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Protecting and Passing Down Your Financial Legacy

Protecting and Passing Down Your Financial Legacy EGSI Investment Management

When it comes to passing on wealth to your family, it is important to know how to successfully protect your assets.  An estimated 90% of affluent families deplete their funds by the third generation. If you are planning on leaving your estate to your family, learning the common mistakes, and implementing strategies to maintain wealth within your family can be very beneficial.[1] Legacy preparation and planning is not only for the wealthy, but for everyone with something to leave behind for the next generation.

Communicate Effectively

One of the most important aspects of wealth transfer is communication.[2] While conversations about passing may be uncomfortable, they can be essential to ensure that your estate plan and wishes are understood by your loved ones.  Beneficiaries are able to talk to you about assets, wills and trusts while you are alive, thus unifying your family and creating opportunities to adjust your legacy plan for all parties involved.

It can also be helpful to discuss with your family wealth retention methods to protect them from overspending.[3] One in four adults in the United States says their parents did not provide them with money training when they were children, which may affect their ability to effectively manage large amounts.[4] While you may be savvy about money management, others with less experience may benefit from concise conversations about how best to manage the money that you are passing to them. Inflation, spending habits, and taxes can have a massive impact on long-term wealth, and educating your loved ones before you expire could directly affect the duration of your estate.[5]

There’s Trust in the Trust

Imagine that you are the captain of a ship. You wouldn’t leave the crew of your ship without any instruction or guidance on how to sail it. You would instead teach them how to sail and explain the jobs that need to be done to effectively reach the pre-appointed destination. Creating and implementing a Trust and appointing a trustee, who clearly understands your wishes, is like hiring a Captain to keep your crew on course.  A Trust can be an excellent way to maintain family wealth for years to come.

There are many different kinds of trusts, but generally, a trust is a legal vehicle that grants the power to a trustee (either a firm or an individual) to distribute and manage your wealth after you are gone.[6] Trusts are useful because they can provide tax advantages and financial protections for your money.[7] They are also beneficial because they can set up your money to be managed by an impartial and unemotional third party with the wealth’s interest in mind, instead of beneficiary expectations and  wishes, which could preserve your estate for generations to come.[8]

A sound financial plan has several fragments that work together to effectively create, build, and protect wealth beyond your lifetime. Legacy planning is one portion of a holistic financial strategy that is comprehensive and effective. If you are looking for guidance about how to manage your funds and set your family up with a long-term plan, please reach out to us for a complimentary review of your financial plan.


[1-3, 5, 8] https://www.forbes.com/sites/francoisbotha/2019/12/06/multigenerational-wealth-preservation-what-you-need-to-know/?sh=74f0828375d8
[4] https://www.nbcnews.com/better/lifestyle/how-teach-young-kids-about-money-so-it-sticks-them-ncna1023231
[6-7] https://trustandwill.com/learn/multigenerational-family-wealth-planning

Advisory services offered through EGSI Investment Management, Inc., a Registered Investment Advisor with the State of Ohio. Insurance services offered through EGSI Financial, Inc. Guarantees offered with insurance products are based on the claims-paying ability of the issuing company. Investing may involve risk and may result in the loss of principal. Ohio Insurance License # 619337. Please contact EGSI Investment Management if there are any changes in your financial situation or investment objectives, or if you wish to impose, add, or modify any reasonable restrictions to the management of your account, EGSI Investment Management Form ADV Part 2A&B is available for your review upon request.

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