Archive for the ‘Human and Intellectual Wealth’ Category

How much is too much?

Thursday, October 18th, 2018

If you leave a financial inheritance to your children, what is the last thing you’d want them to do with it?

If you answered “Buy a car”, you’re part of the overwhelming majority of parents in the country.

How long do you think, on average, a financial inheritance recipient waits to buy a car?

According to the New Car Dealer Association: 19 days.

Which is why, when we’re asked “How much is too much?”, we always answer that question with another question: “What’s the least amount of money your heirs would need to buy a car?”

Just kidding. We don’t give that estate planning advice because we’re not estate planning attorneys (nor do we play them on T.V.), and even if we were, it wouldn’t be practical.

But we do facilitate our clients’ exploration of that question when they ask it by attempting to help them see that money, in and of itself, has no power for evil or good, and that the widely-regarded belief that wealth above a certain threshold will negatively influence character is a myth.

The truth is, money is intrinsically inanimate. Therefore, money doesn’t create or influence character, it simply reveals character. Money is a tool that allows us to express our values, whatever they are. Rather than limiting the amount of wealth heirs will receive out of fear or pessimistic expectations, we encourage clients to focus their energy on preparing their heirs to be good stewards of their financial inheritance, regardless of the amount.

So how do parents prepare their children to be good stewards? By providing opportunities to adopt healthy values. We’re particularly fond of two strategies. First, philanthropic / charitable inclusion. Philanthropic experiences are second-to-none when it comes to expanding someone’s world view and opening their hearts and minds to others. When we look beyond ourselves, beyond our own needs and wants, and recognize the dignified humanity in those around us, the concept of resource stewardship becomes easy to understand and desirable to embrace. It can be as simple as having a child place your money in the church offertory, the Salvation Army bucket, or any other spontaneous opportunity to give a small sum to a non-profit organization. It can be as complex as asking them to research and make recommendations for non-profit organizations for your family’s foundation or donor advised fund. It can incorporate money or time. And it can be your money when they’re very young, and theirs when they’re a bit older. Whatever the tactic, build strong, selfless values such as prudent stewardship of resources through some form of philanthropic or charitable experiences.

The second strategy is not so easy. Let your children fail. Failure is the greatest teacher, but as parents, we’re hard-wired to protect our children from painful experiences. Nevertheless, if we let our children fail, in safe ways, they will learn exponentially more than we ourselves can ever teach them directly. Let them make poor purchase decisions. Let them spend all of their savings on insignificant items. Let them choose to perform a job poorly and then pay them based on the quality of the work. Let them fail a test or turn in a poor paper and get a poor grade. But afterwards, follow up with them, talk with them about their experience, help them reflect on it, learn from it, and grow from it. When it comes to failure as a teacher, the second part is just as important as the first.

How much is too much? The question implies a monetary topic, but the essential subject is not money-related. It’s a different kind of inheritance. An inheritance of values and character, which is always more precious than money.

How much is too much? The answer depends on the values and character of the recipient. For those who are self-centered and unprepared, the answer is “anything is too much”. For those who are self-less and well-prepared, the answer is “nothing is too much”.

We want to ask you: “What are you going to start doing today?” so that tomorrow, you can answer the “How much is too much?” question by confidently stating “Nothing is too much for my children.”

Legacies are sown, not something we leave behind

Tuesday, June 18th, 2013

If I had a nickel for every time I’ve read or heard someone refer to a family legacy as something that is “left behind” for future generations, I’d be writing this (with a different topic, naturally) from my own private beach, on my own private island, somewhere in the Caribbean. And while I applaud the focus that a family’s legacy is increasingly receiving, unfortunately the concept of a family’s legacy is largely misunderstood. As a result, many families unwittingly fail to establish the legacy they intend to, and instead sow the legacy they hope to avoid.

The modern day concept of “leaving a legacy” has a number of connotations. The term is often used in the philanthropic community to denote a benefactor that has committed to leave a portion of their material wealth to an organization or institution upon their death. They are typically referred to as “Legacy Donors”, and are approached by fundraising professionals with an appeal to create a lasting legacy through a charitable act that will make an impact in their community after the donor has departed for the afterlife. Thus, their material wealth, by virtue of its impact, lives on and carries the family’s legacy beyond their mortal years here on earth. Hence, they “leave behind” a legacy of charity and generosity with the stroke of a pen.

Occasionally a family’s legacy is defined by the behavior of successive generations. To our dismay, a family’s non-financial legacy is typically noted only when the behavior of successive generations is destructive or otherwise disappointing. In these cases, there is a general acknowledgement that the patriarch and matriarch “didn’t do enough”, and therefore, their legacy is viewed through the perception of their own inaction – what they failed to do, rather than what they actually did.

In both cases, society defines the patriarch’s and matriarch’s legacy by “what they left behind”. To focus on the outcome, and to ascribe to it a single stroke of the pen, or continual inaction by the patriarch and matriarch, diverts attention away from the true nature of legacy. It is this erroneous focus that leads 9 out of 10 families into the shirtsleeves to shirtsleeves pitfall.

In truth, what we refer to as what was “left behind”, is in fact a harvest. What we witness is not so much “what was left behind”, but rather, the culmination of what was sown and yes, even cultivated. In this sense, legacy cannot be the result of a single stroke of the pen, nor can it be the consequences of continual inaction. Legacy is the result of innumerable actions taken over the course of decades. The stroke of a pen that creates a “Legacy Donor” is in fact the harvest of many seeds that were sown and cultivated in a manner that yielded material wealth. The disappointing behavior of a child is the harvest of many seeds that were sown and cultivated during that child’s life, not the inaction of the child’s parents.

Consider then, that if a family’s legacy is a harvest, sowing and cultivating it is a process, one that has its own course of seasons. There are seasons to sow, seasons to nurture and cultivate, and seasons to reap. The nature of the harvest depends on both intentionally sowing the right seeds and cultivating them, but also upon rooting up those wild seeds that we ourselves unintentionally sow. Whether we intend to or not, whether we admit it or not, we are sowing and cultivating the seeds of our legacy every day, eventually to be harvested by our family and our community. If we aren’t purposeful about the seeds we sow and cultivate, our legacies are more likely to resemble weeds,  and less likely to resemble wheat.

As you consider your own legacy in the context of sowing, cultivating, and harvesting, ask yourself: What seeds am I sowing and cultivating? How am I sowing them and cultivating them? What wild seeds am I sowing that require uprooting? How will the harvest of my legacy be defined?