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: Family Meeting, III

I guess I'd like to make two final observations inspired by our family meeting last Saturday.

1. Luke raised a great question about "Our Money"--"family" money, or, in many ways, "John's & Sarita's money"--as opposed to "My Money"--the money that Luke (or anyone) earns himself.
   
   "I don't feel the same way about the money I get from Mom and Dad," he noted. He almost feels ashamed either to ask for it or receive it. The only money he feels good about using or spending is the money he has earned himself. . . .
   
   I thought that was a good observation and something we needed (and still need to, I'm sure) talk about: What is our attitude about money? What do we want for our kids? What do we specifically not want? . . .
2. . . . I can't remember!

Oh well. Maybe some other time. . . .

Legacy Planning: Family Meeting Revisited

I listed my values (as brought up through this legacy planning process); I also quoted our "final" (actually, preliminary, first-draft-final) "Family Vision" statement as hammered out with the kids. I thought it might be interesting to look back on the "Family Vision" statement Sarita and I came up with (with a lot of help primarily from Terry Hunt) back on March 12th, and then, a list of the values (M's and L's!) of other family members (besides myself) that led up to our joint (all 6 of us) "Family Vision." I think it's interesting how and where various members' values coalesced and separated. . . .

So. Family Vision Statement as Sarita and I were able to state it on March 12th:

We, the Holzmanns, strive to live as a family iwth a purposeful and focused Christian culture. We value education and work that inspires the passion and skills for each person to pursue his or her Christian calling. We aspire to family harmony, consensual decision-making, and living life with integrity, balancing positive action, such as philanthropy, business decisions and intervention, with reflective prayer.

Honestly: I look at that satement and compare it with what we as a complete family unit came up with on March 31st, and I like our full family statement much better.

(Something else I should probably note: While Terry's influence was probably too great on March 12th [I think some of the slightly "strange" language came from his attempts to summarize what he thought he was hearing us say], when it came time for us as a family to come up with our statement, Terry had little if any influence. We really "did it on our own." Except--and this is why I mention it here--I want to acknowledge that I don't think we could have come up with such a statement on our own. What I mean is: We needed Terry and Greg--someone--to take us through the process. Even if we had fully understood the process, I don't think we could have done it on our own. The dynamics were different. We were able to speak with one another a bit more freely, I think . . . just because we had someone else lead us. If I had tried to lead the conversation, I sense, somehow, we wouldn't have been able to be quite so open . . . or something.)

Anyway.

And then for the other family members' values.

I won't reveal who said what. But I want, simply, to demonstrate both a lot of the commonalities and the differences.

Person	Most	Least
1	Relations w/ Family	Achievement
	Relations w/ Friends	Social Status
	Relations w/ God	Adventure
	Make a Difference	Career
	Approval	Generosity
2	Make a Difference	Passion
	Approval	Education
	Achievement	Social Status
	Frugality	Adventure
	Intelligence	Career
3	Relations w/ Family	Adventure
	Relations w/ God	Social Status
	Education	Loyalty
	Health	Passion
	Make a Difference/Generosity	Acceptance
4	Relations w/ Friends	Relations w/ God
	Happiness	Passion
	Acceptance	Spirituality
	Achievement	Security (Job)
	Intelligence	Frugality

Yes. We obviously have some . . . diversity within our family! And I'm not wholly comfortable with all of it. We had a few places in which different members challenged each other and questioned how we could possibly move forward under the circumstances. . . .

I will be curious to see how all of these things continue to work themselves out in the future!

Legacy Planning: What makes us Holzmanns? What are we all about? What do we want to stand for?

For me, the highlight of our first family legacy planning meeting came relatively late in the day but just before we hammered out a consensus vision statement.

We had all talked a bit about our top values (both "Most" and "Least"). I don't know that anyone felt that was particularly revelatory. Interesting. But only mildly so.

What blew me away was the next question we talked about (this was not in the Legacy Planning book): "Define what it means to be a 'Holzmann.' What defines you as compared to those around you?"

Whew! What would the kids say? Sarita and I had an opportunity to jump in on this as well, but we let the kids have their say first . . . and I was blown away. I had no idea what they would say. And I was shocked . . . and pleased . . . by their answers.

They seemed to agree unanimously: We are . . .

• Happier
• Healthier ("Not damaged")

We have . . .

• Great Relationships ("We get along well one with another")

We are . . .

• Complete/Whole ("We have unity")
• Learners/Seekers after Truth

We . . .

• Constantly Challenge "accepted norms"
• Spur others on ("Iron sharpening iron"--Proverbs 27:17)
• Constantly Seek "bigger/better"
• Talk things out, seek to come to consensus

We have a culture of . . .

• Inquiry
• Help/Aid/Assistance
• Trustworthiness
• "Do it a minute" (just get it done . . . quickly)

Our top values include . . .

• Education
• [Religion] Follow God
• Integrity

Funny . . . or maybe not: Sarita wanted to urge that we live lives of Order and Structure.

She met with some resistance. Not because we don't value those things or don't, perhaps, "wish we could." But several of us objected. "That is, most definitely, a huge value for you [Mom, Sarita], but ummmm . . . I'm not sure I can honestly say that's the way I live!"

I felt compelled to acknowledge what a blessing Sarita has been to all of us by providing that structure and order for us. But when she dies . . . I'm afraid that structure and order is going to die with her. We [whoever survives her] will feel that loss keenly. But . . . the rest of us, I'm afraid, don't necessarily hold that value nor live our lives with the kind of structure and order she does. . . .

Whew!******Oh!

Having come to this astonishing consensus about "who we are" and "what we value," Greg and Terry asked us to draft what we thought a vision statement for our family might look like.

We took maybe 10 minutes to draft our own versions. Then we wrote them up on large sheets of paper and hung them around the room. . . . And then set about to come to a consensus statement.

What an amazing process!

Our final statement (for Saturday, March 31st! --It is subject, of course, to revision):

We, the Holzmann family, understand that what we have been given allows us to personally and corporately influence others worldwide. Therefore, we seek to change our world--with God's help and for His glory--by training and equipping others to most effectively fulfill their God-given purposes.

We aspire to family harmony, consensual decion-making, and living life with integrity, prayer, and purposeful action.

Wow! I'm looking forward to future meetings. We have agreed to meet again the week after Justin returns from college in mid- to late May. We want to discuss the family "business": where are we financially? What resources do we have as a family . . . to impact the world . . . and to help each other?

Legacy Planning: Family Meeting

Well, we continue our legacy planning. Sarita and I had a meeting three weeks ago with Greg Smith and a guy named Terry Hunt. Terry, it turns out, is a fourth-generation heir of a very large family fortune. He turned my mind a bit--or, actually, a lot--concerning the idea of "giving everything away" as much as possible (rather than possibly passing a [financial] legacy along to our kids).

In essence, he argued for the idea that money in a future generation's hands can be used for good. And we should encourage them to use it for good.

Perhaps the most inspiring comment had to do with enabling our kids to do significant work whether or not they were paid decent wages to do it. Thus, as he said, a member of our family who "bought" our values might be highly motivated to do some deeply charitable work, but without financial backing, they might be unable to do it. With the family's backing, however, they could. . . .

(I am reminded of what we were told while on staff at the U.S. Center for World Mission: that the average "faith mission" missionary has to invest over two years to "raising support" before they can go to the field. How great a "waste" is that of the prospective missionaries' time? [I would say it's a big waste. And a poor use of most prospective missionaries' talents and spiritual gifts. Since when is it reasonable to expect an evangelist, say, to be an effective fundraiser?] And how great an obstacle to them actually gettting to the field? [Major!] How many drop out before they finish raising funds? [Lots!] . . .)

So, Terry suggested, why not provide funds?

He envisioned for us what he says his own extended family is doing. In essence, he said, besides their own jobs, the cousins and kids of the cousins who are older than 21 run a family foundation and a family "company." They hold each other accountable to their family's shared values and operate, in some ways, as a kind of "angel investors" group one for the other. . . .

Anyway. The ideas intrigued me.

But/and Terry's admonitions encouraged me all the more to proceed with legacy planning and the establishment of a family mission statement and vision statement.

I don't want to go through the entire process. But on March 12th, Greg, Terry, Sarita and I worked together to hammer out a tentative vision statement for our family. What we did that day would be a preliminary glimpse at what we intended to do together as a family with our kids on March 31st.

So Saturday, March 31st came.

Let me continue this in a separate post. . . .

Legacy Planning: Questions, Part 2

I don't intend to copy many more of the questions from the Legacy Planning book. But I understand this question will become key to our planning:

From the following list of values and virtues, mark the 5 MOST important to you with an "M" and the 5 LEAST important to you with an "L."

Acceptance	Intimacy
Accomplishments/Results	Joy
Adventure/Excitement	Leadership
Approval	Loyalty
Aesthetics/Beauty	Making a Difference
Autonomy	Mastery/Excellence
Career	Mental Intelligence
Commitment	Openness
Community	Partnership
Completion	Passion
Connecting/Bonding	Physical Health
Creativity	Personal Power
Education	Privacy
Emotional Health	Recognition/Acknowledgement
Environment	Relationship w/ Family
Financial Security	Relationship w/ Friends
Freedom	Relationship w/ God/Higher Power
Frugality	Service/Contribution
Fun	Solitude
Generosity	Spirituality
Happinesss	Trust
Honesty	Vitality
Humor	__________
Influence	__________
Integrity	__________

My "M's" included

• Making a Difference
• Openness
• Passion
• Relationship w/ God

and

• Integrity.

My "L's":

• Approval
• Recognition/Acknowledgement
• Financial Security . . .

and then, without quite such confidence in the "correctness" of my answers:

• Solitude

and

• Personal Power.

I'll be curious to see how these answers work themselves out into a Family Vision Statement! (????!!!!)

Legacy Planning: Questions, Part 1

So Sarita and I are working through this legacy planning process.

Our advisor gave us a 20-page booklet full of questions for us to answer. Some are relatively easy. But many are thought-provoking, and some cause me consternation.

I'd like to share some of the questions with you. I hope they inspire you as they have me. . . .

The questionnaire begins with "Childhood Reflections":

• Where do you fit in your family's birth order?
• Did you have your own money as a child?
• If "Yes," how did you acquire it?
• When you were growing up, who controlled the money in your household?
• As a child, what lessons did you learn about money . . . and from whom?
• What was your family's money motto?
• Name your family's greatest priorities.
• What do you think of those priorities today?
• Name what was least important to your family of origin.

There are a bunch more questions. But these--especially the fourth and following questions I've listed here--got me reminiscing pretty fiercely! And for some of the questions, I'm not sure if I'm remembering accurately or fairly.

But here's what I wrote in answer to the questions:

• Where do you fit in your family's birth order? --2nd
• Did you have your own money as a child? --Yes
• If "Yes," how did you acquire it? --Worked for it
• When you were growing up, who controlled the money in your household? --Dad (for family) . . . and me (for myself) . . . though mom made purchasing decisions within limits.
• As a child, what lessons did you learn about money . . . and from whom? --Parents: It's scarce; hard to come by; be frugal; live cheaply. Me: Money is (relatively) easy to come by if you'll work for it. It's not worth fretting over.
• What was your family's money motto? --I can't remember any real "motto" . . . unless it was the regular refrain: "We can't afford it." . . . So I guess that was "our" motto.
• Name your family's greatest priorities. -- a) Education. b) Following Jesus
• What do you think of those priorities today? --I "buy" them still, today.
• Name what was least important to your family of origin. --???

Interesting: We got talking with a couple of our kids and their spouses about "family money motto" question.

Our son and daughter--two years apart in age--"remember" very different "mottoes" even though they agreed they had not actually heard any of the "guiding words" or thoughts from us directly.

Our son-in-law confessed some anger or resentment or some such toward his parents because they had always been--or, at least, acted as if they were--so poor. . . . But as we discussed his family's living situation, it suddenly dawned on him that they had been "poor" because his parents were paying to send him and his siblings to a private Christian school! . . . And that led us all to ruminate on how parents might serve themselves and their children well if they would take the time and effort to "sell" their kids on their (the parents') values and priorities.

This particular son-in-law's parents, apparently, failed to "market" their vision to their kids . . . and, apparently, inadvertently permitted a root of bitterness to grow. . . .

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.

Personal Legacy: An Issue of Timing

Besides values and vision, there is another area of beliefs or expectations that impact one's legacy planning. It's the issue of

Timing

When should the funds God has entrusted to us be passed along . . . and to whom?

We have been challenged to consider whether we should "dump" large sums of money on agencies now, or whether we should, rather, "trickle" them out a bit at a time: put them in a foundation, for example, and distribute five to eight percent of the principal each year, with the expectation that the principal will grow at a rate faster than the distributions. . . .

In favor of the former idea, Sarita and I look at the following:

• We know certain opportunities are available right now . . .
  
• A well-managed non-profit agency that requests a certain level of funding should be able to direct our funds to those opportunity uses right now.
  
• It is quite possible the opportunities available today will not be available next year or five years from now.
  
• Just because you have money in a bank or investment account today does not mean it will be available tomorrow: look at what happened between 1999 and 2002!
  
• By giving today, we can reduce the size of our estate. Such a move could produce the following (potentially) positive effects:


• It would eliminate some of the estate tax that could be due upon our deaths.
  
• It would reduce the quantity of money that would go--potentially dangerously--to our children and/or grandchildren.

In favor of the latter idea, some of our financial advisors propose the following:

• Non-profit agencies are often hopelessly inefficient and inept and cannot deal effectively with large gifts.
  
• Most agencies would prefer a steady stream of income than a single large gift.
  
• It is almost always better for an agency to have a thousand $100/year donors than to have a single $100,000/year donor. One needs to beware of overwhelming an agency (even as one needs to beware of overwhelming a local church or one's children!) with one's largesse.
  
• A relatively modest sum of money well-invested today--in a form of life insurance, for example, or some other investment vehicle--can pay huge dividends to the designated charity later on.

There are additional considerations one must take into account. Just one example (speaking to some of the legacy planning tools I have seen touted): One doesn't want, necessarily, to create an endowment for an organization: as has been seen so many times in the past, an organization's vision and purpose can drift, so that what you intended by your gift today could become non-operable tomorrow. The organization may stop providing the service for which you endowed it! Thus, for example, if you invest in a life insurance policy or a charitable remainder trust, you may want to leave the final recipient undefined . . . just in case the organization you admire today becomes something different tomorrow (and before you die).

But even that point seems to indicate in favor of gifting today rather than "storing funds up"--in a foundation or in a life insurance policy, charitable remainder trust, or other vehicle--for distribution over time and/or in the future.

Legacy or Estate Planning?

Henry Doorn, executive director of the Barnabas Foundation spoke at the Mission India conference. He noted (something I discovered, later, he must have gotten from Ron Blue), that there are only three places your money can go when you die: to your heirs (family, friends), to charity, or to the government. He didn't quite put it this way, but my mind put his follow-through question together with the lead-in to Evangelism Explosion's standard opening question ("If you were to die tonight, do you know for sure that you would go to heaven?") and I heard him say, "If you were to die tonight, do you know where your money would go?"

And my answer: a shocked, "No! I don't!" --Even though Sarita and I have very carefully prepared final documents.

The problem: We know we have done everything possible, via estate planning, to minimize taxes and maximize transfer to our heirs, our children. But we have done nothing to ensure anything goes to any of the charities we care about.

And the reason for this, as I realized when I spoke with Mr. Doorn later that day and as I read Blue's book, we (Sarita and I) have been dealing with estate planning professionals and not, as Blue refers to them, "wealth transfer" professionals, or, as others refer to them, "legacy planners."

I have modified Blue's summary of the differences as found on page 38 in his book:

Wealth Transfer or Legacy Planning

. . . Focuses, as a goal, upon transfer of ownership.

. . . Considers, as first priority, the impact of wealth transfer on recipients.

. . . Expects implementation--i.e., the transfer of wealth--to begin now.

. . . Involves family input first and professional advice later. [Note: As I am learning, there are professionals who can help us work through the process of acquiring family input; but their role is to help us acquire family input--perhaps along with some education about the breadth of options we might want to consider; but it is not, at that point, to advise us about which options are "better" or "worse." . . . Only after receiving the family input will such a professional, then, seek to advise us about the pros and cons of the different options.]

. . . Makes decisions based on considerations of Godly stewardship.

. . . Seeks to bring honor to God.

Estate Planning, on the other hand,

. . . Focuses on retaining control of assets as long as possible--possibly, even, beyond the grave.

. . . Considers, as first priority, the impact of wealth transfer on the donor and the estate.

. . . Expects implementation--i.e., the transfer of wealth--to begin at death.

. . . Involves professional advice first and family input later. ("Here's what the attorney suggests; what do you think?")

. . . Makes decisions based on tax implications.

. . . Seeks to bring honor to . . . (God? or the donor?).

*****

I look at these two lists and I want to move toward Legacy Planning. I'm bummed we had never heard of the concept when we first went to our estate planning attorney.

Personal Legacy: Vision and Values

What values and experiences inform our giving decisions?

1. We believe we are called, first, to advance God's Kingdom and Glory among the nations of the world. (Matthew 6:33)
2. It is our understanding that there exist Unreached Peoples—peoples or "ethnic" groups among which there is no indigenous community of believing Christians with adequate numbers and resources to evangelize the group.
3. It is our understanding that approximately 40% of the world's population lives within such groups.
4. It is our understanding that an estimated 96% to 97% of all Christian charitable contributions in the United States are directed toward ministries within the United States and only 3% to 4% is left for the rest of the world; 99% of all "missionaries" work among "Reached" peoples; barely 1% of all "missionaries" are assigned to work among Unreached Peoples. . . ) . . .
5. Our understanding of these realities leads us to seek to invest in the under-funded, least-reached portion of the world.
6. For whatever reason--though we expect it is probably due to our involvement in education--we are highly oriented toward ministries that have to do with literacy, literature, and reading.
7. We believe we ought to focus our giving, rather than scatter it broadly. At this point, therefore, we have determined to focus on just a few ministries that focus specifically on the five largest blocs of Unreached Peoples--the Tribals, Hindus, Unreached Chinese, Muslims and Buddhists (THUMB as an acronym).
8. As former staff members of the U.S. Center for World Mission and now as businesspeople, we recognize that there are many unromantic, unemotionally-compelling, yet absolutely necessary "back-office," logistical and infrastructural tasks that need to be fulfilled if the more exciting front-lines tasks are to be completed successfully. We are willing to support these "back-lines" efforts.
9. We are not inclined to support efforts to build "mission station" kinds of facilities: school buildings, hospitals, houses and church buildings.
10. We are, similarly, not inclined to support "relief and development" efforts that leave recipients in dependent conditions.
11. Emergency disaster relief: all right--if combined with spiritual ministry.
12. Literacy and numeracy education that leaves the recipient better able to care for him or herself: great.
13. Microloan types of financial assistance where a person is able to attain independence: wonderful. However,
14. We always want to be doing the things that are underfunded and less likely to be supported by others. Therefore, right now, while "the world" is enchanted with the microloan strategy for development, we are disinclined to participate . . . simply because "everyone else" is doing it and we think we ought to do what is more obscure.

Vision for a Personal Legacy: Introduction

What I want to write here actually comes as a result of discussions with Sarita that have followed our Mission India meeting, reading Alan Gotthardt's The Eternity Portfolio, Ron Blue's Splitting Heirs: Giving Your Money and Things to Your children Without Ruining Their Lives, talking with our CPA and estate planning attorney, our primary investment advisor, and a "Legacy Planner."

In our business, we have written Values, Vision, Mission, Goal, Strategy and Tactic statements. But in our personal lives, we have never done such a thing. So what are our values, vision, mission, etc., when it comes to what God has placed in our hands? We finally began talking about it last night.

—Details to follow . . .