Updated Wednesday, July 30, 2014 as of 7:08 AM ET
Legacy Planning: Beyond the Wealth Transfer
On Wall Street
Sunday, March 16, 2014
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What is this wealth supposed to accomplish? It's a question that many wealthy clients confront as they begin to think about what to do with their fortunes beyond providing for their families.

“They realize that there is more to this process than accumulating family wealth,” says says John Nersesian, chair of the board of directors of the Investment Management Consultants Association.

LEGACY PLANNING

Advisors, Nersesian says, can play an important role in helping clients plan what their legacy will be. Clients need to consider what they want to be remembered for professionally and personally, and also what they want their money to be used for.

According to Nersesian, there are a number of ways advisors can help clients get started:

Seminars. These can be a great introduction to legacy planning for clients and can help spark the conversation with their advisor.

Mission Statement. Neresian also suggests that advisors try alternative techniques, such as getting the family to write a mission statement answering the question: What does this family stand for? 

Card Game. Using a simple card game is another way to ease into the conversation and planning. The family organizes a set of cards with different value statements printed on them in a hierarchy of how important those values are to the family. “Of course there is no right or wrong answer,” he explains. “But it’s a process that gets the family to start thinking about and talking about these issues.” 

CHARITABLE GIVING

For clients with philanthropic goals, there are more questions to address: “What do you want to support? How do you want to support it?” Nersesian asks. “You have to fill in both of those blanks.”

Wealthy clients often choose to support charities that connect to significant events in their lives, such as battles against cancer, adoption or helping preserve wildlife. Whatever the cause, clients can support it in variety of ways: with money, with stock, or with their time, by serving on the board or volunteering.

And advisors can help their clients achieve those goals by suggesting different vehicles for donating to charity. For those just beginning legacy planning, Nersesian recommends establishing a donor-advised fund, what he calls "philanthropy on training wheels."

This type of fund is simpler than most, can be established for relatively modest amounts, and allows the donor to time the year of the donation, which can be advantageous for tax purposes, Nersesian says. Once the client is more comfortable with the process, they can graduate to more complicated donor funds, like family trusts.

“Too often we see people writing checks to charity, and while we applaud their philanthropic intent, it’s not the most effective way to do it,” he says.

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