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How to Get Clients Started on Legacy Planning

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The late Zappos founder Tony Hsieh, 46, left no will, no trust and no instructions for the disposition of his vast fortune when he died recently. Settling his estate will be a long and complex process.

Any person with assets who dies intestate is likely to leave behind a snarl of complexity for survivors, and the more significant the assets, the greater the burden. This is where advisors and their help can prove most valuable.

Conversations about death and money are better had sooner rather than later, but clients often prefer to avoid the topic. How should they be framed? 

Many advisors focus on asset transfer, or who gets the money.

Instead, “Try starting conversations by asking clients what they would like their legacy to be and where they would like their influence to be felt in the future,” says Toby Mathis, a founding partner, attorney and tax expert at Anderson Business Advisors in Las Vegas.

Framing the conversation in this way is psychologically less unsettling, yet it promotes a disposition of wealth that can be far more beneficial to future generations than a straightforward transfer, Mathis adds.

Michael Metzger of Lifepoint Financial Design points out that while introducing the topic can be difficult, “It’s important that clients understand that the conversation goes beyond talking about death. It’s more about providing comfort and security to loved ones.”

For advisors, the aim “is to come from a place of understanding and guide clients toward looking at the issue,” Metzger explains.

Related: How a UBS Exec Gets Families to Open Up About Wealth Transfer

Legacy Matters

The word advisors and attorneys use over and over when describing how to best help clients is “legacy.” 

More on this topic

Leaving a legacy is a way to offer guidance to future generations and endow them with the means to achieve self-actualization, or “be everything they can be,” explains Charles Lowenhaupt, chairman and partner at the St. Louis-based law firm Lowenhaupt & Chasnoff LLC, and a strong believer in the importance of creating a legacy for clients.

Lowenhaupt often starts conversations by asking them “What is your wealth for? Is your legacy that you got really rich?” The answer is typically “no.” 

The opportunity to harness assets to benefit future generations, whether through a family trust or philanthropic contributions, is one that many people find very appealing.

Moreover, when wealth is simply transferred from one generation to the next, family members may have assets they are not prepared to handle thrust upon them. Plus, when transfer is the focus, wealth is often gone in two to three generations.

Cody Hilbun of Raymond James emphasizes the need for clients to educate the next generation about money as early as possible. This helps prepare children to become responsible stewards of generational wealth.

“When wealth is simply passed on, something more valuable is often taken away from the recipients,” Hilbun explains.

Plus, when new generations are trusted with perpetuating a legacy they will enjoy greater purpose than those who simply inherit. And when clients focus on creating a legacy, wealth is preserved and put to work, trust attorneys say.

In addition, when conversations around legacy are framed appropriately, clients may even enjoy contemplating the many ways they can continue to exert a positive influence well into the future. 

See: Revocable vs. Irrevocable Trusts: Which One Is Right for Your Clients?