Legacy Planning: Control the narrative of your life

What we’ve found over the years is that when people go through the generational planning process, they experience two things: The first is great relief that it is done. The second is new excitement and renewed energy to focus on the non-financial aspects of generational planning.

This is the reflective part. It’s not legal and it’s not business. It’s the part where we get to look back on our personal journey and share the stories that we carry in our hearts. This is our gift to the next generation. They may be words or stories, pictures or actions. They may provide hope. They may provide healing.

But just as important are the things we say and do that bring US meaning because we realize that WE are the carriers of wisdom for our family. And from generation to generation, each of us is a link in the chain that binds our families together. And that link is the mark we leave—our legacy.

One of the reasons people don’t get around to estate planning is that the task seems too overwhelming and they don’t know where to start.
 
My name is John Gigliello, and I am a CERTIFIED FINANCIAL PLANNER™ with the Albany Financial Group. You are listening to Invest in Knowledge, a podcast about all things financial. 

As a financial planner, I aim to educate my clients, and listeners of this podcast, so that you can take control of your financial future. 

You may be wondering, "Why is a financial professional talking about legacy planning for the generations?" Well, I do this as a service to my clients and my community because I've seen some difficult, unhappy situations when families don’t think about these issues. When no legacy planning is done, we see a range of unhappy outcomes that often impact multiple generations. 

In this episode, I break legacy planning down into Six Parts that will help you to control the narrative of your life.

Transcript

I’m sure some of you know at least one of the two people I am about to mention. One was a popular actor from a hit series on HBO. The other led an unassuming life away from the limelight. It was this humble person who became famous for delivering a talk that was based on answering this question: 

What wisdom would you try to impart to the world if you knew it was your last chance?

His name was Randy Pausch, a father, a husband, and a computer scientist at Carnegie Melon University in Pittsburgh, was asked to do just that. 

Randy had already been diagnosed with pancreatic cancer when he was asked to give a “Last Lecture,” one in a series where professors imagine what they would talk about in their final lesson.

Most people don’t deliver under such pressing circumstances, which made his lecture even more compelling. His talk to students at the school was recorded. It became a YouTube sensation. Soon he was on Oprah and Good Morning, America, and then finally he came out with a book called The Last Lecture.

Randy’s story is remarkable partly because it showed great human resilience in the face of personal tragedy. He knew his time on Earth was limited. He knew the day he died, as he said, would be like pushing his family off a cliff. So he set out, while still strong, to do what he could to build a net that would catch them, and cushion the blow of his departure. I’ve picked out a few of his notable quotes from his lecture and book.  

“The key question to keep asking is, are you spending your time on the right things? Because time is all you have.”

“Be prepared. Luck is truly where preparation meets opportunity.”

“To be cliché, death is a part of life and it’s going to happen to all of us. I have the blessing of getting a little bit of advance notice and I am able to optimize my use of time down the home stretch.”
 Randy died quietly at home in July of 2008, about 10 months after he gave his last lecture. He was surrounded by his family. I think it’s safe to say he left his family and his children and the world with a deep, personal message about his values, his beliefs, his wisdom. And not just for his wife and children but really also his children’s children—the chain of generations we all have a link in.

I think if you could ever say someone had a good death, it was certainly Randy Pausch.

The details of Randy’s death stand in contrast to those of another man, the actor and producer James Gandolfini. You may remember him as Tony Soprano, the Mafia crime boss and lead character in the HBO hit series The Sopranos. 

Unlike Randy Pausch, James Gandolfini died suddenly at age 51 while on a trip to Italy. It was a shock to his fans and his family. No one saw it coming. 

Unfortunately, he hadn’t done a thorough job planning his affairs. He left 80% of his estate to his sisters and daughter in a way that triggered a painful $30 million tax bill.

And unlike Randy Pausch, James Gandolfini didn’t get to play a role in writing his final legacy. Instead, his ending had a strong resemblance to the controversial "Last Scene" of The Sopranos….

If you were a fan, you may remember it. Tony arranges to meet his family for dinner at a local diner. First his wife Carmela, arrives. Then his son, AJ.…Tony orders fried onion rings for the table while they await his daughter Meadow.

Tony keeps looking at the door, checking for his daughter’s arrival. The camera jump cuts to the daughter outside, trying to park her car. And then, back to Tony. The tension builds. He keeps looking up. We’re all wondering who’s going to come in the door? Meadow or a Mafia hit man? …and then, finally...

The screen goes black. The finale to the six-season series ends, the storyline left unresolved. No deathbed scene. No final words. Just a jarring cut to black...Just as James Gandolfini’s real life ended, too.
 So, in the opposite manner of Randy Pausch, James Gandolfini didn’t get to write his story for the ages. 

I hope you can see in our little tale of two families here a hint of the topics we’re going to touch on tonight, namely the importance and seriousness of thinking through your legacy and planning for the next generation. It’s never too soon to do that.

Let me repeat: It’s never too soon to do that.

My name is John Gigliello, and I am a CERTIFIED FINANCIAL PLANNER™ with the Albany Financial Group. You are listening to Invest in Knowledge, a podcast about all things financial. 

As a financial planner, my goal is to educate my clients, and listeners of this podcast, so that you can take control of your financial future. 

You may be wondering, "Why is a financial professional up here today talking about legacy planning for the generations?" Well, I do this as a service to my clients and my community because I've seen some difficult, unhappy situations when families don’t think about these issues. When no legacy planning is done, we see a range of unhappy outcomes that often impact multiple generations. We’ll talk more about those in a minute. 

And when it comes to tonight’s topic, it’s not the stuffy old version of traditional estate planning. Instead, we see legacy planning in a broader, more positive light that will help you find meaning in your life and make sure it counts for something to your loved ones who will stay behind a while longer.  

As we saw in his Last Lecture, Randy Pausch recounted his childhood dreams, the outstanding people he had met in his lifetime, and the lessons he learned along the way.  

The lecture has been seen and read by millions of people. Now that’s a legacy. Yours may not be as far-reaching as his, but it will be just as meaningful to your own family – more so even, because it’s yours.  

So let’s continue trying to understand the seriousness of the problem many families face in this area and then look at some solutions that can start to help you and your family avoid the worst scenarios.

Many people haven’t thought through how they want their money and estate handled after they’re gone. They think they have forever. What could go wrong?

And not reflected here are people who have given it some thought but not recently, or not fully, as in the case of James Gandolfini.

But things do go wrong. Maybe you died before you got everything set up. You got hit by a bus before you even had a chance to tell people you loved them, much less write a will or start writing down your memories.

Terrible thought, right? Well, let’s just consider what could happen in the aftermath of your untimely death.

Your family is left grieving and in the dark about what you own, where everything is, and what your wishes are. 

Think about your closest next-of-kin – your spouse or children. First, they’re in shock to learn of your untimely death. They start going through your papers. What will they find? A neat folder marked “open in case of my death” with all your assets listed and your wishes clearly spelled out, or a hodge-podge of papers that make no sense to anyone but you – and now you’re gone?

Or your estate planning documents are missing, incomplete, or in conflict with one another. 

Perhaps you never got around to making a will. So no one knows who you wanted your assets to go to. Or, if you did sign a will, maybe it conflicts with your beneficiary designation. This happens. People update their will when they get remarried but forget to update their IRA and other investment beneficiary designations which still list the ex-spouse. 

Let me ask you, if you died tomorrow, how would your assets be distributed? Do you even know?

Family members start arguing over what you would have wanted. 

Granted you’re not around to see the turmoil, but I’m asking you to imagine it now. Without clear instructions from you, what would your family members say to one another? Would there be arguments over what you would have wanted? You may have heard of normal, loving families who turned on one another after a parent died without a will. It can bring out the worst in people.

If there is no will or trust, the estate goes into probate. This means the court takes over and divides the assets based on state law. This may or may not be what you want. Probate fees are deducted from your estate, leaving less for your heirs.

If you were to die tomorrow, do you know if your estate would owe estate taxes?

Perhaps one of the worst things to contemplate about sudden death is leaving special sentiments unsaid. There are people who say “I love you” at the end of every phone conversation, just to make sure it’s the last thing said if they get hit by a bus. But that doesn’t really do the job of telling your spouse, your children, your grandchildren how you truly feel about them.

Let me ask you, if you got hit by a bus tomorrow, what things will you wish you had said to the people you love?

And in the end, the impact of your life is diminished. Between the confusion, family squabbles, messy estate planning, and all the things you wish you’d said but didn’t, your legacy comes up short. The aftermath of your death is not nearly as positive as it could have been.

What else could go wrong?

For some, a fate worse than death is sudden incapacity. 

You suffer a stroke. You get hit by a bus and rather than dying, you end up in a coma. In some ways this is worse than dying unprepared, because you have to go on living. So who will make decisions about your care? Someone you love and trust? Or will you be at the mercy of someone you don’t know because you didn’t set things up properly?

Here’s what can go wrong. Your medical wishes are not honored because no one knows what they are. Hospitals are obligated to do whatever is necessary to keep people alive, even if it involves ventilators and feeding tubes. If this is not what you would want, you have to state those wishes now. If you want to appoint a loved one to make medical decisions on your behalf, you have to set this up now, while you are still of sound mind and body.

And here’s what else. Your money is frozen. Your bills go unpaid and your investments are left unattended because you never signed a power of attorney appointing a trusted person to act on your behalf. No one else has the authority to transfer money or pay bills or do anything with your finances as long as you are incapacitated.

So here's the problem…

People equate estate planning with death planning and therefore, block it out and never do anything, or not enough. The quote here sums it up: “One of the greatest obstacles in estate planning is the perpetuating of death denial. Most people don’t want to plan for post-death lives because death is a scary topic to even think about.”

This is true both on a financial level but also, probably more importantly, on an emotional and spiritual level. That lifetime of experiences—hard earned wisdom and insight that make up our values--never get discussed and never get passed on to the next generation. And that’s the real loss for everyone.

You may be thinking, “Well, my family knows how I feel about them. And I’m not a best-selling author or Hollywood movie star with tens of millions in the bank, so what does it matter if I don’t take this issue seriously? What are the consequences?

Common problems that arise when no one thinks about estate planning include:

·         No will or trust

·         Overlooked provisions such as guardianship for minors

·         No tax planning

·         Financial strains; Cash shortage for survivors

Also, sometimes:

·         Decisions are not communicated to next generation

·         Details not revealed until after death

·         Family tension arises after will is read

·         Reluctance to make plans or update a plan

It’s really not a good picture, right?

Which is why attorneys, accountants, and financial professionals have been pressing their clients for years to do estate planning. The benefits of estate planning are very real:

·         Spells out health care wishes

·         Possessions go to heirs you choose without wrangling or dispute

·         Avoids additional, unplanned legal expenses

·         Provides for loved ones not otherwise protected

But traditional estate planning often doesn’t capture the fullness of our lives and our values.

What’s missing are the intangible assets we’ve collected, often the fruits of a life well lived. They include two types of things not included in traditional estate planning: 

·         Character assets: Your values, health, spirituality, heritage, purpose, life experiences, talents and plans for giving, and

·         Intellectual assets: Your business systems, alliances, ideas, skills, traditions, reputation and wisdom.

Now, you’re possibly saying to yourself, “That’s a grim picture. We don’t want that to happen in our family. Is there a way to achieve all these things—not just the nuts and bolts of traditional estate planning? And the answer is Yes. It’s called Generational Planning and it recognizes that we are all much more than just our physical assets accounted for in our estate plan.

So here’s our definition of generational planning:

Generational Planning is a modern, intentional (fun, even) two-phase process that does away with the worst aspects of estate planning and helps you plan your legacy.

Generational planning has two objectives: 

First objective: Legacy Planning, a process for passing on a family’s tangible wealth and assets

Second objective: Conveying your family’s values and history to the next generation.

Both are done for the benefit of the next generation. 

It’s also important to say that generational planning is not driven by documents in the way of a stuffier estate planning process.

And so, in thinking about the people closest to you, here are some thoughts on key considerations to a successful legacy plan for the generations.

First, consider your spouse, if you are married. If you were to die first, you need to ensure sufficient income for the rest of your spouse’s life, maybe through insurance or just making sure there are enough assets to draw from. You also want to make sure that whichever of you goes first, the surviving spouse would be able to manage the finances alone. You know, we see many cases where the husband makes the investment decisions and the wife pays the bills. This is a natural division of labor in a marriage and they are each doing what they do best. Then one of them dies and the other must take over without having been trained to do so. In the successful legacy, a married couple, while they are both alive, plan ahead and make sure that either spouse can carry on and manage the finances, regardless of which spouse goes first.

Children need to be prepared for their inheritance. We’ve all heard stories about trust fund babies and inheritors who have no appreciation or respect for the money that was left to them. Without the proper guidance, their tendency is to spend it, rather than preserving it for their own future or for future generations. Inheritance planning starts with an understanding of the basic values upon which the inheritance was built, which is to preserve and grow your family’s wealth. These values need to be passed on to the kids. Then there are the practical matters of how to specifically invest the money and how to withdraw it without incurring unnecessary taxes and fees.

As for the grandchildren, you want them to understand how you lived and what you lived for. Sometimes it’s easier to skip a generation when passing on these values. Grandchildren usually have a greater appreciation than children do for what life was like when you were young and what you learned from your experiences. So seize the opportunity now to start sharing family stories and conveying some of those memories and values you grew up with.

And finally, think about all the people you’ve touched in your life. Think about the causes you care about -- the organizations that are doing good work in the world and that you contribute to now. Maybe you’d like to leave something to them so they can continue those good works.

Naturally, you may be saying to yourself, okay, this makes sense. But how can I do this in a way that is not overwhelming, complicated, or extremely expensive?

You don't have to be overwhelmed. Follow a six-step legacy planning process to start leaving your mark for the next generation.

Let me take you through a quick overview of these six steps.

Part one involves planning for incapacity. We like to get this out of the way first because it is so essential and so easy to do.

Incapacity planning is so easy, it’s surprising everyone hasn’t done it. People of all ages should, because an accident or a stroke could happen to anyone at any time. There are forms for this. For health care, all you have to do is state a few simple wishes about how you would want to be cared for and name a person to interact with doctors and make medical decisions on your behalf. This may be your spouse, one of your children, or a close friend. 

For finances, you simply sign a power of attorney giving another person legal authority to act on your behalf. This allows them to pay bills, transfer money, and do what’s needed to keep your finances in order during the time you are unable to do it yourself. Again, it can be a spouse, an adult child, a close friend, or even a trusted professional.

You must be mentally competent to sign these forms, which is why you want to do it now. 

This is Step One of Savvy Legacy Planning. Once you have this checked off you’ll feel much better, trust me. Then you’ll be ready to tackle Step Two.

Part two is to get organized.You know you’ve been meaning to do this. Or, maybe you are already pretty well organized, but not in a way that would make sense to your loved ones if you suddenly weren’t around anymore.

Your objective in this step is to prepare for the real business of estate planning. 

First, you need to identify all the assets you own so you’ll know how to divvy it up among your beneficiaries. This includes all your savings accounts, investment accounts, retirement accounts, real estate, business interests, significant personal property like jewelry and artwork – everything. Before you ever sit down with an attorney to have your estate planning documents drawn up, you need to have this list.

Another reason to do this is to determine if your estate will be subject to estate taxes. If it is – that is, if the total value of your estate exceeds the estate tax exemption amount – you will want to talk to your attorney about some of the legal ways to reduce or avoid estate taxes. If you go on the Internet, you can read about many celebrities who didn’t do the proper planning and whose estates owed millions of dollars in estate taxes that could have been avoided. If you DON’T read about a particular celebrity’s estate plan, it means he did it right – he set up a trust that both saved estate taxes and kept his affairs private.

Did you know that Jimmy Hendrix, Bob Marley, Prince, Sonny Bono, Pablo Picasso, Michael Jackson, Howard Hughes and  yes, even Abraham Lincoln all died without a will. I know it’s hard to believe, but it is very much true.

And, of course, you want to make things easy on your spouse or children. Make it so they have access to your important papers and passwords. Help them know what to do first, like taking care of your pets or getting your mail. In a non-legal letter to your survivors you can say anything you want – you can give funeral instructions, tell them what you want done with your Facebook account, tell them where the key to your home safe is – anything. 

In part three you’ll be thinking about the people you love and the causes you care about. This is in preparation for Part Four, which is the real business of estate planning.

For some of you, Part Three will be easy. You want to leave everything to your spouse, and you have one or two favorite charities that you want to support. But you have to think about contingencies. What if your spouse goes before you do? Do you want everything to go to your kids -- divided equally among them or distributed according to need? What about grandchildren? What about other relatives or friends to whom you may want to give part of your estate or some of your prized possessions?

And what if you have special situations, like a child you don’t feel is ready to handle an inheritance, or a special-needs child who would lose out on medical benefits in the case of a large inheritance? These are all things that need to be considered before you start working on your estate planning documents. The more you have thought through your family and charitable wishes, the more efficient the estate planning process will be, and the more money you will save. 

Also in this step is the most important process of preparing beneficiaries for their inheritance. Now, some families may want to be completely open about who’s going to get what, while others may prefer to be more secretive to avoid family battles. Maybe it’s better to have those family battles – if they’re going to happen – while you are still around to mediate. In any case, you want the people who will be inheriting your assets to know how to manage them – to carry on your intent to preserve and grow the assets and not spend them on meaningless things or lose them to taxes. This is the time to talk to your spouse and kids about what they might get if you die, and give them some lessons on how to manage their inheritance. This will be an extremely valuable part of your legacy.

Now we get to the traditional part of estate planning. All those decisions you made in Part Three about who should get what need to be legalized. That is, there will need to be a mechanism to transfer those assets to your loved ones in a legal manner. So let’s take a look at that.

Now, this isn’t always done via a will. Sometimes you can transfer assets through account titling. If you hold title as joint tenants with right of survivorship, and if one joint tenant dies, the property will automatically transfer to the other joint tenant without going through probate. Another way is through beneficiary designations. If you have an IRA, you signed a beneficiary designation in which you named the person or persons who should inherit the IRA if you die. This also allows assets to pass directly to the beneficiary, outside of probate, regardless of what your will says. 

There are several legal ways to transfer assets to loved ones after death, but they all need to be coordinated. You may have some accounts titled jointly. You may have signed beneficiary designations. You may also need to have a trust, depending on how complex your situation is and whether or not your estate is subject to estate taxes. You will also need a will to pick up the leftovers. 

Some people’s estate plans are very simple. They barely need to see a lawyer. They can do everything through account titling, beneficiary designations, and a simple will.

Other people do need more legal advice. You will need to make that determination and you may need to work with an estate planning attorney.

Depending on how much thought you gave to your beneficiaries in Step Three, this step should be pretty quick and straightforward. It’s a matter of executing the wishes you already identified. Laying all this groundwork in Part Three will save on legal fees. At the same time, you don’t want to rush anything. Talking with an attorney can sometimes make you aware of possibilities you didn’t know about before, such as planning for contingencies or drawing up the documents so they cannot be contested. Good attorneys definitely earn their fees.
 
 

Now we get to the fun part, creating your family legacy. This is where you really make your life count for something by leaving behind a piece of yourself.

How you do this will be up to you. Now there are worksheets and guidelines that can get you started. You might start by simply capturing memories and writing down certain thoughts, such as what you want your children and grandchildren to know about you. You may be planning to compile family photos or favorite recipes to hand down. Maybe you have a special skill, such as gardening or woodworking, that you would like to pass on to certain family members. Now is the time to start thinking about these intangible assets that will make your legacy so valuable to your family.

Part Six comes later, but it’s no less essential than Parts One through Five. It’s great that you are doing all this planning early, long before you plan to leave this earth, but that means a lot can happen between now and then. So you will need to keep an eye on your plan and revise it if anything changes.

Things change and so will your plan

Your plan is not set in stone. As your family composition changes, you will want to revisit your plan. Whenever there's a marriage, a divorce, a death, or the birth of a child, you'll want to take a look at your plan. Or, you might change your mind about something. You can always amend your documents, for any reason at all. Remember, having the wrong people inherit your money is almost worse than no estate plan.

So, that’s our six-part legacy planning process.

We're getting close to finishing, so let's review briefly.

We started by looking at the differences between the Randy Pausch story and the James Gandolfini story. And the key takeaway there was that your legacy is going to be written no matter what, for better or worse. 

So let’s make sure we control the final narrative of our life because things can happen suddenly - death or incapacitation. 

And we saw the consequences of not being prepared - the pain, confusion, and anger among family members left behind.

Then we were introduced to the concept of generational planning and saw how it differs from traditional estate planning.

And that led us to the understanding that the first step in generational planning is to ensure that our tangible wealth and assets get left to the right people or organizations.  

And then to do that, we’ve just introduced you to the six major steps in the Legacy Planning process. As you look at those six steps, you’re possibly thinking that sounds like a lot to achieve. I feel that way, too, because it is. 

But what we’ve found over the years is that when people go through the generational planning process, they experience two things: The first is great relief that it is done. The second is new excitement and renewed energy to focus on the non-financial aspects of generational planning.

This is the reflective part. It’s not legal and it’s not business. It’s the part where we get to look back on our personal journey and share the stories that we carry in our hearts. This is our gift to the next generation. They may be words or stories, pictures or actions. They may provide hope. They may provide healing.

But just as important are the things we say and do that bring US meaning because we realize that WE are the carriers of wisdom for our family. And from generation to generation, each of us is a link in the chain that binds our families together. And that link is the mark we leave—our legacy.

One of the reasons people don’t get around to estate planning is that the task seems too overwhelming and they don’t know where to start. So we would like to break it into chunks for you, where we set some goals and establish a timetable for implementing them. For example, in week one you might sign your health care directive. In week two you might sign the power of attorney for financial decisions. 

We have a checklist of the things that need to be done to get your plan in order, and together we can go through that list and check things off as they are done. Working together, we will help you stay on track. 

We want you to have control over your legacy like Randy Pausch and we don’t want any family to suffer like the Gandolfinis.

Contact our office today to get a free copy excellent resource on today’s topic, called the Baby Boomers Guide to Legacy Planning. 

Thanks for listening and stay tuned for our new slate of podcasts, starting in 2022.

The anecdotes, facts and statistics related to cybersecurity threats referenced in this episode were compiled by Horsesmouth, LLC, 2021.

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