Leaving a Legacy That Spans Generations

When most people think of the late artist Prince, they think about a global music phenomenon with unforgettable pop hits and an unforgettable persona. That’s how he should be remembered.

But what many people do not realize is that Prince’s fortune – the estate he worked tirelessly to create over time – is currently being battled out in the courts amongst a slew of relatives, “alleged heirs,” lawyers and advisors. Prince passed away over a year ago (April 21, 2016), yet his estate is still very much unsettled.¹

The reason for the ongoing court battles and legal headaches? Prince didn’t have a will.

We won’t get into the specifics of where the probate court case stands or where it might end up, but in all likelihood it will still be going on months, perhaps even years, from now. This situation with Prince’s estate brought to mind a quote we read recently from an estate planner named Will Bonner. It is a concise statement that underscores the importance of legacy and wealth planning: “You can have a fortune by accident. And you can have a family by accident. But you can’t hold onto a family fortune by accident.”²

In Prince’s case, he undoubtedly created a legacy in his music, which also created a great deal of wealth. But building a legacy and creating wealth requires something more to ensure that it lasts, and that it spans generations.

It requires planning.

Family Wealth Management: Start with the Big Picture

Indeed, legacy building and family wealth management both require planning, and like any type of planning it is perhaps best to do it in steps. Though there are several steps, here are 3 important “big picture” ones that should give you a solid framework for leaving your legacy:

1. Discuss your Plans with your Family – good communication is the key to a lot of things in life, and estate planning is arguably one of them. The more you openly discuss your estate plans and how business should be settled in your absence, the less chance there is of infighting and confusion amongst heirs when the time comes. That can mean saving your family from probate court and legal headaches, and can also mean saving your family in general.
2. Cover Your Bases (Account Titling and Legal Documents) – checking your beneficiary designations once a year on your tax deferred accounts, insurance policies, annuities and other accounts is a good habit to form. There are other accounts you may have, like a taxable brokerage account or a joint account, where the account title and setup determines where your assets flow in the event of your passing – have your wealth manager walk you through what happens to the assets for each account. In terms of legal documents, we would recommend working with an estate planning attorney to create at least a basic will at first, which you may want to update/review once a year. As your estate grows and your needs change, your will may become more complex and involve forming trusts. Your estate planning attorney can guide you through these steps.
3. Connecting Your Family with your Wealth Manager -  establishing a relationship between your family and your wealth manager can help to build trust and to make the transition smooth and comfortable. It will also ensure your family knows who to call when a situation with the estate arises, which will allow the wealth manager to get to work on the next steps immediately. Settling an estate can be a time consuming and complex process, so it is important that everyone is able to work together confidently.

Family Wealth Planning with WrapManager

At WrapManager, our goal is to help our clients grow their wealth over time, consistent with their long-term investment objectives. In a sense, our work is to help clients in building a legacy. But we also understand the importance of leaving a legacy, and we are keenly aware of all the work and planning that goes with it.

According to a 2011 study conducted by Roy Williams and Vic Preisser, in a sample of 3,250 wealth families, 70% of estate transfers fail, resulting in an “involuntary loss of control of assets.”³ At WrapManager, we can help our clients take the right steps, including hiring estate planning professionals to get the job done, in addition to serving as a sounding board for knowing what steps need to be taken and how to accomplish them.

Families that have significant assets in businesses, real estate, or other income producing investments also want to ensure that the family wealth is being passed on to heirs (and received by heirs) in a tax-efficient manner. In conjunction with the expertise provided by your other professional estate planning advisors and tax advisors, WrapManager can help make sure that your estate is in line and include these details as part of your investment plan.

Call us today to learn more about how we can help you with your legacy creation and family wealth planning. WrapManager has professionals that can help you confirm:

• How to ensure that your children and/or grandchildren receive the shares of your assets that you have laid out.
• The benefits of opening a trust account.
• The ins and outs of IRAs and estate planning.
• Your options if and when you inherit an IRA, and many more important matters.

If you are establishing a first time estate plan or updating a current one, WrapManager can also help you determine how to select a trustee. Whether you choose a friend, family member, or a corporate trustee, it’s important to make sure that your selection is up to date and is ready to step in when the need arises. 

For more information on establishing or updating your family estate plan, you can reach us at 1-800-541-7774 or send us a note to wealth@wrapmanager.com.

Sources:

1. MRP News: Here's what we know about the status of Prince's estate

2. Early To Rise: How to Build Your Family Wealth

3. Forbes: Wealth Transfers: How to Reverse the 70% Failure Rate

The information presented by WrapManager, Inc. is general information only and does not represent tax or legal advice, either expressed or implied. You are encouraged to seek professional tax advice for income tax questions and assistance. WrapManager, Inc. does not advise on any income tax requirements or issues.