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  • Writer's pictureSteve Coker, CFP

Creating a Living Legacy

Many of my clients have a goal of leaving money to their children, usually a dollar amount that they would like to have ‘left over’ after retirement. I believe that leaving money to your children is a noble goal, and I hope to do the same for my children someday. Yet, I believe that creating a legacy is more than simply leaving money, it is also leaving something of yourself behind to the next generation, and that is a goal that can best be done during life. As we go through the estate planning process, perhaps we should be more intentional about the legacy that we leave behind rather than focusing simply on the size of our estate.

Consider how we approach retirement. Typically, when my clients talk about retirement they talk about plans for travel, vacation houses, hobbies, and relaxation. These are all good things. I look forward to the day when I am financially independent enough to not ‘have’ to work, and can finally spend time with my wife and simply relax. However, even in retirement, perhaps we should be conscience of the model that we are setting for our children. What is our plan for leaving a legacy? What are the values that we would like to communicate? Consider how our goals would be different if we prioritized leaving a legacy. Those vacations at least, might include family and grandkids. Even hobbies might be replaced by habits that you would like to model for your children and grandchildren.

In addition, if you plan to leave a significant sum of money to your children consider whether they are ready to receive those funds. A friend and mentor of mine, Randall Sanada, uses the phrase “wisdom before wealth” to emphasize that you want to pass down the wisdom of what to do with money before you pass down the money. In my experience, one of the best ways to do this is to involve your grown children in your charitable giving. Giving money away somehow releases the grasp that money can have on us, and wakes us up to the good that the money can do. Having our children experience the joy of giving will help prepare them to be responsible with the funds once the receive it.

Finally, if you are considering leaving a large sum of money to your children upon your death, consider giving at least some of those funds to them during life. This step, of course, must be done judiciously. However, it is better to help guide your children with those smaller gifts during life rather than leaving a large sum at death with little guidance or experience. Also, if you would like to be a blessing to your children sometimes $20,000 for the down-payment on the first house at 25 can be more life changing than inheriting $1,000,000 at age 65.

We’ve been advising a client who has begun to question the wisdom of simply leaving all of his money to his kids. Regardless of the estate, tax, and investing decisions that are involved, there is the simple question: “Is this the right thing for my child?”. It is a difficult situation, and one that I hope will be healed. Where to leave your assets can be, for some, a burdensome and stressful decision. I hope that these thoughts will encourage you to be intentional during life so that your children will not only be ready to receive their inheritance, but that your legacy will be more than simply the money that you leave behind.

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