So you want to stay in control of your property while you are alive and well and provide for you and your loved ones in case of your mental disability. Then after you are gone, you want to give what you have, to whom you want, when you want, the way you want. But what is the “what you have” that you want to give to whom you want?
There was a recent comprehensive study called the American Legacies Study that explored that very question. The American Legacies Study surveyed baby boomers and their parents to determine what was important to them in leaving a legacy. What the study discovered is that leaving a legacy is more than just leaving an inheritance. Where an inheritance is composed of only financial assets, a legacy also includes non-financial assets.
The number one “what you have” of both baby boomers and their parents to give to whom you want is family values and life lessons. Nearly 80% of both baby boomers and their parents felt that family values and life lessons were important to receive from their parents or to provide to their children. These family values and life lessons include ethics, morals, faith, religion and family traditions and stories.
But how do you leave these intangible assets that are not material goods to your family? By writing it down. You may want to prepare a family values statement, which is sometimes called an ethical will. In this family values statement, you would include what is significant to you that you want to pass on to your family. You can also ask other family members to write down the values and life lessons that are most important to them; then you can incorporate those into your family values statement. By doing this, you can pass along your most important legacy to your children.
Another “what you have” that you can leave to your children are your personal possessions of emotional value. About 30% of both baby boomers and their parents felt that personal possessions of emotional value were important to leave to their children. Although these personal possessions may not have much monetary value, they have significant emotional value to your family.
Some examples of personal property that have emotional value are the tea pot that Auntie always used during your visits with her, grandma’s stool you would sit on in your youth while you chatted with her, or Mom’s candy dish from which you grabbed candy when you came to visit. Personal possessions with emotional value include pictures, journals and other family histories and genealogies.
Even household items that are used on a daily basis can have emotional value, like Mom’s favorite mug or the manual can opener Dad always used because he refused to buy an electric one. I know of one instance in which Mom’s favorite pajamas were recycled and used to make pajamas for Teddy Bears, which were then given to each of the grandchildren.
I have seen numerous families split apart over stuff which has very little monetary value, but a huge emotional value. What is the best way to divvy these up among the family? You should talk to your family while you are still alive and well. Find out who wants what and then write it down.
For example, when I used to visit a favorite aunt of mine, I always admired an antique silver-plated candy dish in her living room. When she passed away, she left the candy dish to me and it now sits in the lobby of my office filled with candy. Every morning when I come into my office, I see Auntie’s legacy to me.
Another category of property that you can leave to your children is financial assets and real estate. These items have financial value but very little emotional value. These would include your home, any other real estate that you own, investments and other financial assets.
The study found a huge generation gap between baby boomers and their parents in the importance of leaving financial assets to children. Nearly 40% of the parents of baby boomers felt that it was important to leave financial assets to their children. Many felt it was their obligation to leave these financial assets to their children.
On the other hand, only 10% of baby boomers felt that leaving financial assets to their children was important. Baby boomers were the group that felt most strongly that their financial assets were not their children’s birthright.
When leaving financial assets, one thing that both baby boomers and their parents did agree upon was performance-based inheritances. More than half of baby boomers and their parents believed that children who provided care for a parent should receive a greater share of the parent’s financial assets. Similarly, nearly one-third of all boomers and their parents believed that a child deserved less if the child has caused conflicts or disrespected the family.
According to the study, the differing views of baby boomers and their parents (generation gap) coupled with the lack of meaningful discussions (communication gap) about the full scope of issues relating to legacy planning results in what they called a legacy gap.
How can you and your family bridge the legacy gap? Talk about it even if you do not want to. You may be reluctant to discuss it because you have a discomfort with conversations about death and inheritance. You may also fear the potential conflict among family members when you bring these matters up or have a concern about being fair. Talk about it with your family anyway.
The best thing to do is to start now and make the most of your legacy. Plan your living legacy to honor the life you have lived so far. Once you have planned your living legacy, you can then enjoy living the legacy for the rest of your life. Then when you are gone, you can leave your lasting legacy to loved ones.
By: Matthew M. Wallace, CPA JD
Published edited May 10, 2009 in The Times Herald newspaper, Port Huron, Michigan as: Legacies not just financial assets