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The Wealth Reception Era*

There is a new estate planning phrase circulating among professionals. Watch for the term Wealth Reception Planning* because it can provide a new dimension of value and meaning to you and your family.

Transfer Planning

Over the years, estate planning generally focused on wealth accumulation and wealth transfer. Living trusts, for example, have been touted as a good wealth transfer tool. I generally agree. Emphasis has been on avoiding probate as you transfer your assets to your heirs and, with particular types of living trusts for married people, avoiding transfer taxes (gift taxes & death taxes) on two times the federal tax exemption.

Efficient transfer of your estate is important (yet rarely achieved!). I write regularly about the systematic planning process you should follow if you hope to accomplish even the basic transfer goals of avoiding probate and death taxes.

Wealth Reception Planning* (WRP) assumes that you are working systematically to assure efficient estate transfer, then looks deeper and farther at how your “True Wealth” will be received. It is different in two very important ways.

One – Four Legacy Pillars

A large financial company recently commissioned a survey of baby boomers and their parents. They found that there are four important elements to a person’s legacy. Not in order of importance, they are: end-of-life wishes to be fulfilled; values and life lessons; financial wealth and real estate; and personal possessions of emotional value.

The survey asked about the importance of each pillar. Of over 2600 people surveyed, not a single person said that if they could have only one it would be the financial wealth and real estate. Not one! The survey also found a significant gap in understanding between generations. Values and life lessons, end-of-life wishes, and the meaning behind personal possessions are not being effectively communicated.

Wealth Reception Planning is an approach to estate planning that says, “your True Wealth is much more than money and property, so legacy planning should look at more than just your material estate.” Much of WRP involves enhanced inter-generational communication. This may include everything from scrap-booking to planned dinner conversations. It includes writing, recording or simply telling the heirs about life-defining events or turning points. Stories impart values, wisdom, hopes and dreams. The stories behind an heirloom make an heirloom meaningful, and heirlooms become reminders of the stories.

Two – The Receiver’s Perspective

The second unique aspect of Wealth Reception Planning is the idea of looking from the receiver’s point of view. Whereas traditional estate planning often has an “I worked hard for this, don’t blow it all in one place” attitude, WRP asks how the intended heir would best receive the family wealth.

We can apply this thinking to all of your true wealth: the four legacy pillars. It is quite a different mental exercise to ask how can the receiver benefit most after the transfer! In some cases this means protecting it from an heir’s indiscretion, but more often it means providing enhanced flexibility and safety.

For example, if you were going to receive an inheritance, would you rather receive it (A) in your own personal name where you have technical ownership but divorces, lawsuits and your future nursing home costs can take it from you, and where estate taxes at your later death can take 46%, or (B) in a way that you fully control it and receive the income and principal as needed, the inherited assets remain out of the reach of lawsuits, divorces and nursing home, and upon your death will pass according to your directions and free of estate tax?

In my experience, good kids choose the latter. What an incredible difference can be achieved by asking more than just “how do I transfer it without probate and tax?”


*Wealth Reception Era & Wealth Reception Planning are trademarked terms of the National Network of Estate Planning Attorneys. All rights reserved.

Article authored by Curt W. Ferguson and originally published in the Prairie Farmer magazine, November 2006 issue