How will you define your legacy?

For many the idea of openly discussing their vision for their heirs and money matters is at a minimum uncomfortable and for some, out right taboo. Many worry that if they discuss such personal plans with their heirs that their heirs will become lazy or start spending their inheritance before the memorial is even imminent. Others fear that if they ask their parents about their estate planning they will be perceived as morbid or, worse yet, greedy.

In fact, in-depth planning and meaningful conversations are crucial to successfully creating and protecting family legacies. Often baby boomers and their elder’s generation are uncomfortable discussing the one-dimensional topic of leaving an “inheritance” but both embrace the idea of leaving a “legacy,” because it captures all facets of an individual’s life – including their family traditions and history, life stories, values, and wishes.

It is important to create a forum where family members can openly discuss their wishes, hopes and fears when working to define your family’s legacy. Having an objective moderator for “family meetings” can be instrumental in overcoming many of the obstacles families face when discussing key legacy issues. A professional Legacy Coach can be an invaluable resource, helping families to establish a Family Financial Philosophy that provides structure and guidance for future generations.

The American Legacies Study commissioned by Allianz found that five key themes emerged:

1. Values, not valuables:
The study found that both boomers and those in the elder generation were uncomfortable discussing the one-dimensional topic of leaving an “inheritance” but both embraced the idea of leaving a “legacy,” because it captures all facets of an individual’s life – including their family traditions and history, life stories, values, and wishes.

2. The legacy gap:
The study found that although both boomers and those in their parents’ generation say they are having in-depth conversations about legacy and inheritance, most of these conversations are not happening in a truly meaningful or productive way.

3. The Alpha Child:
An Alpha Child – defined as “the one child parents turn to first” – typically guides legacy planning. The profile of the Alpha Child is one who keeps the family connected and is a strong communicator.

4. Performance-based inheritances:
Performance-based distribution gives more to the child that has cared for the parent and less to the children that were a source of stress and conflict. This distribution plan is particularly favored by high net worth individuals.

5. The ideal legacy advisor:
People value personal connection over performance. The top qualities both generations look for in a legacy advisor are honesty, trustworthiness, compassion, good listening skills and strong and clear communication.

During the next several decades, researchers expect roughly $25 trillion in wealth to be handed down by the elder, parents-of-boomers generation, $7.2 trillion of which will go directly to the boomers. While no one can definitively predict the psychological, social and economic impact of this unprecedented movement of wealth, this new study did reveal what matters most to both generations today and what they are planning to do. Perhaps surprisingly, with tens of trillions of dollars at stake, it’s not about the money.

To create and protect a meaningful legacy:

1) Begin by meeting with one of our Legacy Coaches
2) Complete an in-depth legacy questionnaire and Kolbe Index Profile.
3) Design a Family Financial Philosophy.
4) Identify areas which will need further analysis
5) Design and communicate strategies for all involved (family meetings, advisor meetings)
6) Implement strategies
7) Maintain and adjust plans as needed

About the study

Allianz partnered with Dr. Ken Dychtwald of Age Wave to design The Allianz American Legacies Study, which was conducted by Harris Interactive®. The specific objectives of the study were to quantify the hopes, fears, priorities, and motivations related to the passing of values, assets, and wealth between the two generations – baby boomers and their elders, the generation of their parents. A  national survey asked boomers and elders to identify how they define leaving a legacy and how families are communicating about these sensitive issues today.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

Allianz, De Maine Wealth Management and LPL Financial are not affiliated.