In this post, I want to share one of the most important things you can leave your heirs. We are not talking about the money stored in the bank or the nice car parked in your garage; these items do not last forever.
There’s a story in the bible about a prodigal son. In the story, Jesus shared how the young man demanded his inheritance while his father was still alive. By making this request, the young man wished his father was dead. Although hurt, the father granted his request.
The son took little time to spend all his inheritance drinking, partying, and whatever pleasure he fulfilled. Ultimately, he ended up in a pig’s pen (Talking about going broke). This young man was ill-prepared to handle his inheritance. I’m not sure of the extent of his financial training, but it’s obvious he didn’t understand how to manage money; as a result, he suffered severely.
The story is no different today. So many heirs must prepare before being entrusted with the family wealth (no matter what). They need a strategy for what to do when receiving their inheritance before a love passes. For instance, they need education concerning debt-to-income ratio, family governance, and working with the family legal team for starters.
Also, many heirs need instructions on creating a family bank. I'm not talking about a brick-and-mortar. Instead, my focus is on borrowing and passing wealth using insurance policies (per the advice of a licensed professional). By using this strategy, the family becomes their own bank.
Also, heirs need techniques on saving, investing, passive income, or how the banking system works. For this reason, educating the next generation is crucial, or they will never understand how the world works against them due to ignorance (not knowing).
In the book, Entrusted, the writer David York and Andre Howell said, “Entrusted Planning differs from modern estate planning, first in its beneficiary-focus. Entrusted Planning is more about preparing future generations.” I gather that estate planning is n generational, and Entrusted Planning is multiple generational.
It all begins with financial literacy and legacy solutions. By financial literacy, I mean learning how money works. For example, during one of my webinars, I instructed everyone to go and get their bank statements. I taught them not to tell me their balance but to look at the interest rate they were receiving. One of the individuals unmutated her microphone and said, "I'm receiving, ".0006 percent (I do not know the actual number, but it was very close to .0006)." I instructed her to divide 72 into .0006. Why seven-two? It helps us understand how long it takes our money to double. She was shocked to learn it would have taken her 12,000 years to double her money. Here's another example. Let's say you were earning 9% on your money. If you divided 72 into 9%, doubling your money would take eight years. In short, the higher the interest rate, the greater return.
Can you see how your life would have been different if someone had set you down early and shared the family playbook? For some, it saved them from making bad financial decisions, and being involved in toxic relationships, to name a few.
Even if you sat down with your children today and explained what to do after you’re gone, bar a miracle, your verbal plan would not make it to the bedroom. However, if you have a written plan, your success rate increases. In my opinion, education and training is the most valuable asset you can leave your heirs.
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