From the October 2010 issue of Investment Advisor • Subscribe!

The Seven Secrets of a Purposeful Legacy

Sidebar to "A Willful Purpose"

Over the past 10 years, wealth consultant John Warnick of Family Wealth Transitions & Solutions in Denver has evolved a way of helping clients communicate an emotional legacy that he calls the Purposeful Trust. Many of his guidelines are useful to clients who want to create more meaningful wills. Here are the "Seven Secrets of a Purposeful Trust," as Warnick explained them to me:

Capturing the client's voice and vision. The client's own voice is italicized in text boxes within the document. "This trumps everything else, except the technical tax clauses," Warnick explains. "We harmonize it with the tax savings plan."

Purpose clauses. These are the heart of the trust, explaining what the client wants it to do (in addition to saving taxes, avoiding probate, etc.). Warnick prompts clients with questions like "What are the things that matter most in your heart? What do you want to see happening years after your death?" Answers may be general ("I want my grandchildren and children to live flourishing lives") or specific ("I want my family to meet annually to have fun and reminisce about family values").

Naming the trust for its purpose. Trusts are usually named after their tax identity (marital trust, dynasty trust). Warnick encourages clients to give their trust a symbolic name with emotional content, such as the Opportunity Trust or, to promote family harmony, the Unity Trust.

Guidelines to beneficiaries and trustees. This entails bringing the client's life wisdom into the trust document so nuggets of experiential reflection--such as how to handle hard times--are shared and preserved.

Transforming gifts into lasting legacies and priceless heirlooms. Warnick says that when "a gift of personal property includes the client's story and the item's background, or when a cash bequest is associated with a heartfelt purpose or value, that gift is turned into a priceless treasure and a lasting legacy."

Planting seeds of gratitude. Too often, beneficiaries adapt to a trust and feel entitled to its benefits. Warnick includes in the document the parent's or grandparent's memories of what they appreciated most about their child or grandchild, and their hopes and dreams for the younger person. "We work hard to come up with positive affirming statements," he says. In consequence, the inheritance no longer represents dollar signs, but a real legacy, sown with seeds of gratitude.

The trust compass. Statements of the client's bedrock principles can give the trust a compass to navigate through an unpredictable future. As Warnick puts it, "We try to build in flexibility so a long-term trust can live and breathe."

Over all, clarity and simplicity are crucial. Everything must be written in plain English, not in legal jargon. Because so much of the client's life wisdom is invested in creating the trust document (or will), it's impossible for them to leave an unconsidered legacy to their heirs.

Warnick shares his perspective with a growing number of participants in a monthly phone-in interview of a thought leader or innovator. The group, called the Purposeful Planning Collaboration (see www.johnawarnick.com for more information), started with seven members last January and now comprises 131 "collaborators" in 26 states, Israel, and Canada.

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