When transferring your assets to the following generation, there are three ways to ensure a lasting legacy

In the upcoming years, wealthy Baby Boomers worldwide are predicted to transfer or leave behind nearly £80 trillion

For many, values are more important than money in the transfer. We examine how to leave an enduring legacy.

Over £100 trillion (74.8 trillion) of global wealth is anticipated to be passed down from one generation to the next over the next few decades. However, according to a recent report, many of the wealthiest people in the world are concerned about leaving a legacy that reflects their values.

As the Great Wealth Transfer takes place, wealthy people who don't have a clear financial plan run the risk of experiencing family strife, losing out on opportunities, and seeing their fortunes decline.

Non-financial wealth can also be lost over time, in addition to financial assets. According to a survey conducted by HSBC Private Bank among 1,000 wealthy people worldwide, nearly three quarters (72%) of them stated that their legacy is more defined by the transmission of their values than by their financial inheritance.

When it comes to inheritances, wealthy people have different ideas about how they want to use or transfer their wealth. Instead of passing it on after they pass away, one-third (35%) prefer to enjoy it with their family. Less than a quarter (23 percent) intend to pass it on after they pass away, while slightly more than a quarter (28 percent) wish to do so while still living.

How to leave a lasting impression.

According to the HSBC report, while wealthy people focus on increasing their wealth, many are unsure of what they want their wealth to accomplish after they pass away, even though they want their legacy to reflect their values.

But the wealthy individuals who are best equipped to create a lasting legacy, according to the findings, have done three very specific things:

Establish a wealth philosophy.

Wealthy people can determine the purpose of their wealth and the values that the elder generation wants to uphold in the future by having a clear set of intentions for their assets.

The best way to ensure that wishes are clear is to write them down in black and white. Therefore, a letter of wishes is now advised by many legal experts in addition to a formal, legally binding will.

"Many wealth creators are so busy building their fortunes that they have under-invested in preparing the next generation," stated Russell Prior, OBE, head of family governance, family office advisory, and philanthropy at HSBC.

"Rather than merely laying out plans for their financial assets, they require a clear, well-developed wealth philosophy that takes into account a far wider range of factors. The "

Talk to the family.

When it comes to inheritance and legacy planning, early and honest communication is essential. However, when some parents don't think their kids are ready to handle money, it can be challenging to have a conversation.

According to the survey, over two thirds (70%) of respondents stated they would prefer to postpone transferring their wealth in order to foster financial responsibility in the following generation.

"Wealth brings freedoms and a lot of convenience, but at the same time, the senior generation knows there are many responsibilities," stated Ann Ling, head of wealth planning and advisory for Asia Pacific at HSBC. A "

In a similar vein, children may experience pressure from this burden of expectations because they frequently worry about making mistakes. They frequently believe they can't match their parents' success in business and wealth creation.

Strong lines of communication between generations are therefore essential. Ling stated, "In my experience, I've never seen people complain about having the family discussion too early."

"Families must communicate openly about their shared interests and passions in order to create a lasting legacy. A "

Gather support for a cause.

Supporting a cause that all family members can agree on is one way to foster unity within the family. According to Cerulli Associates' 2024 analysis, about £18 trillion (13.4 trillion) of the Great Wealth Transfer is anticipated to go to charitable causes.

"Philanthropy can be a powerful way to unite the family and create a legacy that can last long after the wealth creator has gone," Prior stated.

Giving to charity is another wise estate planning tactic that may help your loved ones avoid paying inheritance taxes.

In the end, it's critical to plan ahead. Family members will be in a good position to create something lasting if they discuss the goals and effects of their combined wealth with one another.

Ling stated: "A legacy gains relevance and vitality when well-planned and in line with philanthropic values are combined." Future generations will be able to maintain harmony thanks to this as well. The "

Failing to do so, however, carries risks that go beyond financial inefficiency: it may lead to conflict that jeopardizes a legacy that will last.