WARNING: When planned correctly, witnessing the effect of your generosity and passion can be highly addictive!
Most people don’t give much thought to legacy planning aside from considering their will as they age and thinking about what to do with what might be left when they pass away. This approach is not nearly as much fun as making a difference that you can see while you are living! With the help of your advisor, you can create a solid plan that allows you to identify what assets in your overall financial picture may be excess and available for other goals – including leaving a living legacy.
Co-creating these impactful, world-changing plans is one of the most rewarding aspects of our work as wealth advisors. The best part is seeing progress as the client-advisor relationship grows over the years. This is especially true for purpose-driven clients, who are often dialed in with their families, have a meaningful career, and want to help improve the world around them.
There are at least five distinct opportunities to create your own living legacy over the course of your adult life:
Your First Chance comes every time you get a bump in income or a cut in expenses. When my business partner, Kelly Hokanson, and I started our business, our income was minimal. We’d do business planning sessions at a burger joint where we could share a burger with lots of free toppings. We identified our corporate charity, Operation Breakthrough, and as our income grew, instead of automatically increasing spending, we’d shave off some funds for them. We essentially created a charitable budget item and stuck to it. Legacy planning opportunities exist in the early-career-stage and are often available in company matches or matches from donors within the organization itself. Many organizations will also accept hard assets you may want to relinquish. For example, Kelly and I have both donated cars and bags upon bags of clothing to our cause
Your Second Chance comes with your family and friends. As soon as our kids were old enough, we were taking them to Operation Breakthrough to help sort applesauce in the pantry. Our friends have now been there. Our parents have been there. When you spread the word, you spread your legacy. With more people involved, you can make a bigger impact as you focus your energy together. Here’s the kicker on the kids: they will be more likely to keep their own cash flow in line as they grow older. If you teach your children to commit time and money to a cause right from the get-go, they will be far more likely to be self-sustaining. They watch what you do more than listening to what you say. This planning opportunity means that you have planted the seeds of a two-generation legacy and can begin its impact today but last for years to come.
Your Third Chance comes with a liquidity windfall. Did you sell your business? Did you receive an inheritance? Did you win the lottery? All of these opportunities will create liquidity, and often come with a tax liability. Taxes aren’t innately bad, in fact, they pay our country’s bills. If you can redirect some of these “Social Dollars,” as we call them, to the cause you most care about, that is a good outcome. Again, assuming you have a tested financial plan that considers the tax impact, you should be able to see how much of this liquidity opportunity is in excess of your needs. It’s okay to give yourself permission to release some of the money before you are completely financially independent. When we eventually sold our independent firm to join the Buckingham team, it was a no-brainer to take some of the proceeds and start an endowment for our beloved charity. Legacy opportunities include both how you structure a business sale, or how you inherit the money.
Your Fourth Chance comes in retirement, especially while living below your means. A good wealth advisor certainly can’t guarantee that you won’t run out of money, but they can give you a good idea of what spending limit will help fortify you for the future. And this is the key to your next opportunity – spending less than you need, even when you can spend more. A number of our clients have benefited from incredibly good fortune but have also shared burgers, so to speak, to create fortunes of their own. Retirement goes through many stages in terms of resource use and needs. Early on you may spend more freely and later in retirement you may need the nest-egg for long-term care. This means expenses will ebb and flow with your needs, providing opportunities throughout this period to fulfill your legacy giving plan. There are several opportunities here for donating Required Minimum Distributions, bunching charitable donations to a Donor Advised Fund, or donating property you no longer wish to hold.
Your Fifth Chance comes with final gifts. Whether through a direct gift to an organization upon death, setting up a Donor Advised Fund, or setting up a Private Family Foundation, your final gifts can be your wisest and most impactful. There are multiple opportunities for people who do multi-generational planning based upon what your beneficiaries need and what the tax laws stipulate can be done to benefit your living legacy. For example, planning which assets you leave to the next generation versus your legacy organization can make a big difference for your impact. And while it’s possible that this could be your largest single gift for your legacy, if you start early and hit all five of these identified opportunities, it may very well be dwarfed by your lifetime of gifts.
Just as the best time to plant a tree in the forest is a lifetime ago, the second-best time is now. Start where you are by identifying where you would like to make your impact and let your wealth advisor show you how you can do it in the most impactful way. Then, you can truly leave a legacy.
For informational and educational purposes only. Individuals should speak with a qualified professional based on their individual circumstances. The opinions expressed by featured authors are their own and may not accurately reflect those of the Buckingham Strategic Wealth®. R-21-2985
© Buckingham Wealth Partners (Buckingham Strategic Wealth, LLC. and Buckingham Strategic Partners, LLC., collectively Buckingham Wealth Partners).
Buckingham Strategic Partners
When advisors work with Buckingham Strategic Partners, they gain the strength of a nationwide community of wealth management professionals. With the support of a diverse team of financial planning leaders, tax professionals, investment researchers and portfolio managers, advisors are able to orchestrate a bespoke plan, tailored to each client’s unique situation. Clients benefit from Buckingham’s team of dedicated professionals who are constantly exploring and assessing the ever-changing landscape of investments, tax code, markets and planning strategies—with a singular focus on maintaining an evidence-driven, fiduciary approach that puts client’s interests first.