Two Valuable Legacy Planning Books | Strategic Inheritance

Two Valuable Legacy Planning Books–Even if you have limited financial resources

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I read two books while on vacation the last couple of weeks: Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values by Roy Williams and Vic Preisser, and Family Wealth: How Family Members and Their Advisers Preserve Human, Intellectual, and Financial Assets for Generations, by James E. Hughes, Jr.

Preparing Heirs goes into depth about the research behind a number one of our advisors mentioned to us: in a study of 3,250 families with significant financial assets, 70% of them failed to transfer their assets successfully to the next generation. What does that mean? They either lost all their money, or they found that the money destroyed family relationships. It blew the family apart in the inheriting generation.

When I read Preparing Heirs, I thought it provided some good insights, especially into the causes of failure. And the biggest cause of failure, according to Williams and Preisser? A lack of (or, actually, a breakdown in) trust. And such a breakdown occurs primarily because of a failure to communicate openly and honestly. One key point: such open communication must include not just heirs, but heirs’ spouses as well.

Those families who made successful wealth transitions were able to say:

We have involved all family members (including spouses and children over 15) in a discovery process designed to determine their individual needs.
We include all family members (including spouses) in the family meetings.
Out of the foregoing discovery process and family meetings, we have developed a Family Wealth Mission Statement that spells out the overall purpose of our wealth.
All family heirs have the option of participating in the management of family assets.
Heirs understand and have “bought into” their future roles and look forward to performing those roles in family wealth management.
Heirs have reviewed the family’s estate plans and documents.
Currents wills, trusts, and other instruments make most asset distributions based on heir’s readiness rather than heir’s age. [Ex: “At age 35 the first distribution will be permitted as long as [Heir] has been fully employed for the five preceding years and has received increases in responsibility with pay commensurate to that responsibility.”]
Our family mission purpose includes the creation of incentives and opportunities for heirs.
[Even] young heirs are encouraged to participate in our family’s philanthropic grant-making decisions.
Our family considers family unity to be just as important as family financial strength.
We communicate well throughout our family and regularly meet as a family to discuss issues and changes.

[pp. 56-81; 98-99]

If all members of the family agree that seven or more of these things are largely true, then, the authors say, the family can be fairly confident about their long-term success in transferring wealth to future generations. If fewer than seven of these items are true, however, then the family faces serious risks.

After reading Preparing Heirs, I realized our family has a long way yet to go, but, I sense, we are making (or are about to make) some significant progress.

My opinion: I see only one item (”Our family considers family unity to be just as important as family financial strength.”) as completely true. Two others (”All family heirs have the option of participating in the management of family assets” and “We communicate well throughout our family and regularly meet as a family to discuss issues and changes”) as potentially/kind of true. I believe that, as a result of my initiating the project, all of the “Inner 6” of us have committed ourselves to creating a Family Wealth Mission statement that would meet the requirements of the first item in the list.

*****

NOTE: I’m afraid that thinking about transferring family “wealth” may seem almost a joke to some of my readers, especially if you’re still relatively young–in your 30s or low 40s. Or if your financial abilities are limited.

I would like to challenge you, however, to reconsider your attitude.

Sarita and I and our kids, too, were severely limited in our financial resources until fairly recently. But things changed. And, suddenly, we feel as if we’re a bit behind the 8-Ball. they could change for you, too.

Besides, as James Hughes notes, wealth, true wealth, is not only nor, even, primarily, in the form of money. The best forms of wealth reside in people, their skills, their knowledge and their attitudes. Financial wealth, when you get down to it, is only secondary.

When you think in those terms: that who we are as people, our skills, knowledge, attitudes, dreams, aspirations, purpose . . . these are our true wealth: I believe I am not talking with you while you are too young. I believe we, all of us, should be thinking about these things earlier in life. Like . . . now. Even if you’re in your 20s, 30s, 40s or 50s–not to mention your 60s, 70s, 80s or 90s! . . . “Even” teens should begin thinking about these matters.

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