4 Steps to Incorporating Values Into Your Estate Plan

There are many reasons to create an estate plan. Most people want to preserve their assets, reduce any potential estate tax burden, and ensure that their assets are distributed appropriately. But as you create an estate plan, you also have the opportunity to pass down more than money and property—you can relay your values as well.

For families that want to maintain their wealth over generations or ensure that their children and grandchildren understand their financial decisions and responsibilities, expressing values is essential. Research shows that families that have sustained their assets past three generations—the dreaded shirtsleeves-to-shirtsleeves cliché—have focused on both communicating their values and teaching them to the younger cohort.

Identify What Matters

Whatever your assets entail, chances are they represent a story that reflects what’s important to you and your family. Your wealth accumulation and the assets you’ve acquired are part of a bigger narrative—and one that’s important for your family to know. As you begin your estate planning process, suss out which aspects of your story are essential to carry forward. For example, perhaps it’s important that your children know the reasons why you started your company and how you survived those first lean years. Or maybe there’s a specific reason you purchased a piece of property that’s rooted in your family story; it was at the lake where you vacationed with your parents or in a spot that provided you with great comfort.

As you think of your narrative as it relates to your assets, you’ll also start to identify values that play a prominent role. Consider the choices you made regarding spending and investing, your career decisions, and the things that played the most significant role in driving your success. These values could be hard work, family, education, or something else entirely. Beyond simply telling these stories (which is very important) you also want to document your values as part of your estate planning process. Find the form that is easiest for you, whether that's a mission statement, written story, audio recording or even a video.

Put Your Plan to Work

Once you’ve identified your values, work with your estate planning team to incorporate them into your plan. There’s no one way to do this, but instead many options for preserving and conveying what’s most important to you. The best place to start is by selecting your executor or trustee. You’ll want to name someone who you not only trust but who understands your values and can explain your wishes to the rest of your heirs in a professional manner.

Also, evaluate the vehicles you’re using to distribute your assets. Certain types of trusts, for example, provide lots of flexibility for including parameters that shape the trust distributions. For instance, if higher education is a top value, then you could structure a trust that makes distributions once the beneficiary graduates college, or perhaps supports the recipient as he or she pursues a secondary degree. However, keep in mind: if you express your values via terms of a trust, then establishing a trustee that understands your position is even more critical.

Incorporate Charitable Giving

Another way to express your values is via charitable giving and the organizations that your assets can support. If you already volunteer or donate to nonprofits now and have contemplated a much larger gift, consider looping the organization into your planning process. By doing so, you can often develop a custom gift that reflects both your values and passions as well as serves the organization’s highest needs.

Your estate plan can also establish a fund or trust, helmed by your heirs, with the express purpose of charitable giving. While large trusts have long been the domain of super-wealthy families, more affordable options such as donor-advised funds make it easier to incorporate consistent giving into an estate plan. Such funds allow your heirs to establish a legacy of giving, reflect on the values that are core to the family, and carry them on through gifts to related charitable organizations.

Communicate Early and Often

Estate planning is no small undertaking—and when you decide to incorporate your values into your plan, the result becomes even more important. Begin communicating your values and your overall wishes to your family long before your plan comes to life. Be sure to set aside time specifically to outline the parameters of your estate plan, and if you feel compelled, the reasoning behind your choices. Use this time to discuss your family values and retell the stories that bring them to life. In addition, don’t leave the values talk as a one-and-done discussion. Try to bring your values up often, and look for examples in your financial life where your values inform your choices and let your children know.

An estate plan is an important document for organizing and distributing your financial assets. Incorporate your values into as well, and you'll be able to pass along not just wealth, but also important life lessons and more.