I then listed the following books that I had just ordered on the subject -- most, if not all of which, I had seen recommended here on bogleheads in one place or another (in fact, I think Larry Swedroe was the ultimate source of several of them)I, too, am just beginning to grapple with this -- but at an even earlier point in the process: involving heirs in the estate planning process itself. Rather than present them with a fait accompli that they must then be educated about, the idea is to educate them as part of soliciting their input in a plan they can understand and buy into (so to speak).
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I noted that:Beyond the Grave: The Right Way and the Wrong Way of Leaving Money To Your Children (and Others) by Condon and Condon
Wealth: Grow It, Protect It, Spend It, and Share It by Lucas
For Love & Money: A Comprehensive Guide to the Successful Generational Transfer of Wealth by Williams
Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values by Williams and Preisser
Philanthropy, Heirs & Values: How Successful Families Are Using Philanthropy To Prepare Their Heirs For Post-transition Responsibilities by Williams and Preisser
Family: The Compact Among Generations by Hughes
Family Wealth--Keeping It in the Family: How Family Members and Their Advisers Preserve Human, Intellectual, and Financial Assets for Generations by Hughes
with which I have no affiliation of any kind.Several of these books are by The Institute for Preparing Heirs (Motto: "Families traditionally prepare assets for heirs ... we prepare heirs for assets.")
I also linked to several resources that I had found online and had found helpful:
(I particularly recommend the podcast as a place to begin.)This New York Times article: "What to Tell Children About Their Inheritance and When"
This podcast with Preisser: "Estate Planning for the Post Transition Period - Roey Diefendorf & Vic Preisser"
This Overview of a Family Retreat by Richard Riva
This Family Meeting Chart from MMC Institute
Near the end I mentioned my interest in a wiki entry on this subject and solicited resources from others.
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I have just finished Hughes' Family Wealth and am now beginning For Love and Money by Williams and would like to use this new thread to distill and share my thoughts and solicit comments and input. If it turns out to be any good, perhaps this can become the basis for a wiki entry or something.
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Propositions
P1) Wealth is a Means Not an End
This sounds obvious in theory perhaps but it seems also that this is the easiest and first thing to be forgotten in practice. Traditional "estate planning" is often an exercise (often a complex and costly exercise) in "wealth preservation" per se that often amounts to little more than an often complex and costly exercise in tax avoidance. Little, if any, attention is paid to the ends to which that wealth will be put in the future -- or, indeed, can be put in the present to advance the long-term well-being of the individuals in the family and the family as a whole.
P2) Wealth is Not Inherently Good
Although perhaps not quite as obvious as #1 , nonetheless almost everyone at Bogleheads (and perhaps also in the world at large) has heard anecdotal evidence and/or has lived through a personal experience in which wealth had a positively harmful effect on the people it was intended to benefit. This often happens to lottery winners, for instance, and also within dysfunctional families. As my eponym Socrates pointed out so many years ago, most supposed "goods" are not inherently good but become "good" when used wisely (as opposed to foolishly).
P3) A Family's "Business" is the Maximization of the Family Members' Individual and Collective Well-Being
Or in peculiarly American terms: "Maximally Facilitating Its Members' 'Pursuit of Happiness'" [credit: Hughes, Family Wealth]. Or in Maslovian terms: "Maximizing the Family Members' Individual and Collective Self-Actualization". Or in ancient Greek terms: "Maximizing the Family Members' Individual and Collective 'Excellence' / 'Goodness' / 'Virtue'". However one puts it, though, "dying with the most toys" (or even: "living with the most toys") is most certainly not the definition of "winning" or "success". "Quality of Life" is.
P4) Most (If Not All) Families are Dysfunctional to One Degree or Another
In other words, most (if not all) family "businesses" of maximizing family members' individual and collective well-being fail to one degree or another. Indeed, family dysfunction often (if not always) results in family members harming one another and/or themselves -- taking the family farther from, rather than closer to, its goal. Wealthy families (using whatever definition you like) are not only not immune from family dysfunction, they are rather probably more prone to family dysfunction due to a variety of factors. In any case, the presence of wealth will generally serve to amplify whatever dysfunction exists -- and also to motivate the disguising of family dysfunction in order to promote the public (and private) image of a "successful family".
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Conclusions
C1) From "Estate Planning" to "Succession Planning"
If "Estate Planning" is the term to designate "Strategic Wealth Planning", then "Estate Planning" is clearly a necessary -- but also clearly an insufficient -- component of a successful family that maximizes its members' individual and collective well-being. Another necessary component is what might be called "Strategic Wisdom Planning", the strategic cultivation of the family members' individual and collective wisdom so that wise use can and will be made of family's wealth (and other potential-goods) in order that the family's wealth may benefit family members and not harm them. Borrowing from the terminology of the business world, this strategic cultivation of the capacities of the next generation to make beneficial use of the wealth they will inherit can be (and has been) termed "Succession Planning".
C2) From "Succession Planning" to "Family Strategic Planning"
The cultivation of family members' individual and collective capacity to make beneficial use of the wealth they will inherit -- i.e. their wisdom -- is a long-term process (which is why it requires strategic planning). Indeed, in some sense it is a long-long process of conscious parenting in which both "the cultivated" (child) and "the cultivator" (parent) will grow, will grow closer, and will grow more symmetrical. Indeed, in some sense this life-long process will become an end in itself, in which both parties are what Aristotle called "friends". Thus, once begun,"Strategic Wisdom Planning" inevitably shifts from a "succession focus" to a "lifetime / lifestyle focus" to a "transgenerational focus". In other words, "Succession Planning" in particular inevitably morphs into a key component of "Family Strategic Planning" in general -- the conscious planning of the family "business" of maximizing its members' individual and collective well-being.
C3) From "Family Strategic Planning" to "Family Therapy"
By design "Family Strategic Planning" will identify the obstacles impeding the success of the family "business" of maximizing its members' individual and collective well-being and develop plans for the minimization (if not outright elimination) of those obstacles. What might be called the "external obstacles" confronting the family "business" of maximizing its members' individual and collective well-being will be addressed through the familiar avenues of "Strategic Wealth Planning" ("Estate Planning", "Financial Planning", "Retirement Planning", etc.). Addressing what be called the "internal obstacles" confronting the family "business" of maximizing its members' individual and collective well-being will be addressed through the somewhat less-familiar avenues of "Strategic Wisdom Planning" ("Succession Planning" and "Conscious Parenting"). Given the prevalence and significance of family dysfunction, however, addressing the "internal obstacles" will often require "Family Therapy" (even if the family dysfunction appears localized in one or a few family members). Although many (if not most) families will resist "Family Therapy", they should in fact welcome it -- both for the short-term healing it can bring to the family and for the long-term benefits it can bring to the family (most of which will be unattainable if the short-term healing is not attained).
In short:
C4) "Wealth Doesn't Help People; People Help People"
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Personally, I am finding this emerging framework for thinking about "Estate Planning" as a component of both a larger planning process and also ultimately a total way of life to be a potentially profound paradigm shift -- one that I probably would not have been able to appreciate at any earlier point in my life (I'm in my early 50s). On the other hand, I am well-known for favoring the abstract (and some think: the irrelevant) and thus perhaps I am making a big deal out of nothing. In any case, I welcome input from others on the matter.
I expect this to be a work in progress for me as I continue reading and thinking -- and taking into account the additional viewpoints of the Bogleheads. Thanks to all for your ongoing facilitation of my own growth.