What is Legacy Wealth Management
Legacy Wealth Management (Family Wealth Management) is the planning, organization, and investment of your families wealth. You can hire a wealth management firm, but that’s not what we are here for. We are here for you to understand what you can do to manage and grow your families wealth. We are here to show you what structure you need to be teaching your kids to follow to continue that wealth building structure.
You need to know what your legacy will be? What type of wealth are you planning to leave behind?
And what system of management will you set in place for your children and grandchildren to follow?
Wealth Solutions for Legacy Planning Problems
You may not remember M.C. Hammer for anything more than his exciting dance moves and “hammer” pants. But I will never forget that he squandered $30 million dollars overnight. I don’t blame him entirely. Poverty is also a mindset. And poverty breeds poverty.
Let me explain. He wasn’t raised wealthy or rich. His parents didn’t teach him how to maintain and grow wealth, nor live beneath his means. So when he got money, he assumed it was for spending. Later…$13 million in debt, he had to face those consequences. And years from now, when his grandchildren and great-grandchildren can’t afford the education they require, or have the startup funds for the business they want to start, they too, will face the consequences.
Financial Planning
If you’ve been on this site before, you know I’m a stickler for having a plan. I don’t mean the general, “I want to make a million dollars” plan. If you make even a little under middle class wages, you will hit a million eventually. The question isn’t whether you will make a million dollars. The question is, how long will it take. How you will get it. What steps you need to take in the beginning, middle, and end. That’s where the Legacy Wealth Management planning comes in.
There are essentially 6 steps to financial planning.
1. Determine where you are in your current financial status
2. Develop your financial goals
3. Identify the different means of acheiving those goals
4. Analyze the different means to figure out which ones are best, or first
5. Create the plan and put it into action
6. Rewrite and revise. Nothing is ever perfect at first. You need to always be adjusting and re-evaluating.
Personal Retail Banking Services
Pretty big name for a common thing. This is your banks. The places that provide you checking and savings accounts. The places that provide mortgages and loans, etc. And don’t be fooled. They may all offer similar services, but they are not all created equal. In fact some banks will be detrimental to your goals and wealth management style.
You want to choose a bank based on what they can do for you. Ask yourself some questions.
What are the fees?
Is there an annual charge for keeping the checking account open. Is there a fee but only for low balance accounts or accounts with only a certain amount in them. What is the overdraft protection issue? Is it worth it to get the overdraft protection? (Average overdraft is $33.00, but average person pays more in fees when they opt-in to the overdraft protection services). What about their other services? Are they offering a limited-time rate on CD’s or other services that might expire and end up costing you in the long run? And do they offer refunds on ATM withdrawals
Many online banks have low or no fees for opening and keeping an account. So consider that along with your other options. But that also leads me to the next question..
How accessible is your bank?
These days, online banks are everywhere and widely used. But there is still something to be said about walking into a physical bank and depositing or withdrawing cash. Something to be said about sitting inside of an office and having the processes of loans explained to you by an actual person.
The value of a physical experience will never be topped by digital banking. So if that is important to you, then perhaps you might require a bank that has a branch in your city or close to your home.
Estate Planning
This is one of the more important factors when planning for generational/legacy wealth management. What is the good of planning and executing perfectly all your life (or more likely, some of your life), just to see it squandered or sent to probate when you pass. You must have a plan in place.
Yes the purpose of estate planning is to create the legal documents (wills and trusts) that will decide who will receive what assets after you pass. But it has another purpose as well. To make sure your estate isn’t destroyed by taxes during the ownership transfers when you pass as well.
Contrary to common belief, wills are not only to be used by the rich. Everyone over the age of 18 needs a will in the event of their passing. A will not only allows you to mitigate tax issues, and pass on your financial wealth, it allows you to dictate who will get custody of your children and how they should be raised.
If you don’t create a will…the state will decide who gets what, which often means that your favorite nephew, your best friend, and your dedicated charities will get nothing.
It’s not difficult to understand. There are 3 major roles. The testator (the person leaving behind assets…you). Beneficiary (person, or persons receiving the assets you are passing down). The executor: the trustworthy person you designate to execute your will according to your wishes.
Write your will yourself if need be, designate your beneficiaries and name your executor. Have it signed according to the laws of your state. And you’ve created peace of mind over how your belongings and assets will be distributed after you are gone.
Legal needs and Taxes
If you are creating a legacy wealth management plan yourself, then you need to become well-versed on the legal statutes and tax laws as well as basic accounting practices. Seriously! I cannot stress this enough.
Walmart saved themselves over $1.6 billion in taxes in 2018 alone. That’s 1.6 BILLION! However you think of Walmart and their standards of ethics or treatment of employees, you cannot deny that they have an expert handle on tax laws. And that’s what you need.
We all wondered how these billion dollar corporations were getting these huge tax breaks and write-offs. They didn’t do anything illegal. They just took advantage of the loopholes in the tax laws. Loopholes you need to know about!
Investment Management
Then there’s your investments. Yes, that includes stocks and bonds. But this also includes your rental properties, businesses you’ve invested in, cryptocurrency, etc. Things you’ve spent money on that you hope to see a return on. You must keep a close eye on your investments in order to avoid catastrophic failure
You should also, always be on the lookout for new and profitable investments. In my article about getting investment ideas from something as simple as watching the news, I cover how to find and interpret the signs of a good investment. Check it out Here.
Wealth Preservation Tactics
In your legacy wealth management plan, be sure to create a personalized strategy that not only you can follow but can pass along to your children and their children to follow.
There are always ways to try and ensure that your vision remains intact long after you are gone.
Training Your Successor
You have to train your children/successors up from childhood to see the same value in your business/investments/home. Create an early feeling of ownership and responsibility so that they feel obligated to the growth and preservation of the wealth that you have created. Make your children your shadows in your business dealings. Explain to them the details. Help them understand why the successes were successful and why the failures failed. Give them incrementally larger responsibilities as they get older to test their readiness and instill confidence in them. And encourage them to fail. I don’t mean to lose everything you’ve worked for. But to not be afraid of failing. Failing is just a small step toward success. Basically, don’t discourage them from trying something new.
Following the Mission Statement
Have a mission statement! And follow it! And raise your children/successors to follow it. I mean character goals (honesty, integrity, faithfulness) as well as businesses qualities like firm handshakes, follow-through, ethical business practices and eye contact. Write it down. Drill it into them. They will learn what you teach them and remember what you’ve done. So be the example as well.
Conclusion
Legacy Wealth management is a lifetime effort. Several lifetimes as a matter of fact. If it’s starting with you, create the foundation correctly. If you are continuing the legacy left to you by someone else, do so mindfully. What you do today, determines the future. Not just of your own descendents but also the people they affect with their business practices. It can be the difference between creating something that could gainfully employ thousands or creating something that only lasts one lifetime an sees your great-grandchildren in financial ruin and poverty.
Choose Wisely!
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