Focus on Legacy Value for Effective Planning

For families with sizable or taxable estates, there are many estate planning tools that can be used to reduce taxes, protect your assets, and achieve your long-term goals. But those tools tend to require significant asset transfers to reduce their taxable estate. For obvious reasons, many business owners don’t like seeing the value of their personal balance sheet decrease, especially after spending a whole career focused on making it increase. To help overcome this conflict, I encourage clients to think bigger and work on building the family’s net worth instead of their individual net worth. I like to call this the legacy value.

By focusing on legacy value, families tend to feel more comfortable with the idea of making substantial gifts to trusts for their children or grandchildren. For highly motivated and successful owners, it also provides a goal that makes sense (maximizing the legacy value) as opposed to focusing on just one part of the equation (minimizing their taxable estate). Minimizing value is a hard goal for most high-achieving business owners to accept and truly run with. Ask your professional advisors to show you the entire picture, not just your individual picture. Changing the frame of reference helps overcome those hurdles and provides a motivation for advanced estate planning.

If you are putting off estate planning because you are worried about letting go, consider reframing the goal to legacy value from estate minimization and see if makes things easier.

And since it is December, don’t forget to make your annual gifts!