A Peace of Mind Coach – Advanced Planning

Posted on October 15, 2012 by thecomplexestate

You can call it coach, professional or whatever you think will appeal to your HNW client or any client.  The truth is that in this day and age it is hard for clients to make difficult decisions without having a peace of mind.  If your client needs a peace of mind, hire someone who will provide it.

I recently posed a question to our audience about what they were doing in this last quarter to educate their client base on the potential tax changes expiring at year-end. I received various replies from different professionals and in almost all of the answers it was noted that they had sent letters outlining broad and generic consequences of ignoring the potential changes.

It would seem to me that unless we know our clients full picture a letter would simply fall into the waste can. Suggesting a client give away half or even a portion of their wealth because of the changes in the tax law is unrealistic. The peace of mind they have currently knowing that they have wealth that they control and want to hold on to it would stand to reason that they could not simply give it away.

Now to the contrary, if peace of mind was gained through educating clients on the benefits and potential risks to their “own” situation then perhaps planning for the transfer of some of their wealth today would make sense.

As Scott Farnsworth of CEO Sunbridge Legacy Advisors recently said to a group of attorneys, “ If you are asking about whether or not the estate tax is going to expire then you are asking the wrong question. We all have a larger wealth that goes beyond money and property. It includes the wisdom we acquired, the insights that have allowed us to make better decisions, as we get older, and our heritage. When you add that in with money and property, then you pass along real wealth.”  As you see Scott’s approach goes beyond the tax planning.

You want may consider removing the exemption conversation from your call to action. Instead take this time to meet with your clients and their advisors, together at the same table, and review their entire picture and include those things that are not on the balance sheet like wisdom and values.  Make sure that you have it drawn out and that they understand it. Once you have uncovered all their current risks and opportunities, they will have a working document to act on. They can then use your wisdom and their own to move forward.

Peace of mind is more than a $5M or $10M exemption. Peace of mind is priceless.

Kim Hamilton

InKnowVision LLC

Filed under: Advanced Estate Planning, Legacy Planning | Tagged: , , , , | Leave a Comment »

How Much Is Enough?- Advanced Estate Planning

Posted on September 24, 2012 by thecomplexestate

How Much Is Enough?  This vexing “elephant-in-the-room” question faces most families of wealth. “How much ought we to leave the children when we die?” Here is what Bill Gates and Warren Buffet said about leaving money to their heirs.

“One thing is for sure,” said Bill Gates in Forbes Magazine, “I won’t leave a lot of money
to my heirs because I don’t think it would be good for them.” He stated that he would leave each of his children $10 million.

“The perfect amount to leave children,” said Warren Buffet, “is enough so they would feel they could do anything, but not so much that they could do nothing.”

The “How Much?” question is enormously complex and, once opened, reveals other questions inside. Looking closely we see the question voices the parental worry that adult children will not know how to manage their inherited wealth.    But how did Bill Gates and Warren Buffet learn to manage their own wealth in ways that did not distort their character?

The idea that parents must limit their children’s wealth in order to preserve their children’s sanity and industry sounds appealing but, to me, it suggests either that parental values had not been inculcated into the family culture or that the parents don’t believe in their children’s ability to take to heart what they had been taught about life, wealth, and balance.

One anti-dote to the worry about inheritance distorting children later in life is to help children grow to become self-confident emotionally healthy adults, wealth aside.  This growth is not a “pie-in-the-sky” dream.  It is possible.  However it requires family interactions that are attuned to children’s emotional needs, from the crib onward. It’s a worthwhile investment because attitudes of confidence, industry, kindness, and generosity developed during childhood will protect inheritors from getting lost later in their lives.  These qualities and attitudes must be absorbed early in life.  They cannot be inculcated from the grave.

Usually family wealth is a veiled secret, vaguely acknowledged, but rarely discussed openly. In relation to families, I have a bias toward transparency, openness, & continuing familial communication especially because wealth does not remain a secret and end of life is way late in the game to begin such a truly intimate conversation.

I believe that wealth needs to be discussed in matter-of-fact ways in the family and that children should be brought in to the fact of family wealth at the earliest possible time, which, of course, will vary with the child and with the family.  For example, young children could be present at some meetings of family foundations.  When a bit older they even could be given some limited funds, under supervision, to distribute in considered ways.  The tradition of judicious financial management also should begin early.   When children are kept ignorant of the big secret that swirls around them they will be overwhelmed when they learn the truth.  As with most things, acknowledgement rather than avoidance of life’s obvious but sometimes uncomfortable realities is a preventative vaccination.

Of course there are families of wealth that do not function well.  This is not necessarily a function of wealth but of parental misattunement to the children’s needs.  All children rich, poor, and in between need the same thing – attuned parents.  Any time a special circumstance occurs in a child’s life, the child navigates that circumstance best when the circumstance is addressed and managed openly.  This applies to financial specialness as well as to physical specialness, handicaps, and even remarkable personal gifts and talents.

Legal structures and limited inheritance should be matters of last resort.  They are needed when children grow to be emotionally deformed adults.  In these situations too, however, it is essential that the children know of the structures and limitations created by their parents and the reasons for they were created, long before their parents die.  Nothing should come as a surprise at the end.   Sometimes it might be useful to engage these difficult conversations with a trained third-party since parents who could not engage an essential life long conversation with their children certainly will not have the ability to do that when they are looking at their disappointments as they end their lives.

 

Courtesy of Allen Siegel, MD  principal founder of the Nautilos Group in Chicago, IL

Website:  www.nautilosgroup.com   email:  asiegel@nautilos.com

 

Want to learn more about how InKnowVision can help your practice?  Call us today. 630-470-4683.

 

Filed under: Advanced Estate Planning, Estate Planinng, Legacy Planning | Tagged: , , , , , | Leave a Comment »

Clarity brings the best result | Selling a Business

Posted on August 29, 2012 by thecomplexestate

by guest blogger -Paul Cronin – partner, STPI

A few months ago, I wrote about a business broker who called me in a panic on a Friday evening, saying his selling client just called off the sale, for no good reason.  The initial thought was that the owner was not emotionally prepared to leave, so he froze things.  (to read Part One of this blog, click here)

The broker asked the owner to take a questionnaire (The OCR) prepared by STPI and speak by phone with Jack Beauregard (author, founder and CEO of STPI).  The owner did so and spoke with Jack.  There followed radio silence for a few weeks.

I thought that the deal may be dead, but I was puzzled, so I asked the broker if anything had happened, and if he could give us some feedback on his use of STPI’s The Owner’s Clarification System©.  I was expecting a simple note, explaining that the owner needed time to do some personal transition planning, and maybe a nice blurb for our site.

We got much better than that.  Here is a quote from the broker:

“I brought an “above asking price” deal to husband and wife team.  In spite of this, they were doing everything possible to kill the deal.  Feeling like there was something deeper, I reached out to Paul at Successful Transition and we ran the husband went thru the OCR.  Interestingly, by going thru the process the husband uncovered that his wife that was not emotionally ready for him to retire.  She was worried about being left all alone as he went golfing.  The program opened the husband’s eyes to what was emotionally blocking his wife.  Armed with the power of this knowledge they mutually came up with a plan for their future lives.  FYI – I just left the sellers office a few hours ago with a signed P&S and hugs from the wife.   The OCR will become a key step to my process from now on” - Douglas Pendleton/ George & Company whose client recently took the OCR.

It gets better.  I met with the owner of the business brokerage, who was not sure that STPI’s system might work there.  Once he heard about the story, he decided to re-think the whole matter, recognizing that without the questionnaire, he would never have uncovered the real objection:  the spouse’s concern.

Our program is one example of how getting the selling business owner to gain clarity in his objectives as well as possible objections from family members, can be make-or-break in selling a business.

To learn more about the Owner’s Clarification System©, you can request download a free brochure and request a demo at this link.

About our Guest Blogger:

Paul Cronin is partner and Director of Business Development at STPI, the Successful Transition Planning Institute of Cambridge, MA.  STPI provides tools and training to advisors so they may help successful business owners, executives and professionals learn how to “Think”, “Live” and “Decide” what to do with their companies and careers, in order to plan for a dynamic, new life.  Paul can be reached at 978-749-9546,

Filed under: Business Succession Planning | Tagged: , , , , | Leave a Comment »

The “Perfect” Family Meeting – Is There One?

Posted on August 20, 2012 by thecomplexestate

I was intrigued by Richard Orlando’s recent article in Private Wealth entitled “The “Perfect” Family Meeting” in that he provided some good steps to preparing for such an event. However, I know that not every professional advisor or set of advisors can conduct such a meeting with just a list of “must do’s”.  Even with years of experience in serving the high net worth in advanced planning, it is that one skillful individual that has been trained and is experienced in facilitation and communication that is needed to engineer the process.

“Research shows that the main reasons families are not able to successfully transfer wealth across generations are a breakdown in trust, communication, planning and governance, and the failure to prepare the next generation, “ the article states. We agree.  Having been party to these important meetings, there are many things lacking in the succession planning of a family’s wealth and the most obvious are the heirs.

We’ve seen many advisors use Kolbe Indexes or Family DNA Discovery for each family member as part of the discovery phase or in preparation for the family meeting. These tools are a great way to uncover opportunity and understand communication styles amongst the family before you begin your communication with them.

Remember, a family meeting does not need to be scheduled for just the family’s succession plan. It can be for any important topic or communication that the family needs to know about or wants to share. For example, the risk to the family’s reputation or brand, which can have a direct impact on the family’s financial and emotional health if it were to be threatened or the inherent risk of unstable economic times.

The success of a family meeting is not to be determined by the advisors but by the family itself, both as a unit and as individuals.

Kim Hamilton

InKnowVision LLC

Join us for the InKnowVision Institute

Filed under: Advanced Estate Planning, Family Meetings, High Net Worth, Legacy Planning | Tagged: , , , , , , | Leave a Comment »

Difficult Conversations

Posted on June 19, 2012 by thecomplexestate

It is difficult for clients to talk to their children about the family’s wealth.  However changes in generational behavior and each generation’s own needs are bringing that conversation to the table as the new US Trust 2012 survey reveals. 

We have all heard stories about having to take a parent out of their homes kicking and screaming in order better manage their health and safety. Then there are stories about disinherited children, picking so-called favorites and leaving more money to charity than to family members.  The tides are shifting to more purposeful planning and the economic climate has a lot to do with it.

So much has impacted one’s net worth today. Just read the newspapers and you’ll see that people have lost over 40% of their net worth. The younger generation is not holding back in seeking advice on how to best plan for their future. They have a feeling that they will be left bearing the brunt of ill prepared parents and needy children.

Alternatively, boomers are not creating comprehensive plans. While they describe themselves as very private people, they believe that their wills are adequate for their planning needs. Has any one informed them that a will is a public document?

Advisors need to think about how they are communicating with their clients and prospects. There’s a lot more on the minds of the high net worth these days. Getting them to share some of what is keeping them up at night can open the door to endless possibilities.

We agree with a lot of the survey’s findings and would like to hear what you are experiencing when working with a high net worth client.

Kim Hamilton

InKnowVision, LLC

Filed under: advanced tax planning, High Net Worth | Tagged: , , , , , | Leave a Comment »

Philanthropy – Education Tool For The Next Generation

Posted on May 29, 2012 by thecomplexestate

Do you know that….

HNW Families struggle with issues of wealth transfer
Lack of knowledge leads to discontent among next-gen 
Many next-gen are creating their own wealth or involved in entrepreneurial ventures
Advisors increasingly serve as “quarterbacks”

In a study released May 7 by Morgan Stanley Private Wealth Management and Campden Wealth found despite their high level of wealth, most respondents said they took an informal approach to educating their children about money, focusing on budgeting, asset allocation and getting to know advisors. The report noted wealthy families frequently use a primary advisor as a “quarterback” to execute plans and coordinate efforts between other advisors.

Tom Brady

They noted that philanthropy is a popular way for families to teach their children about wealth. The report found 73% of next-generation parents and 56% of older-generation parents use philanthropy to teach about wealth.

We concur with these findings.

When it comes to managing their wealth, 19% of parents from the next-generation group and 18% from the older generation agree that wealth management should be left to the experts, while their children focus on their careers. Over half of the older-generation parents said their children should find a balance between managing wealth and focusing on their careers. None of the respondents said they wanted their children to focus solely on managing the family wealth.

Nearly half of the next generation will look to advisors for education. What an opportunity!

For those of you who were wondering what other value add services you could add to your clients’ relationships it might be filling the need of basic financial and estate planning educational workshops for adult children and in some instances grandchildren which could include how to buy their first home, the ins and outs of credit cards, how to plan for an inheritance, what is charitable planning, for example. This program series could taught by rotating professional advisors throughout the series so younger generations can get an introduction to several of the family’s advisors over time in turn building trust and relationships.

Educate, don’t sell to a HNW client, by filling the need, doing it with precision and being purposefully collaborative when you execute.  You will find the entire process extremely satisfying.

Kim Hamilton

InKnowVision,LLC – Advanced Planning for the High Net Worth

Filed under: Advanced Estate Planning, Legacy Planning, philanthropy | Tagged: , , , , , | Leave a Comment »

The Family Bank

Posted on May 14, 2012 by thecomplexestate

I recently spent some time talking with my colleague Joe Cohen, of HoyleCohen about the lack of basic financial literacy amongst teenagers, college students and beneficiaries under the ages of 30.  We concluded that this is an issue on the minds of many of our high net worth clients especially when it comes to advanced estate planning.  How could they “give away” their assets today hoping that they would see the fruits of their gifting paying off tomorrow?

Joe uses a technique with his grandchildren around philanthropic giving. Around certain life events and holidays he provides a gift to a donor advised fund and has the grandchildren put it to work. Some struggle and others know exactly what they want to do. It is all in a life’s lesson.

This conversation brought me back to the “Family Bank”, a topic that Jay Hughes wrote about in his book Family Wealth, Keeping it in the Family and the great work that the Heritage Institute is doing with advisors and families in this area.

Our children lack the financial literacy to apply for a home loan, auto loan, credit card, or business loan.  Most schools do not teach these basic financial elements.  Jay Hughes writes,  “It is the creation of the family bank that fosters such and education.”

He goes on to say, “Family banks are useful for providing

  • Financial education
  • Sense of community
  • Character building
  • Financial mistake – making in a safe environment

all while increasing the family’s financial, intellectual and human balance sheets through cumulative successes of the individual borrower.”

The Heritage Institute uses a process to encourage the “testing and monitoring” of financial literacy for the next generation of beneficiaries before they are given any gifts or loans. Our colleague, Johnne Syverson of Syverson Strege & Company, uses this process along with the InKnowVision Process in his high net worth client engagements and has had tremendous success engaging the family and helping them to make wise choices in planning decisions.

Thankfully, Jay Hughes provides us with some guidance for setting up a family bank and the Heritage process is excellent in helping to implement it.

  • The Family Bank should not be a formal institution as in the corporate sense. Its activities should remain private and create a system of governance so that it meets the unique circumstances of the family that creates it.
  • Rules for meetings. It must have officers, directors and if need be advisory boards. Procedures for processing loans.
  • Create a Mission Statement explaining its philosophy and reason for being.
  • Trusts are potential lenders and borrowers. Trustees should understand and agree to participate in the family bank.
  • Concurrence of all family members with the terms of the mission statement.
  • All family members who participate are given copies of all loan applications including the intellectual capital portions and omitting the personal data.

The next time you sit down with your high net worth client and suggest that they take advantage of advanced estate planning or the current tax law before it’s to late, think about the value of a family bank.  Your leadership could help to strengthen a family’s balance sheet and values and provide badly needed financial education for its participants and benefactors all by encouraging the use of a family bank and a little bit of philanthropy.

 

 

 

 

 

 

 

Kim Hamilton

Filed under: Advanced Estate Planning | Tagged: , , , , , | Leave a Comment »

5 Ways to Assure Your Clients Plans Are Reviewed Annually

Posted on February 7, 2012 by thecomplexestate
Advanced estate planning can be complex. It can also fall apart when you least expect it. Here are a few tips to help keep clients in tune with their planning.
  1. Tell them.  Clients will pretty much do what you ask so long as they trust you.  If you tell them that their plan will be reviewed at least annually then they will expect it.
  2. It’s Part of My Service.  Make it part of your process and assure clients that this benefit will far out weigh the risk.
  3. Share a Story. Most planning mistakes are made because plans are not updated, implemented or executed.  Sharing a story about anyone of these unfortunate events could help clients see why they should get a periodic review.
  4. Benefit vs. Cost. The value of keeping on top of one’s plan is priceless.  Would any of your clients want an outcome that was different from their stated goals? I know no one who wants to pay more for planning than is necessary. I guess we could say the same about taxes!
  5. Family Matters. Reminding clients why they choose to plan in the first place assures that their cash flow, lifestyle needs and family protection goals will be met and are often subject to change.

During this tax season, the opportunities to talk with clients and their other trusted advisors are numerous. Be sure that CPAs have copies of your clients most updated plan or at least a summary. Include the financial advisor as well. Plan to meet with all team members face to face to be sure that everyone is on the same page and clients are not at risk and they are not missing opportunities.

 

Kim Hamilton

Filed under: Advanced Estate Planning, advanced tax planning, Business Succession Planning, Business Transition Planning, Estate Planinng, Legacy Planning | Tagged: , , , | Leave a Comment »

All it takes is a deadline to motivate planning

Posted on December 5, 2011 by thecomplexestate

Whether a loved one is at death’s door or the tax law is about to change, there is an inevitable deadline looming for both.

Last week I received five phone calls, Facebook notifications and emails from friends and extended family that a parent  had passed away during the Thanksgiving holiday. It was a shock to have them happen all at once.  But then again who plans on dying.

In between attending wakes, funerals and sending sympathy cards, Scott and I had a chance to see the movie The Descendants, which by the way I urge every planner to see along with their clients.  It is reflective of the state in which we plan as well as for those who planned for us.  Both death and estate planning have something in common, finality.

The tax law will change at the end of 2012 if not before. And it will have finality.  This is why the current call to action for so many advisors and their clients is to move the planning process forward.  The deadline is fast approaching.

When my dear friend told me about her father’s recent passing she said, “ He stopped at the lawyer’s office to sign his will on the way to the hospital and he left me with the mess.  Thanks Dad.” I could say nothing but only hope that we can encourage clients to be more purposeful than this in their planning, deadline or no deadline.

Kim Hamilton

Filed under: Advanced Estate Planning, advanced tax planning, Business Succession Planning, charitable planning, Estate Planinng, High Net Worth, high net worth tax planning, Legacy Planning, philanthropy | Tagged: , , , , , , | Leave a Comment »

Entitlement- Defined by a Parent

Posted on November 30, 2011 by thecomplexestate

Here is the definition by Merriam-Webster’s;

1. A : the state or condition of being entitled : right

B : a right to benefits specified especially by law or contract

2. : a government program providing benefits to members of a specified group; also : funds supporting or distributed by such a program

3: belief that one is deserving of or entitled to certain privileges

Here is the definition provided by a client shared by one of our advisors,

“Whatever I made during my lifetime, my children told me that they are entitled to it when I die.”

And that’s the truth.

Sad to say but we have created a sense of entitlement for our heirs and we have not heard the last of it.  Advanced estate planning and business succession planning bring out the best and the worst in families.  Divisions amongst family members can come at a time when planning needs are at their greatest. Overcoming this obstacle is a grand feat for anyone but there is hope.

Helping clients recognize early on that they can do something productive to ward off the entitlement issue can enhance and strengthen the client advisor relationship.  It can also give clients a peace of mind knowing that there is a process that can help them navigate through difficult conversations.

A word of warning; the entitlement generation is not limited to the “Y”s.  The economy has expanded it to the early age boomers and “X”ers as well.

Filed under: Advanced Estate Planning, advanced tax planning, Business Succession Planning, Business Transition Planning, Estate Planinng, High Net Worth | Tagged: , , , , , , | Leave a Comment »

Next Page »
Follow

Get every new post delivered to your Inbox.

Join 239 other followers

%d bloggers like this: