5 May 2023
Mark Glover
Head of Financial Planning, HSBC Wealth and Personal Banking
As your life course progresses, eventually you may set your sights on what you may leave behind, your legacy.
The term legacy can mean different things to different people. Many legacy goals will consider the financial aspect – how to pass on wealth. However, not all legacy goals are purely financial, and they can vary widely depending on your values, interests, and priorities. Before considering what should be left behind, you should first think about what matters most to you and your family.
Here, we outline some of the considerations and steps for establishing your legacy goals at ease.
The key is to identify what is most important to you and to work towards leaving a positive and lasting impact on the world.
Many people want to pass on wealth to their family. Taking a thoughtful and strategic approach can help you ensure that your wealth is managed and distributed in a way that reflects your values and supports the long-term success of your family. You can increase your chances of success by having the necessary structures in place (for example, legal frameworks and business succession plans) as well as by including other people, such as family, friends & trusted advisors.
Before making your plans, you should consider what you want and involve your family where relevant. What’s your overarching purpose for the wealth, for yourself, for your family and how do they all come together?
Intergenerational wealth transfer can be a complex process, but here are 5 steps you can take to make it smoother and more successful:
The first step is to develop a plan for passing on your wealth. This may involve working with financial and legal advisors, or other professionals to help you develop a comprehensive plan that considers your assets, taxes, and family dynamics. Don’t forgot to consider what you will need to retain to cover your own spending.
There are many options for passing on wealth to your family, including insurance, gifts, trusts, and inheritances. Each option has different advantages and disadvantages, so it's important to carefully consider which approach is best for your situation.
It's vital to communicate openly and honestly with your family about your intentions for passing on wealth. This can help prevent misunderstandings and potential conflicts and ensure that your wishes are carried out as you intended.
Preparing your heirs for inheriting wealth can help ensure that they are equipped to manage their finances wisely and make good decisions. This may involve setting an ideal timing of inheritance, providing financial education, mentoring and guidance on managing wealth responsibly.
It's important to update your plan regularly to reflect changes in your interpersonal dynamics, financial situation, and tax laws. This can help ensure that your plan remains effective and achieves your goals.
Legacy planning can be a complex area, where professional advice can be very beneficial. Timing is also an important consideration, so starting having conversations sooner maximises your chances of meeting your legacy goals. Passing on wealth to your family can be a significant and meaningful way to leave a legacy for future generations. No matter what your legacy goals are, taking time to consider them is an important first step to realising them.
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