How to Leave an Inheritance
Inheritance planning has the opportunity to be an excellent way to create a legacy for your family. However, it can also become a tainted process focused solely on money, where infighting and disappointments leave you feeling worse than you did before creating your will. We believe focusing solely on money – and not your legacy as a human being – corrupts this process and makes it stressful for both the individual and their loved ones.
At Sovereign Financial, we offer more than estate planning. Our Legacy Coaching program helps individuals and families focus on the kind of impact they want to leave behind both personally and financially. This guide will help you understand the inheritance planning process as a whole and ensure you are happy with how your money is used for generations to come.
Creating a Financial Legacy
Many families are not satisfied with their inheritance plan once it’s put into writing. They either burn bridges with family, feel they don’t have enough to give their loved ones, or worry that their money won’t last beyond one generation. Families that do feel satisfied with their inheritance have one thing in common: a belief that their legacy will impact both their family and the greater community. They believe this because their estate is built on personal values and preparation for the next generation, rather than simply distributing wealth.
At Sovereign Financial, we focus on five different areas to create a more comprehensive inheritance plan that leaves a legacy behind:
-Your personal legacy
-Your family legacy
-Your financial legacy
-Your business legacy
-Your charitable legacy
Leaving Inheritance for Family
Family inheritance can be tricky, especially if you have a lot to leave behind. While most people simply split their assets and savings equally among children, this is not always what makes the most sense financially or for your family legacy. For example, suppose you have one child who is a successful lawyer with little to no student debt, while the other is working as a missionary or non-profit organizer with several children to put through college. In that case, you may find that equally splitting the inheritance doesn’t make sense.
Inheritance may not always be best distributed in a lump sum either. For example, some family members could benefit more from help with college funds or investments in a first home rather than a lump sum after you pass. How you provide for your family is not set in stone, so talk with your Sovereign Financial coach to determine what makes the most sense for your family.
Charitable Contributions and Family Businesses
Your legacy is about much more than personal wealth. It’s also about what value you leave behind in terms of charitable work and businesses that generate long-term wealth for both your family and the families of your employees. In addition, your wealth can work wonders to help aid a cause you are passionate about, create a foundation for education, or benefit your local community.
These contributions don’t have to be made after your passing either. There may be tax advantages for making these contributions now. Not only will you get to see the power your wealth has to do good, but you can save your family the burden of ensuring these charitable donations are tax benefits.
Family businesses should also be accounted for in your inheritance planning. Frequently businesses are left to children, but this may not be in their best interest or yours. If your children have already carved out their life paths, consider other pathways to ensure your business can still create a meaningful impact in the community.
What Do You Need to Leave an Inheritance?
Creating your inheritance takes a team of professionals who have your best interest in mind. Before consulting with a lawyer to draft your will, you should speak to your Sovereign Financial advisor to determine the best distribution for your family, charitable contributions, and family business planning.
You have several options, including cash, stocks, real estate, and pre-paid college accounts which can go into your will, or a trust for grandchildren who may be under 18 when you pass. These can be written in your will to be distributed however you wish, with criteria such as age or graduation for the recipients to receive their benefits. This ensures that your family legacy stays intact and provides your family with what they need, rather than a lump sum that they can use for any purpose.
You don’t have to wait to create a will to start providing an inheritance to your family, however; you can make annual contributions for living expenses, college tuition, and other gifts to your family now, some of which will afford tax benefits for you and the recipients.
Sovereign Financial’s Legacy Coaching program helps you create stewards of the next generation, who will build upon your financial legacy to create families, businesses, and spiritual legacies of their own. With the skills you’ve taught them over the years, you can ensure your family is well taken care of and that they appreciate your gift for more than its monetary value.
To learn more about our Legacy Coaching and how you can start building your legacy, contact us today.