Planning for your financial legacy

Read any of the myriad obituaries of the late David Rockefeller, last grandson of oil tycoon John D. Rockefeller, and a primary theme is of his philanthropy.

Rockefeller, whose fortune was estimated in 2012 at $2.7 billion, and had grown to an estimated $3.3 billion at the time of his death, is said to have donated some $2 billion over his lifetime, and had allocated millions more in charitable donations to be distributed upon his death.

Very few of us will ever have the ability to devote ourselves to philanthropy to the extent that Mr. Rockefeller did. Yet, we owe it to ourselves and our heirs to balance our ability to accumulate wealth with our ability to protect and distribute it as we choose. And we owe it to our heirs to educate them about our legacy, too.

Regardless of the extent of our personal wealth, we can use our wealth and our personal values to create our own legacy — a legacy that should include more than dollars.

In my mind, estate planning begins with identifying the personal legacy you want to leave behind. In a business context, as well as in personal life, keep in mind what the previous generation did for you. Perhaps you cannot entirely reciprocate, but you can pay it forward.

One way to pay it forward is to help ease the burden that the next generation may face if you are not around to help or answer questions. Avoid the procrastination that is one of the biggest reasons for lack of proper estate planning. For many, this hesitation stems from inability or unwillingness to confront one’s mortality or potential disability. For others, it is fear of the potential complexity of related tax and legal issues. Taking a proactive approach, however, will make a huge difference for your next generation.

That means an initial step is to identify a fiduciary. Of course, the planning should also include identifying the best ways to limit taxes as well as details on allocation of assets. On these matters, it is wise to create a team you can rely on with a trusted tax professional and financial advisor.

I cannot overemphasize the importance of having a will — regularly reviewed and updated to reflect changes in financial and family circumstances. And keep in mind there are unique issues with blended families.

A personal property memorandum also can be very helpful, listing items you want to leave to different relatives and perhaps even select friends. A qualified estate attorney can help with this, as well as a durable general power of attorney, giving someone you designate the right to make financial decisions on your behalf if at some point you become unable to do so.

Most important, organize all of your financial information for easy access down the road. Do you know where the deed to your house is stored? Credit card numbers as well as bank account, investment and insurance information all need to be easily accessed and kept in a secure location. Many banks and investment firms have systems to make this process easier.

It is important to make your financial and personal legacy crystal clear, both verbally to your heirs and in writing. Make sure your ethical and moral commitments are completely understood. Talk to your children about these values — it can be an important lesson for them, as well as for ensuring your wishes are carried out.

For many, David Rockefeller served as an example. Today, investing in this way, or in a way that places importance on your personal values and beliefs, is often referred to as “sustainable investing.” It was part of his legacy — and it can be part of anyone’s legacy, regardless of the size of the estate.

What will be your legacy?

Joseph Matthews Market Matters