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Family Legacy

By Kelly Pedersen, CFP® 

 

There comes an inflection point for every successful business woman when the purpose of wealth creation flips from maintaining your current lifestyle to leaving a meaningful legacy. In essence, it’s the recognition that wealth is about more than money. It’s about what impact money can have on the people and causes you care about, today and in the future. 

Innately, women are empathetic. We are nurturing by nature, which is one of our greatest strengths. We are typically less competitive and are not as obsessed with winning for the sake of winning. Rather, we find meaning and value in sharing what we have and helping others in need. For us, success ultimately manifests itself in paying our good fortune forward. 

However, just as the accumulation of monetary wealth requires careful planning and advice from experienced financial advisors, so, too, does planning for a legacy that will have a meaningful impact and unite a family around a shared vision.
 

Take time to identify what matters most 

 

Before you engage with an advisor to construct a legacy plan, take time first to do some soul searching about who and what matters to you most. Those people and causes are of course the entire reason behind creating a legacy plan. For many women, legacy means ensuring their children, grandchildren, and future generations are “taken care of,” or at least have enough money to pay for college, health care expenses and a down payment on a first home, for example.  

For others, legacy stretches beyond family to supporting specific charities or causes that are important to them. For still others, it means using their wealth to invest in startups and innovative business that are working to solve pressing global and societal challenges. 

The point is, get specific. Think long and hard about what you want your legacy to be, for you and your family. The more focused you are, the more real and achievable it will feel. 

 

Develop a family vision and values statement 

 

There is an old saying that states, “I gave my kids love, values and an education.” The question then is, how much more money do they really need? For many women, the answer comes down to what will be done with that money. It’s an important question that is deeply tied to legacy. Money without guidance on how and why it should be spent can be a recipe for family dysfunction and the dissipation of that wealth on destructive vices (drugs, alcohol, fast cars, you name it). 

That is why I recommend every woman who wants to develop a legacy plan root that plan in a very concrete family vision and values statement. Invite your spouse, children and extended family into your thinking. Host a family meeting to explore the values that allowed the wealth to be created in the first place. Ask yourselves, what does the family collectively care about? What difference do you want to make in the world and your community? What DON’T you want to have happen because of your wealth? Once again, be specific and lay out a clear vision for what you want the family’s legacy to look like. With that, you will have the foundation to begin developing an actionable plan that is focused and that will bring the family together.  

 

Include all generations in conversations about legacy 

 

I’m often asked, at what age should I start talking about money with my kids (or grandkids)? The answer is it’s never too early to have age-appropriate conversations about wealth and what it can do (for good and for bad). Kids are equally intuitive and impressionable. By including them in conversations about the family’s values and vision for your wealth, you are sowing the seeds of responsible wealth stewardship and hopefully a life-long commitment to altruism and giving back. By giving younger generations a voice, you will more than likely get them excited about what money can do other than buy the latest high-tech gadget. Wouldn’t that be nice!? 

As an example, my husband and I have made a point to take our boys to a football game at every Big 10 school. As part of the deal, they are required to walk the campus with us and have a conversation about what it takes (both financially and academically) to go to college. We talk about what it has taken for mom and dad to achieve what they have, so that college is even a possibility. Essentially, these are conversations about values and what it takes to be successful in life.
 

Bringing a legacy plan to life 

 

So, you’ve thought long and hard about what you want your legacy to be. You’ve involved your extended family and aligned on a set of shared values and vision. Now it’s time to build an action plan to begin bringing that legacy to life. By working with a qualified advisor, there are many avenues to do just that.  

At CAISSA, we work with our clients to bifurcate their portfolios into separate strategies with differing goals: one to support current lifestyle needs, and the other to support longer-term philanthropic goals. Through what we call “tranches of income,” we design specific investment strategies based on our clients’ unique goals and time horizons.  

When it comes to funding a legacy plan, there are a variety of strategies to explore. Everything from a family foundation to a donor-advised fund to a thoughtful gifting strategy. The key is to work with an advisor who is experienced in using all of the legacy planning tools and mechanisms available. One tool may work well for some and not others. Your advisor will know which one might be best for you and keep you from going down the wrong path. Many of these tools can be misunderstood, so it’s best to do the due diligence with your advisor up front. 

By spreading your assets across investment strategies that support both current lifestyle needs and long-term legacy objectives, you enjoy the peace of mind that those assets can be available to you if and when you need them, while also being positioned to achieve the legacy you desire.  

 

To discuss developing a legacy plan for you and your family, please contact CAISSA Founder Kelly Pedersen.