The term “estate planning” can sometimes seem cold and formal, even to an estate planning attorney. As a legal term, “estate” encapsulates everything you acquire throughout the course of your life: homes, property, stocks, wealth, and belongings. But is that really all you are? What about your values, the life lessons you have learned, the wise counsel you could pass on to future generations—are they any less important than the physical assets you will leave behind?
Legacy Planning Is Who You Are, Not What You Have
Legacy planning, sometimes called legacy wealth planning, involves strategies to pass on what you have built for the benefit of future generations. It incorporates your history, values as well as a wide range of financial concerns, ensuring that your assets will be used in a productive and meaningful way.
Case Story 1: Planning for the Next Generation
A married couple came to me for a review of an existing estate plan, which included a trust to provide for their only child after their passing. Unfortunately, the trust was set up under an “ages and stages” plan, and would release a percentage of the inheritance to the child when he reached certain age milestones. While this may seem like a good way to protect your wealth for your kids, it doesn’t take into account a number of life events that could put the funds at risk. For example, if the child turns 18 and someone files a lawsuit against him, the statute of limitations for collecting on a judgment is 20 years—potentially placing his entire inheritance on the line. Or what if the beneficiary gets married in his 20s? His spouse could wait to file for divorce until the next distribution from the trust in order to get more of his assets—and if they have a child of their own, the spouse can return to ask for more child support after the next trust payment is released. I was able to fix these unknowns with a 360-year dynasty trust where the beneficiary (with additional trustees) will have the ability to draw on the interest and principal. Because the beneficiary does not have total control over the trust, he does not have the power to withdraw all of the funds at once, restricting both his spending and the amount he could be ordered to pay in a lawsuit.
Case Stories 2 & 3: Planning for Future Generations
Occasionally someone comes to me with a great problem to have: what if you built an empire and have nobody to leave it to? This was the case for one couple, a successful entrepreneur and business manager who made a powerful partnership in both life and business. As they had no children, they were looking for ways to use their wealth for the betterment of the community, eventually seizing on the idea of a school and cultural center. I was able to create a tax-exempt nonprofit that will operate through a charitable foundation. I had a similar consultation with a man whose partner had a considerable sum, but they had no children. His biggest concern was finding a way to provide for his nieces and nephews without having other cousins and relatives feel “cheated” out of an inheritance. I suggested a legacy trust operating as a nonprofit that would provide scholarships to young people in his community. He was stunned, saying, “I never thought of that.”
Case Story 4: Legacy Planning for Your Business
One of my clients came to me with an extensive real estate portfolio that included over 20 separate businesses. Like many commercial property owners, he had created an LLC to hold his real estate investments—in fact, he had created a new LLC for each individual property. This was a logistical and bookkeeping nightmare because each LLC had its own meeting minutes, financial reports, and company records to protect its liability. I took a page out of Walt Disney’s book, using a land trust structure for all the properties. This kept our client’s name and holdings more private, streamlined and simplified the business’s records and management, and better protected the individual businesses against court judgments.
We Can Help You Provide for Others for Years to Come
Your legacy gives future generations the chance to fully appreciate your hard work and sacrifices while giving them opportunities they would otherwise not have had. Contact us today to learn how to preserve your intangible wealth as well as your physical assets.