Conversation starter: Use the Four Pillars approach to help clients establish a legacy plan.
When clients think about planning a personal legacy, it can be a stressful situation. People often put off creating a will or estate plan because they want to avoid making difficult decisions or having difficult conversations with loved ones. The idea of death, money, and splitting possessions can create conflict. But, with the right support, it doesn’t have to be scary. Financial professionals have a great opportunity to make this stage of financial planning easier. They can reduce fear by helping create a secure future and can take out some complexity using the “Four Pillars” of estate planning. When discussing these pillars, it’s clear that creating a legacy is more than just about finances, it’s about leaving lasting impressions, memories, and valuables to the loved ones left behind.
Pillar 1: values and life lessons
Clients with many years of life experience have layers of lessons and knowledge that can be passed on to the next generation. Encourage your clients to take time to document the most important lessons and knowledge so that they can be preserved. There are many suggestions on how to do this. It might be as simple as a notebook or video, or maybe even a memoir or diary. Clients should take note of any family history, folklore, and traditions which can be easily overlooked, but is often one of the most cherished and meaningful for future generations. Documenting the stories and traditions that have been passed down is more impactful than just jotting down names of deceased family members. If preserved correctly, these memories will be cherished for years to come, which is an invaluable gift.
Pillar 2: instructions and wishes to be fulfilled
Financial professionals should recommend their client bring in an attorney to ensure the proper legal documents are in place to fulfill any instructions and wishes. First, clients should consider health and well-being directives. Is the proper insurance in place? Has a health care advocate been named? What are the wishes and directives for medical care and life support measures?
It’s also important to consider living arrangements. Would living unassisted be a viable option or should assisted living facilities be considered? Do clients have family nearby to help rather than being several thousand miles away? Or, would a nursing home be a possibility?
Last, instructions for the executor (or personal representative) of a will and any trustees of any trusts should be clear. It is extremely helpful for family to have access to clients’ final wishes regarding funeral arrangements, burial, cremation, preferences for the funeral service, etc.
Pillar 3: personal possessions of emotional value
While it appears simple on paper, this is the task that could create the most friction among family members. First, clients will need to think about which items are of importance and/or have special meaning. Next, they should discuss these items with family and identify which items have a special meaning for each of them. Based on these discussions, it may become clearer for clients to know how items will be directed. Being transparent and candid during this process will help during what could be a surprisingly emotionally charged task.
Pillar 4: financial assets and real estate
The final pillar focuses on the financial aspect of one’s life. This is another area where financial professionals will need to suggest clients seek the counsel of an attorney. When organizing assets and real estate, you can help clients by breaking this down into three areas.
First, consider items of financial value. Inventory high-value items such as art, antiques, and jewelry, and determine what will happen to them. Will these items be designated through a client’s will to pass to a specific person? Left to a museum? Sold and the profits distributed to the estate? Getting these items appraised (if they have not been recently) may also help provide additional clarity as some items could be higher (or lower) in value than anticipated.
Next, take into account residence(s) and other real estate. Will the proceeds from the sale of a client’s current residence go into the overall estate? What about any vacation properties such as cabins, condos, and/or timeshares? Keep in mind that owned vacation properties often hold special value and meaning to families as a gathering spot.
Last, help clients evaluate all financial assets such as savings, investments, and retirement accounts. Also consider any trusts as well as insurance policies. Determine where the proceeds from these assets will be disbursed. Will they go to family members? Will they be specified as a bequest to a charitable or other organization? Business owners also need to have clear and explicit instructions in place regarding any sale of the business and/or property. Co-owned businesses need special consideration and agreements as to any transfer or sale of ownership shares.
Planning a personal legacy is complicated and emotional, and goes beyond just the monetary value of objects left behind. Sharing the Four Pillars process with your clients can help provide them with peace of mind knowing their wishes are documented and will help them plan a secure future, even if they are no longer there to oversee it.
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