Leaving a Financial Legacy

2006-12-18

“The evil that men do, lives after them
The good is oft interred with their bones.
So let it be with Caesar”.

Many Americans are out to prove Shakespeare wrong; especially where it comes to their money. Watch out for a movie called The Ultimate Gift, to be released in spring 2007; based on a best-selling book by Jim Stovall, the story centers around a billionaire’s legacy to his grandson Jason. In order to get his inheritance, Jason has to complete 12 assignments within a year; assignments based on gifts of Money, Friends, and Knowledge, among others.

The Financial Planning Association is endorsing this movie, reflecting an increasing interest in legacy planning. It’s not just the Rockefellers and Carnegies (or the Gateses and Buffetts) who are into philanthropy these days; even upper middle class families are getting into the act. In some cases, it’s to do good, providing for causes which they believe in; in others, to influence the lives of their children, leave messages to loved ones about the values you believe in, and your hopes for what they can accomplish in their lives.

We are living in times when some people have made money very quickly. Whether through stock options, boom time investing, or even a stroke of luck, the fact remains that in some ways, the upper end of the financial spectrum has become broader based; CNN money estimates the number of millionaires to be over 7.5 million, and that excludes the value of their primary residence. With the boom in the stock markets and in property prices, wealth is growing at an even faster clip.

And people have seen what happens when wealth is inherited. In some cases, the next generation still retains the values of the parents, nurturing the wealth; but more often than not, what’s referred to as the Hilton syndrome sets in. Not to mention the bitterness that money wrangles create within families, and the feeling that the world owes them not just a living but a fortune. It also shows up in behavior that the progenitor would have been appalled by.

Instead, there’s a better way out; by looking at not just how much money you’re giving, but why, and how. Ethical wills are on the increase; unlike traditional wills which are legal documents specifying the distribution of your estate, an ethical will tells your heirs what you want them to know. It could be a letter, an audio or video conveying personal feelings, thoughts, suggestions and requests.

Four key elements that you need to keep in mind, while working through this.

• Sharing out the pie : You need to decide who or what cause gets how much; quite often, it helps to start the process even before you die.

• Involve your family : By not talking about this upfront, your children might well assume that they’re getting it all; which leads to considerable acrimony and heartburn later. Talk to them about what you think, start getting them involved in the activities, and make sure that they start on the right path.

• Picking your cause : Is it a volunteer group, a charity, your alma mater, or some other? Whichever it is, you need to match the values and beliefs, as well as making sure that your contribution counts.

• Doing the paperwork : Whether it’s setting up a trust fund, or getting the tax status recognized, documenting the money, or even just the thoughts and ideas you want to share – don’t put it off. If it’s important to you, get it done first; you’re making sure that your desires will get implemented, with the least amount of discord later.

Whether it’s a few thousand, or a few million, doesn’t matter. It’s what good comes out of it at the end that’s the real thing.

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