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Values-Based Wealth Planning

Values-Based Wealth Planning
estate planning articles
No one over age 18 today will live to see the end of the 21st Century. The inheritance you leave your children is reflected in the values they have learned from you about the role of money and property. Here are ways to plan for the future that give your heirs a perspective on their Inheritance that extends far beyond the dollar value of what you pass on to them.

Between the years 1980 and 2030 it is estimated that the largest transfer of wealth from one generation to the next in the world’s history will take place when approximately $41 Trillion dollars is transferred at death from the ‘greatest generation’ (those born between 1910 and 1935) and the ‘Baby Boom’ generation (born between 1945 and 1965) to their children and grandchildren. hat’s a lot of commas and zeros. This article examines the implications for your planning that affects the generation that are today’s teens and young to mid-life adults.


Studies of people who have inherited wealth they did not earn have shown that it can either be the boom or bane of their existence, depending on the ‘Core Values’ which they inherited from their parents. If the values and example passed down are positive character values, it is likely to be reflected in the lives of the children as adults and parents themselves. If not, you can understand why in some families many grandchildren don’t remember much about their grandparents or what they stood for.

One study shows the last thing parents want their children to spend an inheritance on is a new car, yet in Orange County, California heirs wait an average of only 21 days after receiving an inheritance before buying a new vehicle. Moreover, where inherited wealth buys depreciating assets rather than those which appreciate in value, inherited wealth is depleted by the end of the second generation in just over 80% of the cases studied and is gone entirely by the third generation.

This is a condition known as ‘Affluenza’ (the wasting of wealth). But adults who as children earned their allowance with household chores or had part-time jobs growing up to pay for their own bikes, clothes, cars or college tended to invest their inheritance into retirement savings, mutual funds, business start-ups, home equity and income-producing real estate. What does this tell us?


The ‘Greatest Generation’ literally ‘saved the world’ by their sacrifices in World War II and Korea. After the war, they built careers and new businesses, having children and building homes in unprecedented numbers. Their humility and appreciation for the non-economic values in life is reflected in the classic ‘Americana’ paintings of Norman Rockwell. Their children are today’s ‘baby boomers’ who grew up in the 40’s, 50’s and 60’s and fought totalitarianism in the Cold War, Vietnam and Desert Storm but had years to experiment and ‘find themselves’ since they didn’t face the financial struggles their parents did.


Every parent wants their children to have it ‘better’ than they did, and this is reflected in the examples they live and the values they teach – or fail to teach – their children and grandchildren. However, many planners buy into the myth that business estate, retirement or financial planning is only about transferring ‘the money’ rather than the quality of life and core values. Instead of starting with what they want their children and grandchildren to stand for and accomplish, many bypass these issues entirely and focus instead on fortune rather than family. As a result, estate planning, retirement and financial planning become focused on trust documents, notarized signatures, coverage amounts and funding rather than how these useful tools implement the vision and goals of the parents.


As a long-time practicing attorney in the fields of estate planning, risk mitigation, wealth management and asset protection, I’ve seen clients (and the professionals who should have served them better) in a rush to put their pens to paper rather than first discussing the client’s priorities and values. Here is a protocol for a more favorable outcome:

• Start with a thinking-and-valuing exercise that amounts to a quiet personal assessment of ‘what really matters’. Honestly consider the example and the values passed down to your children and what kind of steward you have been of what you have earned and invested so far. Write down the core values, dreams and objectives that you want to matter in the lives of your children – and yes, your grandchildren. The end result should be your own personal ‘Values and Vision Statement’. It should reflect what you and your children as adults will be known to stand for.

• Next, is an exercise I like to call ‘I Suddenly Died Today and Didn’t Get to Say Goodbye’. Though it may be uncomfortable, take about 30 minutes to jot down what would actually take place over the next two years following your sudden death today versus what you hope or guess or think might happen. This is often a real ‘eye-opener’ if you own a business, have investments, are paying for a home, have debts, children or plans for the future. Most believe we will die in our old age, at home in bed, without pain, still looking good, surrounded by our adoring family and with all our bills paid and our dreams attained.

These two steps can be done in either order. They are best done in private, but always in a relaxed setting, perhaps even in a ‘family retreat’ in a resort setting if you wish to include your children in writing a family Values and Vision Statement. With these steps complete, professional planners can do their best work.

As a planner, I always enjoy having a ‘context’ in which to help clients reduce their business and investment risks, strengthen their financial and asset protection and plan their estate for themselves, their children, their grandchildren and their favorite charities. For example, I enjoy it when family multi-generation trusts contain ‘incentives’ for the children or grandchildren to achieve educational goals, business ownership, contribute to science or the arts, participate in community improvement and church life. The incentives may be in the form of matching funds for investments or retirement savings the children or grandchildren so that they are encouraged to be productive.

Updating your estate and financial planning, reviewing your insurance and retirement planning, forming a family limited partnership for liability protection and to pursue investment and business goals, forming an estate planning trust, holding investments and business enterprises in limited liability companies and securing the financial outcomes you hope for are all important steps. But they should always be based on a solid foundation of ensuring your ‘core values’ are reflected in the planning and documents you sign.

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