Columnist: Don’t do your financial planning over a beer and a fistfight
Mid-July, I got together with over 300 of my closest relatives. With 73 first cousins, the lineage keeps growing! We spent three days visiting, playing family trivia, bidding on memorabilia, dancing, eating and drinking. We remembered those that have gone before us and shared dreams of what lies ahead. Normally an innocuous gathering, this year Saturday night found one of my cousins in jail for assault. It seems a fist fight broke out, and she drew blood with a punch thrown at her sister.
The talk back at the hotel was very matter of fact — the fight was over money. It felt a bit like a Jeff Foxworthy monologue: Does your family do their estate planning over a beer and a fistfight? You might be a redneck! I wanted to laugh, but it also broke my heart. Long simmering emotions erupted over how my still living uncle was dividing up land and plans for his estate distribution amongst his eight adult children.
A bit of drama added some excitement to the weekend, but how sad that greed and resentment over money caused potential long-term damage. I have worked with enough clients to know this isn’t an isolated incident in our family, it is a systemic illness that can infect and destroy anyone’s relationships.
If you love your children equally, how do you treat them uniquely? How do you assess your estate and figure out what is the best way to pass it on to the next generation? You need to ask yourself and answer many questions.
What do you want to be remembered for? Chances are it isn’t solely about the family checkbook. More people focus on financial estate planning than they do on passing on the assets that really count. If you want a sustainable financial legacy, you need to prioritize giving other endowments first. Your family values, beliefs, and history will create greater wealth than any stock portfolio or business empire ever will. It will also create the strong foundation to battle the “shirtsleeve to shirtsleeve” adage.
Financially, how much is enough for you? You need to qualify and quantify your financial assets to incorporate what you can control and position them appropriately. How are assets titled? What beneficiary designations are in place? Do you need trusts? You also need to embrace and be at peace with that which you cannot control.
How much is enough for your kids? Warren Buffet says that “a rich person should leave his kids enough to do anything but not enough to do nothing.” This is going to take some deep processing to get clarity on. It is so much more than about money. How do you cultivate a culture of meaningful contribution in a society that reveres leisure?
How are you going to prepare your children for what will come their way? It is OK to talk about money. You wouldn’t hand a loaded gun to an adult child without proper training as well having a good sense of their mental and emotional state of being. Why do we leave financial assets that can cause great harm if not used properly to ill-edified heirs? If not you then who? Bring in professionals to assist you if necessary, but make the time to do it. Answer the financial questions. What are the tax implications of inheriting different assets. What are your expectations? What are your heir’s needs?
What do you want to do with the remainder? You can creatively leverage what you leave by using Charitable Remainder Trusts and a family of other tools that minimize what goes to the government and maximizes what goes to those you care about. Do you want to do your givin while your livin, so you’re knowin where it’s goin?
Our family gathered Sunday morning for the traditional military recognition and balloon release of the departed. My cousin’s son in the pastorate gave a talk on forgiveness and moving forward with what it means to be family. I am blessed with a rich heritage from my immigrant grandparents. A deep commitment to family and faith as well a work ethic based on integrity and fortitude are foundational. I may have redneck blood running through my veins, but I am committed to handling my family financial affairs without angst or bloodshed. I will bring that to the table for you too.
Danielle Howard is a Certified Financial Planner practitioner. Her office, Wealth By Design LLC, is in Basalt. Visit her at http://www.wealthbydesign4u.com. Advisory Services offered through Cambridge Investment Research Advisors Inc., a Registered Investment Advisor. Securities offered through Cambridge Investment Research Inc., a broker/dealer, member FINRA/SIPC. Cambridge and WBD are not affiliated.
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