Embarking on a journey of legacy planning

The concept of legacy is sensitive and often difficult to define. After all, many people (76%) want to use their financial assets to achieve their goals within their lifetime, rather than using legacy planning simply to provide for future generations. Most people (82%), as you would expect, prioritise their families and loved ones in their legacy planning, but also 74% want to make a positive impact on their society. Beyond these broad themes, however, people’s priorities vary considerably, and evolve over time. For instance, under 40s are more likely to focus on their values and achievements (58%), whereas those over 60 are more inclined towards protecting their assets for future generations (55%). As a result, it makes sense to define and implement a legacy plan early on, and regularly reassess this over time to ensure that any arrangements and structures in place are and continue to be fit for purpose.

Although priorities may vary, 79% of people have a good idea about how they want to use their wealth to achieve their legacy. But, people are understandably anxious about how this will happen in reality. Sixty nine percent are concerned that their successors might try to use their inheritance in a different way than they had intended. People may also lack information or confidence on how to plan ahead. Sixty eight per cent think they lack the necessary knowledge to structure their legacy. The same proportion are worried that structuring may be too complex and therefore are inclined to avoid most arrangements and structures altogether. Legacy is also an area fraught with local complexities: 60% believe that rules in their country of residence, domicile or nationality prevent them from disposing of assets in the way they would like.

When structuring, views also vary considerably. Whilst 86% of respondents believe it is important to retain the ability to direct underlying investments, 79% would like to retain wealth in their name as long as possible to keep flexibility. This is balanced with 79%, respectively 76% of respondents, who want any structure to be able to consolidate and preserve business assets across more than one generation and allow family members to develop philanthropic objectives.

Therefore, there is a natural tension between the longevity of any planning arrangement and structure and the desire to retain control and flexibility. With expert advice, it is certainly possible to understand what’s available whilst taking into account the relevant countries or jurisdictions. In addition, digital solutions can help increase transparency, control and trust. More important than the structural outcome itself is the process by which this is determined. 

Key for any wealth manager and adviser is to take the time to listen, respect the client’s objectives and concerns, and be open and realistic about how best to resolve them. 

Having a significant presence or familiarity with the client’s local market(s) is key. This helps in understanding the culture, cultural barriers, local practices and rules that might affect any planning considerations. Whilst having a plan in place is the ultimate objective it is also key that this plan is reviewed regularly to ensure it remains up to date to changed rules and circumstances. So, a wealth manager keen to review circumstances, priorities and concerns on a regular basis.

Conversations around legacy can be sensitive and often challenging, particularly when a person is reviewing their legacy following illness, bereavement or other major life events. Building on long-term, personal relationships that allow clients to feel comfortable, ask questions, and be open about their changing circumstances or priorities is key. It is never too early to start thinking about legacy and for example making a simple will. Understandably, many people don’t want to think about this until they are confronted with illness or old age, but plans made early can take away unnecessary stress, and lead to better outcomes. More complex arrangements and structures will usually need discussing the implications with family or business partners to avoid any unnecessary tensions and will no doubt take longer.

Any decision to skip a generation or certain family members, or leave a bequest to a charity or philanthropic cause that the family is less familiar with, also might need more time to be considered.