What is Wealth Transfer?

Before we can dive too deeply into the question of what is wealth transfer; let’s work on developing a common understanding of what constitutes wealth to begin with.  In my experience, people measure wealth in the physical universe context, limiting it to things like real estate, stocks, bonds, and other tangible assets.  However, I invite a broader definition and context, most specifically, for individuals, families and organizations we need to calculate and consider our human capital as a part of our wealth balance sheets.  Many folks use the term, “Mind, Body, and Spirit.”  There are indeed multiple levels to the game of life and this phrase is prophetically accurate in laying out a roadmap for how to approach each realm.

I see it as our “Mind” in the “mind, body, and spirit” correlating to our mental health and well-being, which simply breaks down to our brain and the things that happen inside of it.  Our physical body strongly correlates to this physical universe that we dwell in and for that reason it also is closely related and connected to the physical assets that are typically associated with wealth.  There is an adage that says, ‘health is wealth’ and this tends to reinforce the point about the physical body being a part of our overall wealth portfolio.  Finally, in dealing with the “mind, body, spirit” trinity the final part of us is that animating spark of our eternal souls, the spirit.

So, when we talk about our personal, family, or institutional/organizational wealth I proffer that it would be wise to contemplate and consider how assets in all three of these realms are accounted for and transferred to future generations.  Most specifically, our human assets, which can be measured in our life experiences, our processes, beliefs, and morals.  In some small way it simply can boil down to teaching someone to fish, as opposed to giving someone a fish.

In the most ideal situation, wealth transfer is a lifelong process of allocating your wealth, including essential elements of your human capital, to provide for and protect the people you love.  When thinking in terms of Legacy Planning wealth transfer will typically include assembling the documents that constitute the four building blocks of legacy – namely formulating a definitive chief aim, crafting a personal mission statement, writing out a strategic life plan, and drafting a personal legacy statement.  If you are charitably inclined, it is also an opportunity to benefit the broader community and establish a tradition of giving.

One component of wealth transfer and often the most thought of is providing for transfer at death, commonly referred to as ‘estate planning.”  Estate planning is limited in that it almost exclusively deals with only the tangible estate or our physical assets and fails to address or contemplate our human capital.  Another equally important component are transfers during your life, or lifetime gifting.  Lifetime gifting may yield tax advantages while allowing you to see the effects of your planning and, sometimes, to reevaluate and reconsider.  Items on the human capital balance sheet may be easier to gift during one’s lifetime because it will allow for conversations and feedback on the experiences, processes, beliefs, and morals shared during one’s life with those who matter most.

A good wealth transfer plan begins with your ideas, your knowledge and your intent.  This series of legacy lessons are designed to help you take a strategic journey from these first thoughts to a plan that is truly your own.  Along the way, it is helpful to keep in mind that there is no perfect combination of wealth transfer strategies.  Instead, there are many alternate means to achieve your goals.

Despite important differences, we do find that every effective wealth transfer plan has these things in common:

• It considers current realities, both emotional and financial.
• It succeeds in meeting well-defined objectives.
• It represents the collaborative effort of a team of professional advisors.

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