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Personal finance

Tips to successfully transfer your wealth

Discover how family legacy planning prepares your loved ones to inherit your wealth and carry out your wishes.
8 minute read   •   May 23, 2023
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Kristen Whitmer headshot

Senior Financial Advisor

Kristen Whitmer headshot

Kristin Witmer, CFP®, CTFA

Kristin Witmer is a senior financial advisor with Vanguard Personal Advisor®. She's advised Vanguard clients since 2016, helping individuals and families develop and maintain financial plans to meet their goals.

Kristin is a Certified Financial Planner™ (CFP®) professional and Certified Trust and Fiduciary Advisor (CTFA) with a bachelor's degree from Bloomsburg University. Her favorite pastimes include traveling and watching football.

What's wealth transfer?

Wealth transfer is the process of moving assets from one generation to another. Assets can include investments, real estate, personal property, and anything else you wish to pass down. Wealth transfer is a key part of estate planning and plays a vital role in preserving and growing your family legacy.

Ask yourself this question: "How prepared are your loved ones to inherit your wealth if something unexpected were to happen tomorrow?" It's a simple question that reinforces the importance of wealth transfer planning and can be a great motivator to start these important conversations early. Delaying these discussions can lead to frustration and the possible loss of wealth down the road.

Source: Fortune Recommends, Generational Wealth Explained: What It Is and How Experts Say You Can Work to Build and Protect It (Ivana Pino, 2022).

Wealth transfer tips to set your loved ones up for success

Schedule regular family legacy meetings

The key to success starts with regular communication about your financial intentions. Your family should know what to expect when you pass away, including how they can best protect your wealth and carry out your financial legacy.

If you haven't already, set aside time with your spouse or partner to create a mutual understanding of the family's finances, get on the same page regarding long-term goals, and ensure you're both prepared if life brings any unexpected situations your way.

Then, once your kids become young adults, bring them up to speed on your family's long-term wealth plan. Scheduling meetings at least twice a year is a good place to start.

Avoid postponing family legacy meetings

There are several reasons to not put off these important discussions.

Sure, it's human nature to think, "I'll get to it one day" or "I'm young and don't really want to talk about my death." While these can be tough discussions that stir up an array of emotions, they're a great way to prevent speculation or false expectations about your intentions before it's too late.

At some point, you've probably heard stories or seen movies about an estate that isn't distributed equally. A favorite child or grandchild gets more than others and positive family dynamics are disrupted. Legacy meetings go a long way in creating clarity around your decisions and helping family members remain united.

For example, let's say you plan to support one grandchild by paying for culinary school. You respect their passion and want to help them pursue it. But your other grandchild isn't pursuing education. Do you plan to give them the same amount of money to put toward something else like a car or home? Or do you feel that these goals should be financed independently?

Having up-front conversations about your legacy plan can help your family understand and respect your wishes.

Beneficiary designations are important

Did you know you need to designate your IRA beneficiaries as "per capita" or "per stirpes"? Getting it right can make a big difference in how your wealth is transferred and whether it's passed down the way you intend.

With a per capita designation, assets are divided equally among surviving co-beneficiaries, which means nothing will pass on to a deceased beneficiary's heirs.

With a per stirpes designation, if one of your beneficiaries is deceased, their portion will go to their surviving children.

Not sure how to start a conversation around legacy planning?

Advice can help

Contact us to discuss your individual investment needs.

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Educate your loved ones

Not all couples or family members have a mutual passion for investing. And it's perfectly okay if one person prefers to take the lead when it comes to handling the finances. However, to alleviate a sudden financial burden should something unexpected happen to you, you can:

  • Establish preexisting relationships with financial partners. Involve your spouse or partner in these meetings and give them a chance to interact with your contacts. Knowing they have trusted professionals to turn to can be extremely comforting if they're not equipped to take on the responsibility alone.
  • Educate your spouse or partner. Teaching them the basic financial concepts and investing principles they'll need to carry out your legacy will prepare them for the responsibilities that lie ahead. Here are helpful educational resources to get them started.

When it's time to bring your kids into the discussion, sharing your vision and values with them will help guide future decisions.

Discuss these other legacy planning topics

You might think it goes without saying, but don't forget to cover these 2 very important topics.

Legal wishes

Share the beneficiaries outlined in your will and on your financial accounts as well as the people designated to make financial and medical decisions on your behalf.

Tip: Remember to update your beneficiaries as needed after big life events such as births or marriages.

Financial inventory and contact information

Be sure to keep a secure, easily accessible record of your accounts and include the contact details for the financial associates you consult with (tax planners, advisors, estate planners, trustees, etc.).

And, of course, make sure your loved ones know how to access this information.

Tip: Consolidating your assets and capturing the priority of financial decisions can help simplify the process.

At the end of the day, legacy planning ensures your loved ones are aware of your plans and helps to alleviate their stress during a very emotional time. Planning ahead can have a substantial influence on the impact of your wealth transfer to the next generation.

Want help preserving your wealth?

Working with Vanguard Personal Advisor® gives you access to a financial strategy that's focused on your goals and built to help withstand market volatility and economic shifts.

Advice can help

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