It is often stated the primary purpose of estate planning is to pass along as much wealth as possible to one’s heirs. While this is a worthwhile goal, to leave wealth in a manner that conflicts with the values that make you who you are, is at best incomplete planning, and may even set the stage for the financial downfall of your heirs once you’re gone. The goal of good estate planning is not simply to reduce taxes or provide instant wealth to the kids; rather our goal should be to leave a final testament or legacy that will last much longer than the money we leave behind. The challenge is to translate these philosophical principles into quantifiable dollars.
I believe that there are three priorities of personal wealth as you approach estate planning that must be quantified. The first priority is your own personal life fulfillment or financial independence. This simply means that as you ponder how to employ your material wealth, you should first consider your own needs (and desires) for the future. For most people nearing retirement, their chief concern is outliving their resources. At the same time, some feel guilty if they don’t leave a large inheritance. The choice is often quality of life versus enriching the children, and the question is “Do we have enough?” By using conservative assumptions for life expectancy, investment return, inflation, and taxes, a good advisor can help you determine the capital needed today to assure a lifetime income at the lifestyle you desire, and fund an emergency reserve or opportunity fund as well. If there is a deficit, you can either adjust your expectations, or commit more resources. On the other hand, this process may identify surplus wealth that can be allocated to your family or community before you pass away.
Creating a Family Legacy is the second priority of wealth and is a lifelong process. Someone once said that our children are messages we send to a time that we may never see. Hopefully the messages we send to posterity will be reflective of the values we lived and modeled during our brief stay here. A written family wealth mission statement provides a tangible record of these values for future generations of your family. Quantifying the Family Legacy is a little more challenging but can be done if enough thought goes into the process. Here the question is “How much is enough?” What are your children’s needs, talents, and abilities? What are their prospects for building wealth on their own? How did you build wealth? How would sudden wealth affect your children’s lives? Should you give to all your children equally? These are probing questions that should be considered when planning a family legacy. Some quantifiable inheritance goals might be funds for a home or vacation property, college funds for grandchildren, start up funds for a business venture, or supplemental funds for retirement. Any of these can be given a dollar value that is measurable and can be incorporated into your estate plan.
Creating a Community Legacy is often a third priority of wealth. Andrew Carnegie called this “the gospel of wealth.” The question here is “What can we give?” During our lives this is answered by the time, talents, and resources we commit to those social causes that deeply affect us. If excess wealth is identified after quantifying life fulfillment goals, this wealth can be used to fund family and society legacies during our lifetime. Otherwise, it may be necessary to fund these legacies after death. Often, both legacies can be funded together. When you involve family members in your giving, you can have some assurance that those causes important to you will continue to be supported through your children. Furthermore, there are giving tools that provide financial benefits to both family and society. We are often forced to give societal contributions in the form of taxes; however we have no control over how those social funds are spent. Taxes are the default social legacy we leave if we do not undertake the cause ourselves. There can be only four beneficiaries of your wealth: you, your family, charity, and the US Treasury. If you are wealthy enough so that you estate is taxed at death, quantifying a social legacy can be as easy as directing the tax bill to charities of choice rather than to the compulsory social plans of the government.
Your estate plan is a process of meeting these objectives over time; carefully implementing the strategies that best help you accomplish your goals. The result is a game plan that puts wealth in its proper place and helps to ensure a well-balanced life.
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Editor’s Note: This is the first of FIVE special posts on the topic of TRUSTS. 
