Tips to successfully transfer your wealth

Communication is key.

You're working hard to build your retirement nest egg and preserve your wealth. You may have plans to see your money pass to future generations, pay for your grandchildren's college education, or support your favorite charitable cause.

Whatever your vision may be, it's important to create a legacy plan, discuss it with your family, and set them up for success as they put your goals into action.

What's family legacy planning?

Once you have an estate plan that captures where your assets will go upon your death and who can make financial and health care decisions if you become unable to do so, it's time to start thinking about legacy planning. This is where you'll shift your focus from finalizing legal documents to preparing your family to inherit your wealth and execute your wishes. And our financial advisors can help.

I encourage my clients to consider 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 legacy planning and encourages my clients to start these important conversations early.

Source: Roy Williams & 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.

Wealth transfer tips to set your loved ones up for success

Set up 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 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.

"I encourage my clients to consider this question: 'How prepared are your loved ones to inherit your wealth if something unexpected were to happen tomorrow?'"

—Erin McClain, CFP®, Senior Financial Advisor

Avoid postponing family legacy meetings

I advise my clients to avoid putting off these important discussions for a variety of reasons.

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 all kinds of emotions, they're a great way to prevent speculation or false expectations about your intentions before it's too late.

At some point or another, 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 1 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? Our advisors are here to help you.

Ready to create a customized plan to meet your goals? Our advisors are here to help you.

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, I recommend:

  • Establishing 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 they can turn to can be extremely comforting if they're not equipped to take on the responsibility alone.
  • Educating 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 well aware of your plans and helps to alleviate their stress during a very emotional time. Taking the steps to plan 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 Services® gives you anytime access to advisors who are fiduciaries—always acting in your best interests. They'll provide investment coaching and work with you to balance multiple financial priorities, including saving for retirement and beyond.

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