What is Your Legacy?

When people start planning their estates, they often think about who gets the IRA, the car, the house, etc., and how much to leave to specific individuals. But almost immediately, another thought arises: How will an inheritance affect the recipient(s)?  It’s not a casual consideration, as studies have shown that when heirs receive significant wealth which they were not prepared to receive, the results can be disastrous.

According to Preparing Heirs (Williams and Preisser, 2012), some of the top concerns affluent families have about passing on significant wealth include the following:

  • It may cause the heirs to become too materialistic;
  • Recipients may not understand the value of money and may overspend;
  • Having significant wealth may destroy the incentive to work hard;
  • Social relationships including matrimony may be affected.

As you can see from the above, affluent families do care about more than just how to pass on assets in a tax-efficient manner. It is probably your intent also to have your legacy include the values that helped you create and save your wealth for future generations. But how can you do that when you won’t be around to supervise how the inherited wealth gets used?

Proper Estate Planning

Proper estate planning begins well before you pass on in the form of educating heirs, clarifying family values, providing training opportunities, and smart structuring in conjunction with qualified professionals. Alpha Fiduciary’s financial consultants in Scottsdale can help you consider all these approaches, but here is a short summary of each below:

Clarifying family values – Every family has the opportunity to stand for something. But not all families enjoy the kind of leadership that ensures future generations share or at least appreciate the founders’ mission. That’s why active, frequent communication can be so important. This goes beyond simply taking the kids to church or synagogue. It means talking directly about what you want your legacy to be and eliciting input from future heirs so that you know what values they might bring to the table that are different from your own. This could involve using a third-party moderator to get all the issues on the table and could culminate in a family mission statement that guides the rest of the estate plan.

Providing training – To reinforce family values, family members should participate in exercises which align with them and be given room to fail or change course. Better to know the heirs’ strengths and weaknesses before they are given charge of significant assets than after! So, for example, if you want to promote philanthropy, future heirs could be asked to choose charitable donations and monitor what is done with the money. Or, if you want to support the arts, members could be asked to volunteer at museums or theaters. After several experiences, you should have a better view of whether heirs have capacity or passion for the causes you want to promote.

Structuring the transfer, the final step – Once there is clarity and a sense for what inherited wealth might produce among heirs, you can engage an estate attorney to draw up trust documents which include appropriate restrictions on asset distribution. Your financial advisor can structure a portfolio around your current and future goals. And you can be freed up to put into play now the values-reinforcing programs which will help you communicate your values with greater peace of mind than if you were to leave things to chance.

Alpha Fiduciary and Our Team of Financial Consultants

Alpha Fiduciary’s team of advisors and financial consultants in Scottsdale are eager to help you position your wealth transfer for success. We have a network of other professionals available which we can refer you to if you lack any particular expertise, and we have a deep bench of investment experience to help us focus on what we do best.

About Arthur Doglione

Arthur is an industry veteran with more than 20 years of experience working with high-net-worth clients. He has an extensive background in wealth management with particular expertise in portfolio management. Before establishing Alpha Fiduciary, Art was a Senior Vice President with Merrill Lynch where he built his practice to be the largest of Merrill Lynch’s Arizona territory.

Art founded Alpha Fiduciary in 2006 and has completed two acquisitions since then. The firm currently serves clients across many states as a fee-only Registered Investment Advisor (RIA).

Art founded Alpha Fiduciary as a fiduciary advisory firm. This means it has a responsibility to its clients first and foremost.