If you stop for a minute and think about the future – what will outlast your life? How will your legacy be defined? The last few posts I have discussed issues (love and loss) that are much more focused on the current than the future. Legacy is a concept, for many, that is not often thought about and not always a priority. However, it plays a vital role in strategizing your financial future.
For many financial professionals, they are fortunate enough to begin thinking about and shaping their legacy during their career. Their progression begins by learning the industry in the first few years in the role. After mastering their craft, it almost seems that simultaneously they start to progress their careers and families. As both grow and eventually mature, there is a fundamental shift in how their future is viewed. It shifts from focusing on the here and now (buying homes, paying for college) to a viewpoint of focusing on how to improve the lives of others. Those lives are often times family/children and/or charitable organizations.
Many of the financial professional clients that we work with, often seek guidance on how to think through this concept of legacy. It can be difficult to grasp because there’s an infinite number of solutions that can create a benefit both emotionally and from a wealth strategy perspective. The two main problems we help clients to tackle include passing wealth effectively within their family and creating a defined charitable intent. Below are some of the key questions and considerations to evaluate alongside your unique personal financial plan as they have many effects on your cash flow, tax, estate, and retirement plan.
Passing Down Wealth Effectively to the Next Generation:
- How much control would you like to cede?
- When would you like to gift – during your lifetime or upon your passing?
- How do you want to instill discipline and drive in your children?
- What type of ownership and when should they start being involved in managing their wealth?
- Should you think about each of the children differently?
- What tax or estate implications are there for each of these strategies?
Gifting to Charitable Entities:
- Do you want to have direct control over when and how the money is deployed?
- How involved do you want to be with the organization?
- Are you establishing this for multi-generational involvement?
- What types of property should I be gifting – stocks, bonds, cash, other?
- When is the best time to be making these charitable donations?
- Do you want to make these gifts anonymously?
Actively thinking about a legacy is a privilege that can be quite empowering. Many financial professionals, through their career, community, and family become invested in helping others. This can be a great tool for financial planning, but more importantly can offer a chance to help issues and people that are closest to you. Creating a legacy allows you to leverage your time and resources for a benefit to outlast your life.
Matt Kocanda, is a Wealth Manager at BDF and a member of the Investment Committee. The investment committee develops BDF’s overall investment strategy. Matt focuses on advising Financial Service Professionals through their complex needs – including cash flow, tax, or estate planning. Matt received an undergraduate degree in Finance from Indiana University.