Strategic Inheritance Legacy Lounge forum "open for business"

I will confess: I've been dragging my feet. Not sure why. But I had to overcome the hurdle.

I have finally "turned on" the Strategic Inheritance Legacy Lounge forum and invite you to join what I hope will soon be a freewheeling and inspirational discussion of all things related to passing on a heritage from one generation to another.

Join us, won't you?

Thanks!

Legacy Planning Process, Part I

Several weeks ago, our investment advisor urged Sarita and me to seriously consider hiring a Legacy Planner. (Note the difference between legacy planning and "mere" estate planning. I described some of the philosophical and practical differences back in November.)

Greg Smith, the gentleman whom our advisor recommended, presented a couple of graphics that I think give further insight into some of the differences.

Here I will present only the "Legacy Planning Pyramid" (© 2006 Resonate Companies, Inc. and GDI Consulting USA, Inc.; used by permission):

[Click on the image to see it full size.]

According to Greg, "traditional" financial and estate planning comprise the first two layers of the Legacy Planning Pyramid. He defined financial planning as making appropriate decisions concerning investing; life, disability and long-term care insurance; basic retirement and tax planning, etc. And traditional estate planning: the preparation of proper documents: wills, powers of attorney, trusts, foundations, and so forth.

Proper legacy planning, Greg said, adds a legacy strategy (including statements of mission, vision, values and priorities), plus more advanced legal and financial strategies that may be required to provide an appropriate structure to uphold the strategy, and, most importantly, succession planning--practical plans concerning how one intends to pass on one's mission, vision, values and priorities to one's heirs, executors, etc.

I think it's interesting how many people there are who are delighted to help you do traditional financial and estate planning. Talk to almost any "advanced" financial advisor today and he or she will speak of these matters. These people are all about helping you analyze your life insurance portfolio, increase the size of your retirement account, save taxes, make more money available to your heirs.

Almost no one talks about the things that Greg spoke of as essential to legacy planning.

But legacy planning, as I see it, "adds" the entire layer (and I would like to suggest it is the more fundamental layer) of purpose. Why am I interested in passing wealth to the next generation? What is the purpose of that wealth?

As we discussed these matters, Greg asked a question. "Suppose we were to say a family has successfully passed on its legacy to the next generation if two things, at minimum, are true: 1) the family's wealth is still there when the first generation has passed away, and, 2) none of the members of the second generation have seen their lives destroyed due to improper use of funds; no family relationships have been ruined as a result of strife over money.

"Of families who use traditional financial and estate planning techniques and go no further," he asked, "what percentage would you guess are successful, according to this definition, in the second generation? How many wealthy families still have the wealth and are still relationally intact in the second generation?"

"Maybe one or two percent?" I suggested.

"Oh!" he said. "You are pessimistic! . . . No. The real number is about 30 percent. . . . Thirty percent of all families who do traditional financial and estate planning are still intact in the second generation. While the assets were prepared for transfer, the heirs were inadequately prepared to receive them. They were never given the opportunity to explore the rights, roles and responsibilities of being an heir.

"By contrast," he said, "what percentage of families do you think are successful, by the same definition, if and when they have engaged in full legacy planning?"

"I have no idea," I said.

"The statistics show 90%-plus," he said. [He referenced Roy Williams and Vic Preisser, co-authors of Philanthropy: Heirs and Values for these statistics.]

The key problem with most traditional estate planning, he said, has to do with a lack of "intergenerational communication," a lack of attention to "family systems, creating a shared family vision, and matching the passion and purpose of one's life with the purpose of one's wealth."

So Sarita and I have begun a legacy planning process.

More later.

Making tough decisions

I'm inspired by the content of my last post, combined with some of the content of Ron Blue's Splitting Heirs.

Blue says we need to "love [our] children equally and, as such, treat them uniquely."

Now, that's tough! (Tougher for some than for others.)

I was talking with my dad a week or so ago and he said he found the idea of even attempting to differentiate among his six children overwhelming. I mean, he knows we are different. He knows I have absolutely no need for any portion of his estate, whereas others of my five brothers and sisters are not so well off. He knows that some of us are quite capable of taking care of ourselves, whereas others . . . aren't.

But trying to figure these things out--or even talking about them with his children--seems "just" too difficult.

Blue offers a scenario. I'm not going to get the details all right. But the general picture is what matters:

Suppose you have three children, Blue suggests.

• The oldest, a daughter, is married, professes faith in Christ, lives in the "right" neighborhood, goes to the "right" church, wears--and makes sure her husband and children all wear--the "right" clothes. She and her husband are members of all the "right" clubs and organizations. . . .
• Number two, a son, is married and has children. Their family, members of a "faith" mission in which financial support is spotty, bumps along just above the poverty line. But they are joyful in their service in the inner city. . . .
• Number three child is also a son. At this time, he shows no inclination to serve Jesus. In fact, he's been to prison on a drugs charge. He has had several unbelievable business opportunities which, somehow, in every case, he has squandered. At this point in his life, he spends most of his time watching TV and playing video games. . . .

Question: Are you going to treat them all the same in your will? You know: being fair and all. . . .

Blue suggests--and I absolutely agree: no, you ought not to treat them all the equally! Love them all equally? Yes. Treat them all equally? No way!

But this is hard work.

I have determined that, God helping me, I will do that hard work in behalf of my children.

Well. And then there is this matter of a living will.

Our attorney, knowing of our Christian commitment, urged Sarita and me to sign some kind of--I'm not sure if it was a DNR/Do Not Resuscitate order, but--some kind of Living Will document that provided for less strenuous efforts than might otherwise be made. "After all," he said, "you know where you are going, and it is a Better Place."

I believe that. I don't believe This World is All There Is. So I have no strong motivation for clinging to this life beyond reason. Yet there is a purpose to life! There is a reason to keep living. At least, to some degree.

My brother, Pete, who was dead and yet is now alive: Pete says that, while he was dead, he [I'm not sure if he has said he met Jesus; but . . . ] . . . he saw that he has a strong hope for a much better/more beautiful "tomorrow"--after death. Yet he is glad he is alive. And I am glad he is alive. He has a reason for living on this earth today. He has things to do, promises to keep.

So how shall I write my living will?

I have some tough decisions ahead of me!