The importance of planning for a family legacy should not be underestimated. In addition to tax planning, thoughtful planning will address your unique asset mix and family structure.
Open lines of communication
When developing a family legacy plan, open lines of communication are vital for avoiding tension and ensuring that assets go to the right people. The first step is to discuss your intentions openly with all family members and identify any heirlooms, artwork, or other important items. While you may not be able to split everything equally, open communication between all family members can help everyone feel heard. Also, it helps you take advantage of the most tax-efficient strategies.
Another important issue to discuss is how to share the wealth. In addition to discussing gifts, you should share any family changes that might affect the wealth distribution. It may be difficult for younger family members to know the family history details. Still, the information can give a great starting point for an open line of communication. Also, include the children in discussions about business visits and budgeting. The more, the younger members understand their parents’ intentions and goals, the better prepared they are to help the older ones succeed in implementing them.
Defining wealth
Defining wealth in family legacy planning involves setting up plans for how assets are disbursed. Typically, the wealth will go to family members, such as a surviving spouse and children. However, specific strategies ensure that assets are left to future generations and even to the surviving spouse’s children. In addition to defining wealth, there are also estate planning strategies to leave a legacy for future generations.
Defining wealth in family legacy planning is essential because it helps to make sure beneficiaries are well prepared to take care of the wealth. This includes knowing who will be responsible for assets, businesses, and medical care. The older generation may be tempted to define wealth in dollars and cents, but this is unnecessary and counterproductive. The next generation’s wealth can be distributed equally to all members of the family, but not necessarily in the same way. A trusted family member can help with this process.
Trusts
If you’re concerned about your heirs misusing the assets you leave behind, trusts may be the right solution. Many trusts can be set up to release funds in increments annually or at specific milestones. They can even protect heirs from becoming burdened with debt or financial problems. If you have children with special needs, you can create trust for them. This type of trust is important for both parents and children.
