While the year may almost be over, what you do NOW may still impact your finances in 2023. In this episode of Buckingham Weekly Perspectives, Chief Planning Officer Jeffrey Levine shares three tips you can utilize immediately to lower your 2022 tax liability.
In wealth planning, it’s important to consider not just tangible assets but also the impact you hope to make on your community and family. This is often called one’s legacy, and a big component of that is intangible assets: your values and life lessons that can be passed down to future generations.
As families and friends gather for the holidays, it’s a good time to reflect on your values and the principles that guide your life and financial decisions. One way to articulate these is to put pen to paper and create a legacy letter. This exercise is a chance to express your gratitude, share wisdom or make amends. It can also be a meaningful gift to your loved ones and yourself.
Why are legacy letters important?
Legacy letters communicate our love, values, beliefs, life lessons and wishes for future generations. These types of letters have been around for over 3,500 years. They originated with the Jewish faith and became popular in the Renaissance period but faded from use in the 1800s. Recently, they’ve re-emerged as a popular way for people of all faiths to share their life story. Several technology services have been developed to help people draft their stories on their own or with professional help.
A legacy letter offers a level of authenticity and truth that enables our loved ones to embrace our story and live and grow from it. It becomes a living document. A survey by Oxford University found that 81% of U.S. respondents want their heirs to have this intangible wealth.
When do I write a legacy letter?
You may be inspired to write, or update, a letter at milestones such as births, graduations, marriages, religious events or holidays. At three of my grandchildren’s baptisms, their parents and godparents wrote letters to the baby. Recently, at the oldest grandchild’s confirmation celebration, the letters were opened and read. For his eighth-grade graduation, his mother gave him a book that included written notes from all his teachers since pre-school. All of these would be considered legacy letters since they discuss wishes and values.
How do I write a legacy letter?
A legacy letter can take many forms — written, video, audio. Written is typically the best option since it will not rely on future technology to replay a recorded version. Nevertheless, I highly recommend you make the decision based on which format you are most comfortable in expressing your thoughts.
How long should my legacy letter be?
Making sure you know what you want to say and how you want to say it is more important than the length. Rather than focusing on word count, make sure the letter reflects your voice and answers questions your family would like to know. Often, that can be achieved in only a few pages, or you may feel compelled to write more. However, it does not need to be the length of an autobiography or memoir.
What should I include in my legacy letter?
Some questions you might want to consider when you sit down to write:
- What in your life are you most grateful for?
- What are your most treasured memories?
- How are you involved with your community?
- What are your plans for the future?
- What is your hope for your family’s future?
- What are you passionate about? And what about it excites you?
- Do you have any regrets up until this point in your life?
- What type of person would you like to be remembered as?
Is there anything I should not include in a legacy letter?
It’s important to understand that a legacy letter is not a legal document. Therefore, it is likely not appropriate to explain all the legal details of your wealth transfer plans. That’s what your estate documents and living trust are created for. However, you may choose to add greater context to your wealth plan so that your family understands what factors motivated your choices. Try to keep the tone positive and to share your story constructively.
What resources exist on writing a legacy letter?
Here are a few good book recommendations I share with my clients:
- “Ethical Wills: Putting Your Values on Paper (2nd Edition),” Barry K. Baines
- “Your Legacy Matters: Harvesting the Love and Lessons of Your Life,” Rachael Freed
- “So Grows the Tree: Creating an Ethical Will,” Jo Kline Cebuhar
- “So That Your Values Live On: Ethical Wills and How to Prepare Them,” Jack Riemer and Nathaniel Stampfer
- “The Forever Letter,” Elana Zaiman
Your advisor’s role in legacy planning
Wishing you the best of luck on your writing journey; I hope that it helps you plan with a purpose. If you are looking for additional resources, your advisor can help to discuss how to define your goals and values and, of course, translate those into your wealth planning decisions.
In our final webcast of the year, Managing Director of Investment Strategy Kevin Grogan shared his perspective on the recent market optimism. He attributed the change to markets becoming more hopeful that the Federal Reserve will be able to bring inflation under control without causing a recession. He also answered clients’ most pressing questions about investing, including the differences between mutual funds and exchange-traded funds (ETFs) and an explainer on why diversification is still a winning strategy.
On the planning side, Chief Planning Officer Jeffrey Levine gave a rundown of his year-end checklist as we look toward tax season. Some notable to-dos include reviewing Roth conversions, tax-loss harvesting opportunities and estimated tax payments and withholdings. He also fielded questions from clients about tapping into home equity, the impact of midterm elections on financial plans and the upsides and downsides of annuities.
President Wendy Hartman ended with a positive note for 2023. She reminded clients that Buckingham’s team of advisors strive to bring clarity and education for any event – be it a personal development or pending legislation – that may change their financial plan. And Kevin reminded clients that whether a recession happens or not in the year ahead, it’s important to keep in mind that the markets have already priced in this risk. Find out more on what he expects for the bond market next year in his year-in-review video.
This holiday season, if you are looking for a book recommendation for your favorite bibliophile, yourself, a family member, friend or colleague, Buckingham’s Leadership Team is spreading the cheer by sharing a few of their recommended reads.
“My father shared a copy of one of Larry Swedroe’s books at the beginning of my career, and it forever changed my path in life. My hope is that his book on retirement will inspire you as well.” – Adam Birenbaum, CEO Buckingham Wealth Partners
Preparing for retirement is more than putting money into a 401(k). Written by Buckingham’s own Larry E. Swedroe and Kevin Grogan, “Your Complete Guide to a Successful and Secure Retirement,” breaks down every important aspect you need to think about as you approach retirement. They dive into often overlooked issues that may affect your golden years such as Medicare, Social Security, elder financial abuse, challenges faced by women in retirement, heir preparation and more.
“Whether it’s fitness or finance, instilling healthy habits at a young age is a gift of a lifetime! As a parent, I want to install values in my children around money and finance. This book is a great gift, a way to leave behind a legacy and to teach empowerment of impactful decision making.” – Wendy Hartman, President, Buckingham Strategic Wealth
When you decide to start investing is just as important as the amount you invest. In “One Decade to Make Millions: A Strategy to Maximize the Power of Your Twenties,” author, speaker and Buckingham Strategic Wealth advisor Jeff C. Johnson shares why it’s so important to start investing in your future earlier rather than later. Even if an investor doesn’t have a high-paying job or an advanced degree, with proper saving and spending habits they can set themselves up to retire with a comfortable nest egg.
“This book has not only provided me with practical steps to become a more effective leader, but it has also helped me positively resolve personal decisions logically and effectively.” – Jeffrey Levine, Chief Planning Officer, Buckingham Wealth Partners
Whether it’s due to emotions, preconceptions or ill logic, as humans we have all struggled with making a decision at some point in our lives. In “Decisive: How to Make Better Choices in Life and Work,” authors Chip and Dan Heath introduce readers to an evidence-based four-step process to make better decisions in both their personal and professional lives. Their powerful, practical and effective strategies and tools can help readers get on the path to leading a happier, more productive life, no magic eight ball required.
There are two types of people in the world – those that dream of saying farewell to their 9-to-5 lives and those who dread not having the daily routine that comes with being in the workforce. No matter which side of the fence someone is on, retirement can be scary. In “Retirement the Right Way: How to Retire with Pleasure, Purpose and Peace of Mind,” independent Buckingham Strategic Partners advisor Clint Haynes explores the bigger picture of retirement, including finding a balanced perspective, reimagining life, learning to mind your money and more.
“I love how ‘The Founders’ brings the reader into the ground floor of the two Silicon Valley startups that would eventually merge to form PayPal. The book is filled with lessons on entrepreneurship and provides insights into the personalities that are still making headlines today.” – Kevin Grogan, Managing Director of Investment Strategy, Buckingham Strategic Wealth
For many, PayPal is a convenient, cashless option to pay for online purchases. But did you know many of the creators and original employees of this controversial startup went on to become an integral part of some of the world’s most famous companies? They landed at Facebook, Tesla, YouTube and SpaceX, to name a few. In “The Founders: The Story of PayPal and the Entrepreneurs Who Shaped Silicon Valley,” author Jimmy Soni shares the triumphs, trials and innovations of this groundbreaking company and how it has forever changed the way we live.
“‘Enlightenment Now’ offers a refreshing viewpoint to our modern world. In our work at Buckingham, we often counsel our clients away from the daily fads, new hot trends and shiny pennies. Instead, we use science and data to educate and inform solid financial plans that are designed to stand the test of time. This book is filled with long-term perspectives (and many examples) that result in wisdom that will serve you well throughout life. I hope you enjoy this book as much as I did.” – Justin Ferri, President, Buckingham Wealth Partners
Despite constant news of gloom and doom, research shows people around the world are living longer, happier and healthier lives. In Steven Pinker’s “Enlightenment Now: The Case for Reason, Science, Humanism, and Progress,” he dispels the recency bias we are all susceptible to and replaces it with a refreshing perspective based on reason and science. The author illustrates through dozens of data rich graphs how our lives are being enriched through the gift of enlightenment despite the obstacles we face daily.
“Ben Westhoff’s joy and heartache as a mentor in the Big Brothers Big Sisters program, along with his exploration of the two vastly different world’s he and Jorell inhabited, made this the hardest book for me to put down this year.” – Jeff Remming, Buckingham Strategic Wealth Chief Transformation Officer
St. Louis transplant Ben Westhoff was a 20-something college graduate from an affluent family. When he was paired up with eight-year-old Jorell Cleveland through the Big Brothers Big Sisters program, they quickly became inseparable. They weren’t just mentor and mentee – they were brothers. Tragedy struck in 2016 when Jorell was murdered in the middle of the street at close range. In “Little Brother: Love, Tragedy, and My Search for the Truth,” Westhoff shares his personal story of heartache, the realities of impoverished communities and the truth about the man he considered family.