What is values-based estate planning?

Between the years 1980 and 2030 it is estimated that the largest transfer of wealth from one generation to the next in world history will take place when approximately $41 trillion dollars are transferred at the death of the ‘greatest generation’ (those born between 1910 and 1935 ) and the ‘Baby Boom’ generation (born between 1945 and 1965) to their children and grandchildren. That’s a lot of commas and zeros. This article examines the implications for their planning that affect the generation of today’s teens and young and middle-aged adults.

• WILL YOUR ‘CORE VALUES’ BE TRANSFERRED?

Studies of people who have inherited wealth they did not earn have shown that it can make or break their existence, depending on the ‘Core Values’ they inherited from their parents. If the values ​​and example passed on are positive character values, it is likely to be reflected in the children’s lives as adults and as parents. If not, you can understand why in some families many grandchildren don’t remember much about their grandparents or what they stood for.

A study shows that the last thing parents want their children to spend an inheritance on is a new car, yet in Orange County, California, heirs wait an average of just 21 days after receiving an inheritance before to buy a new vehicle. Furthermore, when inherited wealth buys depreciating assets rather than those that appreciate in value, inherited wealth dries up by the end of the second generation in just over 80% of the cases studied and disappears entirely by the third generation.

This is a condition known as ‘Affluenza’ (the waste of wealth). But adults who earned their allowance as children from chores or held part-time jobs growing up to pay for their own bikes, clothes, cars, or college tended to invest their inheritance in retirement savings, mutual funds, business creation, real estate capital. and income-producing real estate. What does this tell us?

• “DAD – WHERE DO ‘CORE VALUES’ COME FROM?”

What veteran observer Tom Brokaw dubbed the ‘Greatest Generation’ literally ‘saved the world’ by their sacrifices in World War II and Korea. After the war, they developed careers and new businesses, had children, and built houses in unprecedented numbers. His humility and appreciation for the non-economic values ​​of life is reflected in Norman Rockwell’s classic ‘Americana’ paintings. Their children are today’s baby boomers who grew up in the 1940s, 1950s and 1960s and fought against totalitarianism in the Cold War, Vietnam and Desert Storm, but had years to experiment and ‘find themselves’ since they didn’t face the financial struggles their parents did.

• THE MOST COMMON FALSE CONCEPTION

Every parent wants their children to have it ‘better’ than them, and this is reflected in the examples they live and in the values ​​they teach -or fail to teach- their children and grandchildren. However, many planners believe the myth that business wealth, retirement or financial planning is just about transferring “the money” rather than quality of life and core values. Instead of starting with what they want their children and grandchildren to represent and achieve, many overlook these issues entirely and focus instead on wealth rather than family. As a result, estate planning, retirement, and financial planning focus on trust documents, notarized signatures, coverage amounts, and financing, rather than how these helpful tools implement a parent’s vision and goals.

• HOW TO MAKE YOUR PLANNING ‘COUNT’

As a longtime attorney practicing in the fields of estate planning, risk mitigation, wealth management, and asset protection, I have seen clients (and the professionals who should have served them better) rush to put their pens to paper. rather than first discussing the client’s priorities and values. Here is a protocol for a more favorable outcome:

o Begin with a thought and values ​​exercise that amounts to a quiet personal assessment of ‘what really matters’. Honestly consider the example and values ​​passed down to your children and what kind of steward you have been of what you have earned and invested thus far. Write down the core values, dreams, and goals that you want to matter in the lives of your children, and yes, your grandchildren. The end result should be your own personal ‘Values ​​and Vision Statement’. It should reflect what you and your children as adults will be known to stand for.

o Next, there is an exercise I like to call ‘Today I died suddenly and couldn’t say goodbye’. Although it may be uncomfortable, please take about 30 minutes to write down what will actually happen in the next two years after your sudden death today compared to what you expect, assume, or believe might happen. This is often a real eye opener if you own a business, have investments, are paying off a house, have debt, children, or plans for the future. Most believe that we will die in our old age, at home, in bed, pain free, still looking good, surrounded by our loving family, and with all our bills paid and dreams achieved.

These two steps can be performed in any order. They are best done in private, but always in a relaxed setting, perhaps even a “family retreat” at a resort if you want to include your children in drafting a family vision and values ​​statement. With these complete steps, professional planners can do their best work.

As a planner, I always enjoy having a “context” in which to help clients reduce their business and investment risk, strengthen their financial and asset protection, and plan their estate for themselves, their children, their grandchildren, and their charities. favourites. For example, I enjoy when multi-generational family trusts contain ‘incentives’ for children or grandchildren to achieve educational goals, own a business, contribute to science or the arts, participate in community improvement and church life. Incentives can be in the form of matching funds for investments or retirement savings for children or grandchildren to encourage them to be productive.

Update your wealth and financial planning, review your insurance and retirement plans, form a family limited partnership for liability protection and pursue business and investment goals, form an estate planning trust, maintain investments and business ventures in limited liability partnerships and securing the financial results you expect are all important steps. But they should always be built on a solid foundation to ensure your “core values” are reflected in the planning and documents you sign.