Legacy: Now or Later?

Merriam Webster’s definition of Legacy: In its basic meaning, a legacy is a gift of money or other personal property that's granted by the terms of a will—often a substantial gift that needs to be properly managed.

Over the years, my definition of legacy has evolved. Growing up in a low-income area, I never thought of Legacy. My focus was on surviving until tomorrow or the next paycheck. Supporting myself as I worked my way through college, I was hoping to make it to graduation, never mind retirement. The future was not even something I considered except for the immediate next few years (college, marriage, kids, etc.). Life changed when my father passed away the January before graduation. All of a sudden, my focus was on how much I could do in the time I had left because the fragility of life became abundantly clear.

5 years later, I was fortunate enough to become a trust administrator at the JPMorgan Trust Company of Delaware and began to understand the philanthropy and legacy concepts through my client's estate planning and philanthropic giving. That is when it clicked and I started to think about how people will remember me as I started to grow, learn and become a little more comfortable financially.

Many clients would establish a foundation so their descendants could choose philanthropic causes that interested them and direct the required 5% annual distribution required by the IRS. Those are great estate planning tools from a tax perspective but is the legacy focused on family or community.

With these types of planning techniques, the goals are not always aligned as there are inherent conflicts of interest between the family retaining the wealth within the entity while making minimum distributions to allow the assets to grow. The fund manager wants to retain as much of the assets as possible, so their fees continue to grow, so they won't encourage larger gifts.

As time passes, the world evolves and gets more complicated, more divisive, and I often wonder if “leaving a legacy” via a future dated gift takes away from shaping the future we want our children and grandchildren to live in by investing in our communities now.

What if we “Live our Legacy”? ?

The concept of compounding usually refers to investing but what if it was the same for Legacy? Giving now and making your community a better place to live by improving the education system, affordable housing, addressing inequality, job training, youth activities, mental health, etc. Those investments also compound over time just like your funds in an account.

If you live in an area that has a diverse mix of income levels, like Palm Beach County, would it benefit your family 20-50 years from now to have a larger inheritance or a neighborhood that is thriving, low crime and great education opportunities? Of course, some might say, “well, when they have their inheritance, they can just move”. But what if the world is generally a worse place 50 years from now because we didn’t invest today to make it better for future generations?

What if you both invest now in our communities and plan for your family's future?

According to National Philanthropic Trust in their 2022 DAF Report, there is an estimated $234.06 billion in DAF charitable assets and more than $1.3 trillion in private foundation assets estimated for 2021. Although grant distributions are being made, the number of contributions to these philanthropic entities are rising.

Instead of diverting a majority of the funds for future use, as is being done via the above charitable entities, what if we invested in solving structural and systematic problems now by focusing funding to these specific areas? I know the critics would say that enough funding is already going to solve today’s problems, but I would argue against that. It’s important to understand how diluted current funding becomes as it is stretched among so many organizations, services, and issues. ?

Take for example the current affordable housing crisis most of the country is experiencing. When you rely on developers to allocate a small percentage of any development to affordable or workforce housing, it does not produce enough units to address the problem. Instead, we have to make bold decisions and take actions that make larger impacts and actually solve the problem vs allowing it to fester. It’s like battling cancer, you want all the tools to eradicate it not just 1 tool that would alleviate the symptoms. We must think outside the box to solve dynamic issues as the old methods no longer work.

Author Nelson Henderson said, "The true meaning of life is to plant trees, under whose shade you do not expect to sit."

A bold way might be to concentrate funding on a specific geographic area or a particular issue with the most impact to the community. Like a laser that concentrates it power and energy on a specific area of focus to get results. But that requires coordination of effort, understanding that your solution might not be the best solution, and understanding the underlying issues that our communities face. This takes time, patience, and an open mind to a potential new way of thinking about your Legacy!

At the least, let's discuss the options and come up with better solutions that solve the root causes of the issues that are important to us now so we can all have a better future!