Legacy Planning Made Simple: Guiding Clients Towards a Lasting Legacy
Legacy planning is critical when preparing for end-of-life transitions. It is much more than preparing for financial security and inheritance; it also encompasses passing on family stories, values, and philanthropic goals. Like estate planning, legacy planning ensures a person’s final wishes are fulfilled accurately and efficiently.
Financial planners are key in helping their clients navigate complex legacy issues and manage family wealth. From deciding how to distribute assets to beneficiaries to choosing the best legal instruments, a financial planner simplifies legacy planning. Providing legacy planning services enables financial advisors to make a lasting impact on clients and their families.
Financial advisors can support effective client conversations using Asset-Map’s visualization features to encourage intentional decision-making. With the help of Asset-Map, you can seamlessly aid clients in legacy planning. Read on to learn more about how to work with clients to preserve their legacies.
Understanding the Client's Vision for Legacy
Before a financial planner can assist clients in planning their legacy, they must understand their vision. Adam Holt, CFP and Founder of Asset-Map, shares that asking, “What’s your 100-year legacy?” helps start client conversations. When asked this specific question, clients think well beyond retirement and immediate estate planning actions. This question allows clients to consider their values, the planet, and how their ancestors will be affected.
Deep discussions with clients are essential to understanding the full scope of their legacy wishes. Financial planners can align their financial strategies with clients' personal values, community impact, and family dynamics. For example, some wishes clients may have include things like:
Supporting education funding for each ensuing generation
Supporting a family reunion event for the next 30 years
Teaching grandchildren about social contributions by allocating $500 per year to their chosen charity
Understanding your clients’ deeper values and goals for their lasting legacy enables you to implement their wishes. Financial planners can facilitate financial strategies to meet clients' wishes for their legacy.
Tools and Strategies for Effective Legacy Planning
Financial planners can optimize a client's legacy plan using essential estate planning tools like trusts, wills, life insurance policies, and charitable giving. Transitioning a client’s assets and property through the appropriate vehicles ensures their legacy can continue well after death.
Wills effectively pass assets to named beneficiaries, while trusts enable faster distribution of assets to beneficiaries, bypassing probate. Both strategies are great options for protecting a client’s wishes during the legacy planning process.
Clients may seek advice on how to transfer assets most tax-efficiently. Life insurance policies and charitable giving strategies can lower a client’s estate tax liabilities. For example, Revocable Life Insurance Trusts (RLITs) can be used to minimize estate taxes. Charitable contributions can also reduce estate taxes while supporting a client’s philanthropic goals.
Asset-Map makes legacy planning easier by clearly representing all estate components. Financial planners can use this platform’s advanced features to facilitate deeper client conversations. Asset-Map’s Relationship Maps can confirm important parties in a client’s household and identify other interested parties, such as business partners, trusts, and entities, which are often obscure in legacy planning conversations.
Integrating Legacy Planning with Overall Financial Planning
How do you integrate legacy planning into comprehensive financial planning strategies? Consider how legacy planning integrates with other financial aspects, like retirement and tax planning. For instance, decisions on who owns what financial instrument, whether individually or jointly, and who the beneficiary is can change the tax implications of a legacy.
Another legacy planning consideration is that retirement optimization doesn’t always align with estate optimization. For example, a client may make their grandchild the beneficiary of their IRA rather than their surviving spouse. Financial planners can use Asset-Map’s Beneficiary Audit tool to prevent poor decisions and ensure financial instruments go to the right beneficiaries.
The Signals feature of Asset-Map can be used to indicate the severity of the financial impact of premature death and loss of income for households with partners and dependents. This information is used to plan for the unexpected curveballs life throws and emphasizes the importance of legacy planning.
Legal and Ethical Considerations
Financial planners and advisors must also be aware of legal and ethical considerations when planning a legacy, including estate taxes and inheritance laws. Understanding legal regulations ensures the smooth transition of clients' assets. Ethical stewardship is another part of a financial advisor’s role in legacy planning. Financial planners must protect clients' final wishes regarding their assets.
One challenge financial planners face is that a client’s estate beneficiaries may not understand the thoughts and instruments behind their inheritances. The Asset-Map Report outlines the intention and purpose behind a client and advisor’s decisions. This can prevent issues in transitions and pass on a client’s legacy.
Additionally, the Legal Contracts feature in Asset-Map allows advisors to confirm the existence of interested parties to important legal agreements such as wills, trusts, powers of attorney, guardian provisions, and buy-sell agreements.
Educating and Empowering Clients
Financial planners also educate clients about the details and benefits of comprehensive legacy planning. For some clients, especially young professionals, legacy planning might not be on their radar. It’s your job as their advisor to emphasize the importance of legacy planning in protecting the next generation's future.
Advisors specializing in legacy planning create higher lifetime value per client because they:
make inroads into next-generation asset retention,
capture insurance proceeds,
manage trust assets,
and serve as family advocates multi-generationally.
Tools like Asset-Map empower clients to better understand legacy planning. Asset-Map makes the abstract elements of legacy planning into concrete visualizations. Our tools simplify financial components into easy-to-understand visuals and maps. Advisors who provide a family treasure map to clients solidify themselves as informed advocates.
Addressing Challenges in Legacy Planning
It’s best to be prepared for challenges in case they arise during the planning process. Financial advisors may face these common challenges when engaging in legacy planning with clients:
Family disputes. You should understand a client’s family dynamics well to avoid family disputes. This will help you guide clients in asset distribution and communication with beneficiaries. Financial planners also must be prepared to serve as mediators and advisors to clients and their family members.
Unclear legal directives. Financial planners can help clients avoid unclear legal directives by collaborating closely with a law firm while legacy planning. Advisors should work with an attorney to support the legal aspects of legacy planning.
Clients’ lack of knowledge or financial literacy. It is best to encourage financial literacy improvement by providing resources to clients and answering their questions. Work with your clients to explain your financial strategies and use tools like Asset-Map to simplify complex topics.
To best address common legacy challenges, be sure to work in tandem with a legal team. Since most financial advisors aren’t attorneys themselves, they must collaborate with legal professionals.
Elevate Legacy Planning Practice with Asset-Map
Incorporate legacy planning into your comprehensive planning services to help your clients prepare to leave a lasting legacy. Legacy planning goes beyond basic estate planning techniques and considers a client’s values and long-term goals.
Streamlined legacy planning makes planning for life after a client’s death less stressful for clients and their beneficiaries. Support client understanding by leveraging Asset-Map to enhance your financial advisory services. Schedule a demo today to see how it can simplify and improve legacy planning outcomes for your practice.