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What is family legacy planning?

Vanguard wealth planning professionals have found that most high-net-worth clients are focused on the technical aspects of wealth management planning. They have an investment portfolio and an approach for managing those assets. Many have important legal structures in place such as a will, an estate plan, and trusts. Through investment management and legal structures, clients have prepared to transition the assets to their families.

Many people believe their work is done at that point—but these documents are only one aspect of the wealth transfer process. Once you've set up the legal and logistical structures, a critical next step is to ask how well prepared your family and beneficiaries are to receive your assets. That's where family legacy planning comes in—to complement your wealth plan by preparing your family to navigate the responsibilities and opportunities that lie ahead.

Why is family legacy planning important?

Estate planning alone isn't sufficient to ensure successful wealth transition. Research shows that in 90% of cases, an inheritance will be depleted by the third generation. To put this research in context, by the time most clients' grandchildren are grown, their inheritance may be significantly diminished. The reasons behind this decline may include:

  • Lack of communication within the family (60% of the time).
  • Beneficiaries who aren't prepared (25% of the time). Lack of preparation may encompass minimal knowledge of investments and wealth management concepts, few experiences to acquaint children with future responsibilities, or insufficient development of leadership skills so children can guide the family once the parents have passed.
  • Absence of a defined mission to focus family members on collective family goals (15% of the time). A thoughtfully prepared family mission statement can help the family agree on their goals and guide future decision-making.

These factors highlight the importance of preparing a family for an inheritance, making family legacy a critical component of wealth management across generations.

Top reasons families don't succeed in transferring their wealth. 60% Lack of communication and trust. 25% Inadequate preparation. 15% Other reasons (lack of mission, taxes, legal, etc.)

Source: Roy Williams and Vic Preisser, 2003. Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values. San Francisco, Ca.: Robert D. Reed Publishers, pp. 36–48.

Building a strong foundation for long-term wealth preservation

As the diagram below illustrates, the foundation of long-term wealth preservation lies in the combination of financial planning, estate planning, and family legacy planning. Over time, family legacy planning becomes the essential groundwork to support the other key components, including various family assets, estate planning documents and trusts, and long-term portfolio management. At the highest level, family meetings and governance help to execute your vision and maintain a healthy legacy over the years.

Long-term wealth preservation. Financial planning. Estate planning. Family legacy planning.

How Vanguard can help your family prosper across generations

Vanguard has a track record of helping clients succeed over the long term. Our core values of integrity, stewardship, and focus—all for the benefit of our clients—make us unique in the investment industry. Vanguard Family Legacy Services takes the same client-focused approach, helping you build the infrastructure to achieve a successful wealth transfer and providing your beneficiaries with the knowledge and tools they need to thrive.

Vanguard can help you think through your family legacy, provide resources to help you plan, and facilitate family engagements for families with eligible asset levels. Contact us for more details.

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  • ✓ Custom financial plan
  • ✓ Ongoing portfolio management
  • ✓ Investment coaching
  • ✓ Real-time goal tracking
  • ✓ All at a low cost


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