Dedicate enough time to legacy planning, and you will ensure that your estate has a lasting positive impact. However, there is more to legacy planning than just numbers and calculations; the process aligns more traditional estate planning practices with the goals of your family. It identifies the core values holding your family together and prepares your children and grandchildren to receive not only your money but also those values that matter to you the most. The question is, how prepared are you to leave all your savings in the hands of young people? Many people are concerned that the recipients of their gifts will squander them. But that’s what legacy planning services are for – they help you make the right decisions when it comes to passing things to heirs and beneficiaries. Still, there are a few problems you should think about before you begin legacy planning. Check these out below:
1. Protecting Your Legacy
According to a 2015 Reuters study, almost 70 percent of prosperous families lose their fortune by the second generation and the generation that follows wipes out the wealth of more than 90 percent of families. So, even if you’re good at handling your money, your children or your grandchildren may spend all your wealth unless you make proper arrangements in your legacy plan.
2. Targeted Spending
Most people don’t know what to do with their money – it’s sad but true. According to the same Reuters study, “lack of financial education” was one of the major reasons why heirs squandered their fortunes so easily. This is because most people are hesitant to discuss subjects related to money. So, when the time comes to transfer their financial knowledge to the next generations, they falter. In the end, individuals inherit sums of money they have no clue how to manage. Fortunately, legacy planning can rectify this situation by counseling your heirs on how to spend your wealth correctly.
3. Failure to Value Your Wealth
The same Reuters study revealed some more interesting points. Of particular interest is the fact that individuals are likely to buy a new vehicle within 19 days of inheriting a large amount of money. This isn’t surprising considering how most people lack the discipline to hold on to their wealth. They become spendthrifts and fail to value all the hard work you put in to save up that money for your descendants.
4. Keeping Predators at Bay
Ever heard the saying, money is the root of all evil? While there’s some truth to that, nobody can make do without strong financial resources. So, the moment someone receives a large sum of money, the predators start to circle. And no matter how capable and smart you think your loved ones and heirs to be, there’s always going to be someone who’s smarter than them; someone would want to benefit from the situation at their cost. Legacy planning safeguards them against bad circumstances in the future.