Heritage Planning, Pt. 2: The Future of Your Clients’ Families

In my first column in this series, I discussed the three elements of successful multi-generational planning: Financial Planning, which prepares and protects your assets during your lifetime; Estate Planning, which prepares your assets for your family; and Heritage Planning, which prepares your family to receive their inheritances. 

The first two elements have historically received the lion’s share of attention from advisors. Many of us in the industry understood on an almost subconscious level that Financial Planning and Estate Planning were critical, but also not enough on their own. That’s certainly what my experience was like.

Money is a very useful tool; we work hard for it, and it enables us to have and do much that is necessary and good. When I founded my wealth management business almost 30 years ago, my practice was focused "on the money." But as time progressed, I encountered, again and again, examples of money affecting those I loved, and those I worked with, in some very unexpected and unpleasant ways. 

On a personal level, over the years the deaths of a close friend and business owner followed by my brother, father and my father-in-law really drove home the point that sometimes even airtight planning—planning that successfully passes on carefully-accrued capital to heirs in accordance with a deceased person’s wishes—isn’t enough to ensure that there will be harmony in a family. Those age-old maxims about how money can’t buy happiness—and money can’t buy love—are maxims for a reason.

After those experiences, I made it my mission to address this gap in planning.  I developed my own process for helping people to (1) identify what they truly value most and (2) foster an environment in their family to ensure that those things would have a high likelihood of coming into fruition. Over time, I worked at continually honing that process as I worked with more families. As it turned out, I wasn’t the only person in America working on this problem. 

In 2005, The Heritage Institute (THI), based in Portland, Ore,, approached me.  THI had developed a comprehensive solution that went beyond what I had been working on and specifically targeted outcomes of family disharmony and affluenza, or a dysfunctional relationship with money or the pursuit of money. THI had the experience of working through these issues with thousands of families from across the country. 

The basic principle at work in defining the common solution harkens back to something else I mentioned in my first column, which can be found in the differences between financial and emotional inheritances: your legacy is defined by what you value, not by the valuables you have amassed. It is the values, work ethic, traditions, faith, hopes and dreams that contributed to the creation of your financial well being that matter above and beyond the assets you have accumulated. Further, if you do not intentionally preserve the latter, those who follow you will most likely lose the former. Thus, heritage planning forms a platform that provides reliability, strength, and stability that benefits a family in the present, and in the generations to come. 

The name of the trademarked solution we employ with families is The Heritage Process, but the elements of heritage planning, no matter the name they fall under, should always include the following:

  • Identify family stories, values, life lessons and experiences, and use them as the cornerstone for all their planning.
  • Communicate effectively on an adult-to-adult level.
  • Prepare and equip the next generations.
  • Work together, and mentor the children in the skills they’ll need to succeed as individuals and as a united family. 

As you can see, somewhat paradoxically, the principles of heritage planning have nothing to do with money. And they apply to people at all income levels. This is because planning for the future of your money is not the same as planning for the future of your family. However, by intentionally planning for the future of your family, you are ensuring that the plans you have enacted for the future of your money will achieve maximum efficacy.

Ask yourself this question: how does my financial planning and estate planning create a meaningful and significant legacy of hope, family unity, communication, community contribution and individual accomplishment that will continually benefit my family every day, for generations to come?  What about the families you work with? 

I’ll leave you with those questions to ponder. In my next column I’ll begin breaking down the specific components of successful heritage planning, as it is already working in the lives of thousands of families in this country.

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