we see a financial services monologue at work dealing with a peripheral issue ( tax efficiency ) as if it were the core issue . This obsession with the technical tends to put the heart of the matter ( a personal legacy ) in the supporting role and puts Uncle Sam and his tax codes in the lead , thereby missing a tremendous opportunity for both service and cementing a broad family relationship . I believe that the financial services industry can do much better with this particular issue by stepping up the context and quality of the dialogue around estate planning .
In “ Values-Based Planning : Seeing the Whole Client ,” Kris Arnzen suggested advisors ask their clients the following questions :
• How do you want to be remembered ?
• How was your wealth created ?
• How will you pass on your wisdom as well as your wealth ?
• Do you want to leave a societal legacy ?
• What is the most important thing you want to accomplish in your life ?
Clearly there is a need for a more balanced approach to this critical aspect of financial services . As I discussed in my book , Storyselling Revisited , the lion ’ s share of communication techniques employed in our industry is weighted to the number-crunching , logic-grinding left brain — largely ignoring a tropical storm of dissatisfied emotion and contextual curiosity . Jeffrey Condon ’ s Beyond the Grave : The Right Way and the Wrong Way of Leaving Money to Your Children ( and Others ) is a book that takes a more balanced left-brain / right-brain approach to this topic .
Most books on estate planning explain how to maximize inheritance , minimize taxes , avoid probate , set up trusts , and other technical and tactical details . Condon does this as well , but he also explores the psychological and emotional aspects of leaving and inheriting money — including “ protecting ” the inheritance from one ’ s child or spouse , preventing squabbles over inherited property , selecting trustees or guardians , avoiding the disputes between second spouses and children of first marriages , leaving money for pets , and more . The book provides a thorough look at inheritance planning with an eye toward maintaining good , stable family relations well after the estate has been settled .
Well-th Versus Wealth
For the sake of establishing context and priorities in the estate planning process you might want to use a tool like the following list for facilitating the priority-setting aspects of the legacy dialogue . The first suggestion for initiating conversations about estate planning is to call it something else .
For many people , the term “ estate planning ” conjures up images of rich people in mansions because they don ’ t really have an “ estate .” I ’ d suggest using the term “ well-th transfer ” because it places the emphasis on being well when the process is finished , as opposed to the more common and narrow goal of being “ tax efficient .”
Financial wellness is one of the most important ways that advisors can add value to clients ’ financial lives . In many cases , however , it ’ s also difficult to define . When it comes to estate planning , emphasizing “ well ” instead of “ wealth ” helps to place the tax issue in its proper context and enables clients to see the big picture — much of which is emotional in nature .
The Well-th Transfer Priority List
Directions : Rank your priorities by placing the numbers of the two highest priorities at the top of the list . Place the numbers of the next four highest priorities , and then the numbers of the final four priorities .
1 . Heirs understanding the values and principles that produced your wealth .
2 . Keeping the peace among family members after you are gone . 3 . Minimizing taxation to your assets . 4 . Dividing assets fairly and equitably . 5 . Reducing the negative impact of sudden wealth on your children and recipients .
6 . Ensuring your legacy lives for generations ( through a foundation or scholarships , etc .)
This obsession with the technical tends to put the heart of the matter ( a personal legacy ) in the supporting role and puts Uncle Sam and his tax codes in the lead .
7 . Transferring your history , experiences and life lessons to your heirs .
8 . Investing in the perpetuation and well-being of your choice of charities .
9 . Creating a scholarship for a specific type of person or predicament .
10 . Not leaving your children with unnecessary burdens after your passing .
Here are some great questions for priming the pump of your client ’ s personal memory bank ( you can either ask your clients these questions , or provide them with these questions and ask them to provide written responses ):
SEPTEMBER 2023 | FINANCIAL ADVISOR MAGAZINE | 19