The Legacy Bucket

Amyr Rocha Lima

4 min read

Most of us are aware that we must plan for the future. This includes making plans for assets that will outlast our lives.

The problem is that it's much easier to concentrate on the present.

Today's temptations have a much stronger pull than distant benefits in the future. This phenomenon is referred to by behavioural scientists as "present bias."

We've already looked at two of the "Three Buckets" in a financial plan.

You'll want enough money in the liquidity bucket to cover operating cash flow, near-term large capital expenditures, and opportunistic investments.

In the lifestyle bucket, we recommend putting money aside to meet the spending needs of you and your family over the course of your life.

The third bucket, the legacy bucket, presents a unique challenge.

This is due to the fact that it contains funds for our heirs and beneficiaries, which we hope they will receive in the future. None of our decisions in this bucket have tangible, immediate consequences.

After all, whilst we're aware that we should plan for the future, most of us would rather not imagine a world without us.

A Framework for Your Legacy Bucket

Intangibles such as memories, meaning, and impact are difficult to quantify and control when it comes to your legacy. However, there is another factor to consider: your assets.

If you do not make deliberate decisions about how your assets will be distributed after your death, they will be transferred by default according to intestacy laws, potentially ending up in the hands of people you would not have chosen and/or being mismanaged.

You can, however, choose to be deliberate, making choices based on your personal values and goals. You could, for example, write a will, specifying how you wish to divide your assets among beneficiaries who will inherit your wealth when you die.

Alternatively, you could plan your wealth so that it is preserved through a trust, so that you have more control over its sustainability for several generations after your death.

In any case, it is beneficial to consider who will receive the assets. Identifying who you want to benefit from your assets (think of it as a gift) can be a good place to start.

By being intentional and making decisions based on your values and goals, you can ensure that your assets are used in the way you desire.

Here's a little exercise for you to consider:

You've amassed a sizeable net worth that you'd like to distribute. Before diving into any technical details, sit back and try to imagine the future in as much detail as possible. Consider it a chance to seize control, shape the future, and leave a legacy.

How do you want your assets to affect your family and community?

How does the future unfold in an ideal world?

Who do you want to inherit your assets?

What are you hoping they will do with the assets?

And how would you like the assets managed and distributed?

One strategy for distributing your assets is to start dividing them among multiple beneficiaries while your alive. This can allow for a more customised approach and give you the opportunity to provide for different needs and goals.

Alternatively, you may choose to preserve your wealth for future generations by setting up a trust. This can ensure that your assets continue to have an impact beyond your lifetime.

It's important to keep in mind that your legacy planning doesn't have to be set in stone.

As your circumstances and priorities change, you can revisit and update your plan. It can also be helpful to involve a financial planner and legal advisors to ensure that your plan is properly implemented.

Final Thoughts

As you think about your legacy and make deliberate choices for your assets, remember that it's not just about the money. Your legacy is also about the values and lessons you pass on to future generations.

Take a long, deep breath. Then consider your legacy bucket in terms of who, what, when, and how. You can plan for the legacy you want to leave your heirs and beneficiaries by thinking about the specifics of your imagined future and using this framework.

By taking the time to plan, you can create a legacy that reflects your priorities and leaves a lasting impact on those you love.

For a more detailed discussion on this topic, please feel free to contact us. Our team are always available to answer your questions and to help you with any of your financial planning needs. Here’s what we offer: A cup of coffee… and a second opinion.

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Steve & Liz Client Stories Chartered Financial Planner Strategic Wealth Partners

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Anne Client Stories Chartered Financial Planner Strategic Wealth Partners

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