Leaving A Legacy: Estate Planning Is Not Just About Money

December 2, 2009

Filed under: Estate Planning — Tags: , , , , , , — Jenni @ 6:55 pm

family at sunset

I know this title seems strange.

Almost everyone thinks they need an estate plan to insure the comfortable transition of their money.  With few exceptions, I feel that my clients are burdened with the prospect of making decisions about how to pass along their accumulated wealth.  It drives home the point of why the fear based selling I studiously avoid is so compelling.

You’ve worked a lifetime building up not only a fortress of wealth, but also building a legacy of values.  If you believe in the adage “give a man a fish you feed him for 1 day, but teach a man to fish and you’ve fed him for a lifetime,” I have an idea for you.

I read an article not too long ago about family harmony which also described the challenges of leaving a family business when only some of the beneficiaries are interested in the business and the others are not.  The need for life insurance to be sure that the child who runs the business can keep the business was one of the lessons of the article, but there are others.

The key is not to consider the amount of your accumulated wealth in terms of dollars, but in terms of value and legacy.  It won’t be much of a legacy if 10 years after your death, the children are still fighting over how to divide your most prized asset when the real fight might be about who loved whom more.

Once the discussion turns to your values and legacy, it is easier to understand the true importance of estate planning.

One of my favorite clients repeatedly drives home the point that he is not interested in controlling the lives of his family from the grave.  While he is completely at peace with his decisions, I struggle with the concept of letting grandchildren control their substantial inheritances at age 18.

Because he started with nothing and became a true giant, first in his industry and then in philanthropy, he believes everyone can.  Actually, I shouldn’t say he started with nothing.  I should say he started with no money.  He obviously had an abundance of something that drove him to success.  He built an industry leading company, he married a woman to whom he was mutually devoted for many years and had 3 children, each of whom he is proud of in their own unique way.  He pursued his passions at what for me was a dizzying pace and he is conflicted that more attention is given to the money he contributes than the non-monetary contributions to the fields of those he chooses to honor.

He doesn’t understand why I don’t share his abiding confidence in his grandchildren and he dismisses my dire predictions that most wealth is dissipated in less than 3 generations.  Then I realized that I’m the one who doesn’t understand.

You see, my prescription for the malady of inherited wealth being wasted is to lock it up in trust and dribble it out over the generations.  His plan is to be a venture capitalist – give the money to his descendants and let them learn how to use it.  Do good or dissipate it – either way, he believes the value of the lesson is more valuable than the security the money can provide and for him, estate planning really isn’t about the money.

We philosophically wrestle with the ease with which he is willing to let his children and grandchildren make their own mistakes.  With a Zen-like countenance, he repeats his mantra that “money is only a tool.”

I’m still learning, but I think he means that the lessons learned from making mistakes are more valuable than the money itself.  Judging from the mistakes he has shared with me, intellectually I know he is right; although deep in my legally trained gut it is still difficult to accept.

For my client and friend, estate planning is not about money.  He is blessed with an uncommon grasp of the meaning of a life well spent.  I hope I can help all my clients pass on their own unique ideas and values to their loved ones along with any financial inheritance.  But even more, I hope I can hold onto this valuable lesson. Because the truth is, I learn more from some of my clients than they learn from me.

Why Updating Your Estate Plan Is So Important

October 3, 2009

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I am frequently asked why I emphasize keeping estate plans updated.  There are actually two answers to this question; the standard answer, and a more practical reason.  Both answers are true, but one is much more personal.
The standard answer to why update your estate plan comes in five related parts:

  1. Laws Change. Federal estate tax laws change with uncomfortable regularity, especially when a new president takes office. State laws affecting estates change much less frequently, but still often enough to need regular review.
  2. Circumstances Change. You have more children or grandchildren, minors become adults, you have more or less wealth to distribute.  Life is constantly changing and your estate plan must change with it.
  3. Financial Powers of Attorney Become Stale.  Somewhere between 6 months to 3 years is the standard shelf life of a financial power of attorney, and courts and banks are reluctant to accept them after that.  Even if nothing else has changed, your Power of Attorney should be signed regularly refreshed.
  4. You May Move to a Different Jurisdiction. Different states have different laws. Moving from one state to another requires a review and update of your plan.
  5. Attorneys Get Better.  Just like you, attorneys are constantly learning and improving.  The advice we gave you five years ago was good.  The advice we have for you now is better.

These are the standard reasons to update your estate plan.  But there’s a better practical reason that is quite different and much more personal — it has to do with family.  Few of us are lucky enough to have a family dynamic that is structurally and emotionally functional. I have met some couples of modest wealth, in their first marriage, with responsible adult children; but I have met more couples who are: in second marriages, with blended families, with one or more child with destructive habits or tendencies, or worried about a son or daughter in-law (the “outlaws”) whose motives conflict with our own values.  For these families, change will come swiftly and be overwhelming; frequent reviews and updates will ensure that your estate plan keeps up with these swift changes and continues to function as you intended — protecting you, your spouse, and all your children, even if it is sometimes from themselves.