legacy planning

Legacy Planning: Five Ways to Help Your Heirs Preserve and Grow their Inheritance

Don’t Skip this Often-Overlooked Step as You Plan the Disposition of Your Estate

Legacy planning, also called estate planning, is a long-term process. In fact, you’ve probably been engaged in it for much of your adult life, even if you didn’t realize it in the moment. Things like taking out a life insurance policy and naming beneficiaries on your retirement accounts are important steps in planning the eventual disposition of your estate and ensuring those you care about will be financially secure.

On the formal side of things, it’s important that you meet with an estate planning attorney, write a legal will, draft a durable power of attorney, and execute an advanced health care directive. In this article, however, we will examine an important legacy planning step that is too often overlooked: preparing your heirs to receive their inheritance – and helping them to preserve and grow it, as well.

Step 1: Stop Avoiding Uncomfortable Conversations

Open communication about your estate plan can be one of the best ways to prepare your heirs to receive their inheritance – and to preserve your hard-earned wealth. Of course, talking about financial matters and about your future passing can be quite uncomfortable. That’s why so many people actively avoid this step in the legacy planning process. However, doing so usually ends up doing more harm than good. In fact, failures of communication can contribute to the depressing statistics surrounding inheritance mismanagement.

If it helps you frame the conversation, think of it as a win-win situation. You get the opportunity to share with your heirs your values surrounding money and your hopes for how they will use, preserve, and grow the wealth you worked hard to build. For your heirs, it’s an opportunity to learn how to make smart financial decisions so that they can truly benefit from their inheritance in meaningful ways.

Keep in mind that this discussion isn’t just important if you have amassed great wealth. Even if your estate is relatively small, it’s important to talk about how it can produce a positive impact for your heirs when stewarded wisely.

Step 2: Remember that Your Legacy is About More than Money

As you plan your estate, don’t just focus on the numbers. While the disposition of your assets is important, remember that you can also be passing on a wealth of experience, life lessons, and values. This is why many people prefer the term “legacy planning” over estate planning, as it encompasses your full legacy – much of which has nothing to do with your money.

When speaking with your heirs about their future inheritance, it’s often best to approach the conversation from a values standpoint, rather than sharing specific financial numbers. Focus on passing on important lessons like saving, investing, charitable giving, and preserving and growing wealth.

If you have difficult family dynamics, these conversations can prove tricky. However, it can also be the best reason to start the conversations now. Any conflicts that may emerge may only be worse if they come to light after your passing when you are no longer there to mediate or provide context for your decisions. Oftentimes, giving your heirs an understanding of the intent behind your estate planning decisions, and providing an opportunity for questions, can make all the difference.


SEE ALSO: Estate Planning: Keeping Your Legacy in the Family


Step 3: Discuss the Emotional Impact of Inheritance

Studies show two of life’s most consequential transitions are losing someone we love and experiencing a sudden financial change. An inheritance combines the two, as an heir experiences a financial windfall at the same moment that they have suffered a very emotional loss. For this reason, you may want to discuss with your heirs the idea of a waiting period during which they should make no major financial decisions after your passing. This can help ensure that poor financial decisions won’t be made during vulnerable moments.

Step 4: Put Safeguards in Place

This is a delicate subject, but it’s common to have concerns about your heirs mismanaging their inheritance. Fortunately, you can also actively guard against this. If you want to help mitigate your heirs from squandering your fortune, consider a trust. It can be designed to release funds to beneficiaries in small amounts annually, with the option for larger distributions at certain milestones, such as entering college, turning 40, getting married, or purchasing a first home. A trust can give you extra peace of mind in scenarios where one or more of your heirs carries significant debt or has other financial vulnerabilities.

If you have an heir with a disability or special needs, you might consider a special needs trust.


SEE ALSO: Navigating Inter-Generational Wealth Transitions When You Run a Family Business


Step 5: Formalize Your Conversations

While your initial legacy planning conversations with your heirs are likely to take place in comfortable, informal surroundings, it can also be an important step in the process to formalize your discussions. You can do this by inviting your estate planning attorney into the conversation, allowing him or her to explain the probate process and answer any legal questions your heirs may have. Not only can this serve to ensure everyone is truly clear about how the process will work, but it also allows your heirs to build a relationship with your attorney. This can make them more comfortable when the time comes to see your estate plan through.

Final Thoughts on Legacy Planning Conversations with Your Heirs

It is not uncommon to find it difficult to begin legacy planning conversations with your loved ones. At Paces Ferry Wealth Advisors, we can help you set your estate planning goals and determine a strategy for communicating them to your heirs. It is our goal to support you, and we will work closely with your attorney to ensure your plans are properly documented and implemented. Please contact us today if you believe we may be a good fit for your planning needs.


Paces Ferry Wealth Advisors, LLC is a registered investment advisor with the U.S. Securities and Exchange Commission (“SEC”).  This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor.


Zach Morris, CFP®

Zachary Morris, CFP® WEALTH ADVISOR & FOUNDER Having traveled to over 35 countries, Zach is a believer in Ralph Waldo Emerson’s statement that Life is about the journey, not the destination. Being a CERTIFIED FINANCIAL PLANNER™ provides Zach the opportunity to help clients define and realize their journey, and co-founding Paces Ferry Wealth Advisors, an independent firm, allows the freedom to define the client experience along the way.

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