains how your estate is going to be divided up. You can have others create a mission statement or discuss philanthropic endeavors. These meetings are beautiful because they include everybody. 

Again, you don’t want a family meeting where the head tells everyone, “Here’s what’s going to happen. The money will flow this way. This is how you’re all going to act. Got it? Great. Now, let’s go eat.” 

Don’t do that! That’s a uni-directional meeting. That’s how many business owners run their businesses. It’s not a good way to run a family. In family meetings, everyone needs to have a voice.

Next month, I’ll conclude with a few final thoughts.

In the meantime, if you need more help thinking through this whole idea of legacy planning, visit our website, There–in the top right corner of the page–you’ll see a green TALK WITH AN ADVISOR button. Click it, and leave us a short message. We’ll be in touch right away. 

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