Redefining Legacy
At TCI, we often talk about helping you achieve your goals. More often than not, those goals involve supporting your loved ones or communities. Recently, we’ve seen a shift in client preferences—some are moving away from the traditional model of leaving wealth behind and are instead creating a “living legacy.” In this article, you’ll hear from a few of our Advisors who will share why some are making this choice, how they’re shaping their living legacy, the benefits it can bring and why it’s important to have meaningful conversations with family about your wishes.
Estate Planning is Evolving
Legacy has traditionally been tied to estate planning and using your wealth to positively impact loved ones, charities, and your community after you pass away. However, a growing trend among investors is now challenging this view.
There has been an exciting shift where more and more people are choosing to redefine their legacies by making a meaningful impact during their lifetimes. This shift from “legacy planning” to “living legacy” allows individuals to actively participate and enjoy in the positive changes they can create.
Legacy planning is deeply personal and steeped in tradition. TCI isn’t an estate planning firm, but our goal is to help fulfill yours. So, we’re going to share topics with you that will inform and educate you. Hopefully, these topics will spur discussion that could lead to meaningful conversations about your estate plan that positively impact your loved ones.
Having an estate plan is still a critical component to your financial journey. Many couples are rethinking what it means to leave a legacy with their resources — time, talents and wealth. These clients are forgoing traditional estate planning methods, leaving assets after they’ve passed, in favor of actions that have a tangible impact they can experience. Whether you envision making a significant contribution to a local nonprofit or aiding a loved one with a down payment for a house, there are countless ways to impact the lives of others through living legacies.
Focusing your legacy planning on both current and posthumous giving can be overwhelming. However, your TCI team knows the ins and outs of your financial journey. We will help clarify the type of impact you want to make and discuss any necessary adjustments to your financial plan. Each of us at TCI is excited to help you redefine your legacy in a way that is meaningful to you.
Offering Financial Assistance
One way clients are creating living legacies is by helping loved ones through financial challenges. With a living legacy, you can focus on the redistribution of your hard-earned wealth and provide insight, guidance and compassion to your loved ones. Being able to support loved ones’ dreams and financial stability can be a gift for them and for you, ultimately reducing the whole family’s stress. A few examples of how my clients have offered assistance:
- Subsidizing expenses
- Paying off high-interest debt
- Investing money in a family member’s new business
- Offering to help with medical bills
- Paying for grandkids’ “extras,” summer camps, a tutor, soccer lessons
Providing financial assistance should be approached through ongoing discussions with both your loved ones and your Advisor. When advising clients on how to support their family members, I guide them in selecting the best methods for offering assistance. This includes evaluating how the support might affect relationships, the overall financial plan of the giver, and any potential tax implications or cash flow concerns.
Assistance might include:
- A one-time cash gift
- Recurring monthly gifts
- Creating and funding a tax-advantaged account
- Paying some bills
If you want your loved ones to benefit from your living legacy, look at who needs what kind of assistance and the best way to provide it to them.
Creating Memories
Many of my clients are looking ahead to retirement and have the goal of spending more time with their loved ones. Unfortunately, with busy schedules and budget restrictions, making lifelong memories with the people you love can be challenging.
You can transform the way you approach your legacy by shifting your focus from how you might use your wealth in the future to investing in meaningful relationships today. Start by clarifying what’s most important to you. This could be the people in your life you want to spend time with, the types of memories you want to create, or even the places you want to experience together.
Next, determine what type of experience you want to create. Is it a once-in-a-lifetime Disney vacation, or an annual family reunion at a mountain lodge? Do you want to take each of your grandkids to a nostalgic summer vacation spot for one-on-one time?
The Benefits of Giving Now
We can’t talk about legacy planning without addressing taxes. While a well-crafted estate plan offers significant tax benefits, there are also tangible advantages to providing a living legacy. Many investors believe that leaving their wealth to loved ones or donating it through their estate plans is the best way to minimize taxes for beneficiaries. However, this isn’t always the case.
Estate laws are unpredictable, and no one can foresee what the future holds. Instead of trying to time these changes, why not make an impact now while you know exactly what the current tax limits and implications are? By switching to a living legacy that aligns with your long-term goals and values, you can ensure that your assets are managed and distributed according to your wishes, regardless of future legal changes.
For example, the Tax Cuts and Jobs Act (TCJA) of 2017 nearly doubled the federal estate and gift tax exemption from $5.6 million to $11.18 million per person in 2018. This increase allowed many estates to entirely avoid federal estate taxes. However, this higher exemption is set to expire in 2025, potentially impacting those with larger estates. For those whose overall financial plans support this strategy, taking advantage of this exemption now could have an immediate and significant financial impact. Given the constant evolution of tax laws, acting strategically now not only maximizes your estate’s value, but also allows you to create a living legacy that benefits your loved ones today.
The key is to plan proactively, ensuring that your legacy reflects your values and provides the most benefit to your loved ones while navigating the complexities of tax laws.
The Importance of Communication
Building a living legacy, like any other form of estate planning, can be more effective when backed by proactive communication. It’s one thing to feel excited about contributing financially to the lives of children and grandchildren or supporting a community minded organization and another thing entirely to put it into practice. Any time you are ready to make an adjustment to your financial plan that will impact a family member, it’s important to have honest conversations about it.
Consider starting by holding a family meeting. Share your vision and intentions with your loved ones and be open to feedback. Make sure you’re giving with the right motivation. This can go a long way toward ensuring that everyone benefits as intended from your living legacy.
This applies if your living legacy focuses more on different organizations or causes that you want to support. Clearly communicating the “hows and whys” behind your philanthropic endeavors can help to avoid future misunderstandings. It can also open an incredible dialogue about charitable giving, how your family approaches the redistribution of wealth, and the types of causes you want to support as part of your legacy.
You never know, by communicating, you may even inspire your family members to join in, creating a meaningful cycle of family legacy that will carry on for generations to come.
Your Living Legacy
At TCI, we see that investors are moving toward a focus on building living legacies. Leveraging your wealth and other resources to have a positive impact on loved ones, your community, and beyond is an incredibly meaningful way to redistribute your wealth and find purpose in this chapter of your life.
As always, our goal is to help you achieve your goals. If working toward a living legacy is something you’ve considered, please know that your TCI team is here to help. Whether you need ideas or have a clear picture of what you want to achieve, we’re here to help you make your unique vision a reality.
