Finances

Power Up Principle: Leaving a Legacy of Love

If I told you that you could take proactive steps to help keep your family from hating each other after you’re gone, would that interest you? Sadly, family drama occurs more often than you think! I recently conducted a joint financial planning/estate planning workshop with my good friend—and outstanding estate planning attorney—Stacy DenHerder. Experience has taught us a few valuable lessons we’d like to communicate that might help prevent unintentional family conflict after you’re gone. If you would prefer to leave a Legacy of Love rather than division, consider the following:

Have a plan for your “things.” Some of the biggest disagreements are over the littlest things. This is often because of an emotional or sentimental attachment to something that belonged to you: jewelry, china, a tool, a trinket, the family dining room table, etc. Others want the more valuable items: a car, stamp collection, or the grand piano. A significant gift you can give your children is a plan for your possessions after you are gone. Preparing a list of who gets what goes a long way. As another alternative, you could specify they draw numbers and each one chooses an item on their turn. Whatever you decide, having a thoughtful plan can avoid a lifetime of division among yours heirs.

Don’t make one child the other’s keeper. Picture this, you have a “golden” child who has it all together and another who has made poor choices, particularly with money. You decide to leave your estate equally with the golden child receiving their inheritance outright coupled with the responsibility of doling out the portion to your other child. While it may seem wise, this is a surefire way to stir up strife among the siblings. Solutions? Consider having an independent third party or a professional manage the share for the child who makes poor decisions to encourage harmony among your heirs.

Equal or not? Our children often have differing needs so let’s look at two lines of thought related to inheritances: 1) Treat everyone equally, or 2) Love them equally but treat them uniquely. Each is a valid point, but consider this: Regardless of the earning capacity or the needs of one child over another, experience tells us that children of all ages believe that what you leave them is a measure of your love for them. Leaving more to one can lead the other to translate that into “you loved them more.” Consider also that circumstances can change. While one may have high earning capacity now, they could someday be destitute because of a lawsuit, divorce or illness. On the other hand, advocates of the second option say that every child is unique and you should give according to their ability to handle the funds and their needs. You know your family best so if you choose this path, we encourage you to have a meeting to ensure your family understands your philosophy and thought process before the fact, rather than assuming they’ll understand it after the fact.

Blended family. If you are a blended family (his kids/her kids/our kids), we can’t stress enough how important it is to plan. If you leave it up to your spouse to carry out your wishes, there is a high probability your bloodline will be disinherited. Consider just a few of the possible pitfalls:

  • The surviving spouse is the same age as the kids—so the kids may inherit nothing.
  • Everything is left to the surviving spouse who promises to take care of your kids (it never happens).
  • The surviving spouse has to “account” to the children of the one who died (challenging).

An entire article could be written on blended family dynamics alone.

Correct beneficiary designations. Check beneficiary designations on your retirement accounts, annuities and life insurance at least annually. Life changes—marriage, children, employment, etc.—and it is important that your beneficiary designations reflect your changing priorities. If you have a trust, make sure your attorney advises you on whether the trust should be the beneficiary. Stacy stresses, “Every year I see situations where the family discovers that the beneficiary on the deceased’s life insurance is not who that person would have wanted … and there is no remedy.”

The solution? Plan, plan, plan! There is no substitute for wise, experienced counsel to guide you. With the help of an attorney, an accountant, and a financial advisor you can build a strong foundation and design a Legacy of Love that will bless your loved ones long after you are gone.

Janice Thompson

— by Janice Thompson

Thompson is a certified financial planner, and co-founder and CEO of One Degree Advisors, Inc.A frequent speaker on financial topics and a mentor for financial professionals, she also serves on the board of directors for Kingdom Advisors. Learn more at onedegreeadvisors.com.

Advisory services offered through One Degree Advisors, Inc. Securities offered through Securities America, Inc., Member FINRA/SIPC. One Degree Advisors and Securities America are separate companies.

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