Estate Planning – Quote Catch

“Consider, however, estate planning. If there is one area of your life where you really want to hit the bulls-eye, it’s here. Of course, we try to share our dreams, our hopes, and our most important values with those we love while we are alive, but we also have an instinctive desire to provide for our families after we’re gone. We want to leave a legacy that provides meaning, not just money. Plus, we want to know that our lives meant something, that in our passage through this world, we made a difference.” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 5-6
“Psychologists say it is not death we fear so much. It is insignificance. The idea that, at the end of the day, our lives didn’t amount to all that much. That we didn’t’ set ripples in motion in the lives of our families, friends, and neighbors that would carry our accomplishments and our values on for generations.” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 6
“We have worked with thousands of families over the past two decades. Through that experience, from our research of the financial and legal literature, and from interviews and interactions with professional colleagues in several disciplines, we have come to this conclusion: Ninety percent of all traditional inheritance plans will fail. In part, this conclusion is based on numerous studies that show in families where new wealth has been created by the first generation, six out of ten of those families’ fortunes will be gone by the end of the second generation. By the end of the third generation, nine out of the ten families will be broke.” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 7
“We believe that when parents who build wealth pass only their material assets to their children, and not the values by which they have lived, there is little chance the family, or its wealth, will survive for long.” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 7
“You can pass both your values and your valuables to your children.” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 9
“However, traditional estate plans are manufactured in isolation. Accounting, actuarial and legal formulas are applied with ‘one-size-fits-all’ certainty. The estate continues to be regarded in this process as a thing in itself, just as it was before the Statute of Wills transformed the world of inheritance when it first appeared in sixteenth-century England. In fact, your estate is not a ‘thing in itself. Instead, it is an intertwining set of relationships between you, your ancestors, your children, and generations of your children yet unborn. Those relationships cannot be quantified mathematically. They cannot be folded into a balance sheet. They defy scientific inquiry. And yet, it is precisely those relationships- and the conditions that will either undermine them or nurture them and make them strong enough to survive for generations- that will determine the success or failure of not just your estate plan, but, more importantly, of your family itself.” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 32
“Your last will and testament is the wrong place to do your parenting.” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 33
“According to Paul Schervish of Boston College, at least forty-one trillion dollars will pass from one generation to the next by the year 2044.” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 35
“Of course, lots of inheritance problems could be nipped in the bud if the inheritors simply understood that most estates consist of real estate and securities, not cash.” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 45
“For hundreds of years, estate planning has focused on these financial inheritances almost exclusively. But there is another kind of inheritance that we receive and give, an inheritance that is far more powerful, and ultimately more meaningful, than money. That is an emotional inheritance: one we receive over a lifetime from other family members, friends, teachers, religious leaders, coaches, and other significant people in our lives.” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 45
“Of course, since we know that most traditional estate plans begin to crumble almost as quickly as they shower assets on the heirs, one might be tempted to call money the time bomb inheritance.” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 45
“The discovery, articulation, and incorporation of these core values into the framework of your estate planning is what The Heritage Process is all about. The whole concept of wealth is redefined to include not only money and other financial assets, but also the values, virtues, and ethics that make life meaningful, fulfilling, and ultimately successful. In this values-based planning process, money is still important, but only in its function as a resource to help perpetuate the values that will keep the family strong and prosperous for generations.” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 46
“In 2005, the Allianz Life Insurance Company surveyed baby boomers and their parents on a wide range of family and finance-related issues. ‘Many people wrongly assume that the most important issue among families is money and wealth transfer- it’s not,’ said Ken Dychtwald, the survey designer. ‘Non-financial items that parents leave behind- like ethics, morals, faith, and religion- are ten times more important to both boomers and their parents than the financial aspects of inheritance. In fact, seventy-seven percent of those surveyed (age forty plus) said the most important inheritance they could receive or pass on would be values and lessons about life.” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 76-77
“Research and our combined experience show that most people share the same four primary goals: 1. They want to protect their family from ever being destitute. 2. They want to provide their family with opportunities that will help them mature into healthy, productive adults. 3. They do not want to promote a non-working lifestyle. 4. They want to minimize conflict within the family.” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 171-172
“Traditional planning asks ‘Who gets the money that’s left over after taxes, legal fees, and administrative costs are paid?’ The Heritage Process asks, ‘How can we develop a plan that will pass on the family’s true wealth, its traditions, values, morals, and virtues, using the material wealth of the family as a tool to secure those values for generations to come?’” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 172
“Traditional planning counts the assets and divides and distributes the ‘spoils’ according to the language of the Will. Heritage planning guides people to discover what they have, and about what they care about, to understand how their legacy will affect inheritors, to define the legacy they want to leave, and to determine how they can leave a meaningful legacy and implement their vision statement.” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 172
“People who create traditional estate plans focus on how much money each inheritor should receive. Those who craft their plans on a foundation of values reflect on what money has meant to them, and what meaning they want to have for their children.” Beating the Midas Curse, by Perry L. Cochell and Rodney C. Zeeb, Page 172
“Being on the “right side” of the table, for Scott, meant forgetting about what you wanted to sell. The question was what did the client want to achieve? What dangers did clients have that they wanted to eliminate? What opportunities did they want to capture? What strengths did they want to maximize? Above all, what was the big picture that clients had for themselves, for their families, and for their businesses? Scott’s approach looked at clients as whole human beings who had concerns and aspirations that spanned their own lifetimes and beyond.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent?By Scott Fithian and Todd Fithian. Page XIV-XV
“We have found that while advisers are focused on eliminating estate taxes and directing more and more money to the heirs, wealth holders are more concerned about what will happen to the heirs when the money’s in hand.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent?By Scott Fithian and Todd Fithian. Page 18
“However, the most trusted adviser of the future will define comprehensive management as something altogether different. Comprehensive will include accountability for overseeing every insurance professional of every kind; every money manager, whether or not you manage the assets; all of the CPAs and attorneys, any specialist in play at any given time; the wealth holder’s philanthropic adviser; and even his or her bankers. This management role will account for every facet of the wealth holder’s financial life, but won’t stop there. It will address the manner in which their life intersects with their wealth. How will adult children manage and preserve the family’s tangible and intangible assets? What mentorship is required? It will include documenting the wealth holder’s value systems and decision-making patterns and then sharing them with future generations.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian.Page 58.
“When confronted with the favorable financial situation we were in at retirement we made the decision to balance the use of our assets between three areas. First, after a career of hard work and curtailed enjoyments such as travel we wanted to assure ourselves of a good but not lavish lifestyle, secondly, we wanted to make sure our 5 children inherited something of significance that might provide a foundation for their own retirement and finally we felt that in view of our family blessings that an equal amount should be given to those less fortunate. Only by having and living a plan that provided for all three of these objectives could we be happy and proud during our golden years. Once this decision was made our only other decision was what causes we wanted to support.” Remarks to The 2008 Annual Membership Meeting Society of Financial Service Professionals, Bethesda Country Club. Bill Walace, CLU®, ChFC® JUNE 13, 2008
“For the Washington DC area, it is estimated that 1.604 million estates will occur during the 55year period from 2001 through 2055. These final estates will be valued at 1.260 trillion (2005dollars) at the time of death if wealth grows in the area at an average rate of 2%. If historical patterns hold, $47 billion will be distributed in estate fees, $321 billion to the government, $169 billion to charity, and $723 billion to heirs. The $169 billion of potential charitable bequests constitutes13% of the $1.260 trillion value of final estates. In a 4% growth scenario, $1.175 trillion or 25% of a total of $4.665 trillion at the time of death will go to charity. Finally, the study indicates that the 1.935 million households in the metropolitan area in 2001will contribute $207 billion before their deaths and $169 billion in charitable bequests during the55 yr period of simulation. WHAT AN OPPORTUNITY THIS REPRESENTS FOR EVERYONE IN THIS ROOM” .”Remarks to The 2008 Annual Membership Meeting Society of Financial Service Professionals, Bethesda Country Club. Bill Walace, CLU®, ChFC® JUNE 13, 2008
“The top three reasons why advisors believe their HNW clients engage in charitable giving are consistent with the top motivations reported by HNW individuals themselves, which are: being passionate about a cause, having a strong desire to give back, and having a positive impact on society and the world. After that, however, reasons provided by HNW individuals and advisors differ significantly
The next three most cited reasons by HNW individuals were: to encourage charitable giving by the next generation (30%), religious or spiritual motivations (23%), and because they believe giving back is an obligation of wealth (22%). Meanwhile, advisors believed their clients’ next most popular motivations would include: reducing their tax burden (46%), religious or spiritual reasons (41%), and creating a family legacy (30%). The study found that, in fact, just 10% of HNW individuals cite reducing taxes among their motivations for giving.
Further evidence of a disconnect on the topic of taxes was found when advisors cited a belief that 40% of HNW individuals would reduce their giving if the estate tax were eliminated, and that 78% would do so if income tax deductions for donations were eliminated — whereas just 6% and 45% of HNW individuals, respectively, indicated that they would reduce their charitable giving if these tax policy changes occurred.”
THE U.S. TRUST STUDY OF THE PHILANTHROPIC CONVERSATION: Understanding advisor approaches and client expectations OCTOBER 2013 Conducted in partnership with The Philanthropic Initiative (TPI)
“The reasons advisors and HNW individuals cite for why HNW individuals don’t give or hesitate to give to charity differ even more starkly: • Advisors are under the misimpression that the top reasons HNW individuals may shy away from giving are that they won’t have enough money to leave to their heirs (41%), they won’t be left with enough money for themselves (34%), and they don’t consider themselves wealthy enough to give (22%). To the contrary, HNW individuals cite a concern that their gift won’t be used wisely by a nonprofit recipient (30%), their lack of knowledge about or connection to a charity (24%), and fear of increased donation requests from others (17%).” THE U.S. TRUST STUDY OF THE PHILANTHROPIC CONVERSATION: Understanding advisor approaches and client expectations OCTOBER 2013 Conducted in partnership with The Philanthropic Initiative (TPI)
“Nearly one-third of HNW individuals (31%) indicate that they would be more likely to choose an advisor who is knowledgeable about charitable giving. More than half of advisors (57%) plan to increase their knowledge about philanthropy and to better their ability to advise clients about charitable giving. • Among advisors interested in becoming more proficient at rendering philanthropic advice, the areas they would most like to learn about are: developing a strategic giving plan (55%); understanding more about giving vehicles (50%); becoming better at integrating a client’s philanthropic values and goals into an overarching wealth management plan (46%); engaging the next generation in giving (45%), and the role that impacts investing (or Socially Responsible Investing) plays in their clients’ philanthropic pursuits (38%).”THE U.S. TRUST STUDY OF THE PHILANTHROPIC CONVERSATION: Understanding advisor approaches and client expectations OCTOBER 2013 Conducted in partnership with The Philanthropic Initiative (TPI)
“Three out of four (74%) advisors say that discussing philanthropy with clients is good for their business for a variety of reasons, including that it: presents a more comprehensive and holistic approach to managing a client’s wealth (24%); demonstrates greater interest in their clients’ charitable goals and aspirations (18%); shows clients that they are interested in more than just their clients’ money (13%); and provides insights that help advisors better serve their clients (13%). Many advisors (75%) find discussing philanthropy with clients to be an excellent way to deepen relationships and establish new relationships (54%). Many HNW individuals (40%) agree that discussing philanthropy with an advisor has, in fact, deepened their relationship. More than half of advisors (56%) have also found that discussing philanthropy with clients has helped them build relationships with members of the client’s extended family – this proved most true among wealth/ financial advisors (64%).” THE U.S. TRUST STUDY OF THE PHILANTHROPIC CONVERSATION: Understanding advisor approaches and client expectations OCTOBER 2013 Conducted in partnership with The Philanthropic Initiative (TPI)
“Advising work, especially when focused on philanthropy, is inherently psychological – it involves clarifying deeply-held personal values, identifying causes that might have personal meaning, and dealing with the complex human realities of families. Shaping a philanthropic strategy requires attention to such psychological complexities. It also requires support for choosing appropriate philanthropic instruments; and for connecting donors with knowledge and skill about philanthropy, nonprofits and the community.”DONOR ADVISORS AND PHILANTHROPIC STRATEGY.Thomas E. Backer, PhD & Lilli Friedland, PhD.Human Interaction Research Institute
“All too often today, I observe professionals who offer advice to their clients based, not on what their clients need for orderly long-term change to meet new conditions, but, rather, on a product which the professional has developed and wants to sell. This conduct is the antithesis of the behavior of a true personne de confiance. Families are in the business of overcoming the universal cultural proverb, shirtsleeves to shirtsleeves in three generations. Given current demographics it will take on hundred fifty years for three generations of a family to be born and die. Thus, it will be one hundred and fifty years from now before anyone can know whether the family has overcome the first hurdle to its perpetual, never-ending war against the proverb. A professional who wishes to be personne de confiance rather than a salesperson has to face this truth.” A Reflection on the Nature and Practice of the Role of the Personne de Confiance in a System of Family Governance; Historically and Today. By James E. Hughes, Jr., Esq.
“According to Age Wave research, there are four key pillars of legacy: 1. Values and life lessons 2. Instructions and wishes to be fulfilled 3. Personal possessions of emotional value 4. Financial assets or real estate” IDENTITY AND THE ADULT LIFECYCLE IN LEGACY PLANNING. Assignment 7 of the CAP Designation.Phil Cubeta, CLU®, ChFC®, MSFS, CAP®Sallie B. and William B. Wallace Chair in PhilanthropyThe American College for Financial Services
“Why Succession Plans Fail: 1. Sixty percent of succession plans failed because of family dynamics. 2. Twenty-five percent failed because heirs were insufficiently prepared. 3. Ten percent failed because of inadequate estate planning or inadequate liquidity to pay estate taxes.” Correlates of Success in Family Business Transitions, Journal of Business Venturing 12, 285-301 (1997)
“Baby Boomer Yearnings: 1. Values, not Valuables: uncomfortable discussing inheritance out of context; wish to discuss family traditions &history, sharing stories, values, hopes. 2. Legacy Gap: talking about inheritance but not in a meaningful or productive way.3. Ideal Legacy Advisor: The top qualities both generations look for in a legacy advisor: honesty, trustworthiness, compassion, a good listener, and strong communicator.”- 2,267 boomers and their elders surveyed, Allianz, 2005, with Ken Dychtwald
“Most inheritance plans ultimately fail because the inheritors are not prepared for the responsibilities that come with their emotional and financial inheritances….To thrive, the family must learn how to work together, and how to equip succeeding generations to deal with the responsibilities and opportunities of inherited wealth.”— Rod Zeeb, p. I, from his piece on FamilyGovernance
“What would be best for your children? What do you hope they will accomplish with the money? Making a considered and deliberate decision is wise because, if you don’t, you’ve actually made a decision. You have picked the default position; that is, all to my children, less a significant percentage to the government. Spending time on inheritance planning may allow you to transfer the amount you eventually have in mind to your children while making gifts to charity, rather than to the government through taxes. The choices are not your children to taxes, but your children and charity and no taxes.” Wealth in Families Third Edition (Charles W. Collier) Page 26
“The decision on how much to give or leave your children is a deeply personal one, and there are many variables, including individual preferences and specific family situations. Having said that, and admitting there are no rules of thumb, I’ll make some observations using hard numbers. In my experience, with families where the publicly traded financial wealth is in the range of $15 million to $30 million, the opening number is typically $1 million to $2 million per child. In most cases, the amount provides a measure of flexibility, but it may not dramatically change the child’s lifestyle. Also, I see many people deciding that $3 million to $5 million is an appropriate financial inheritance. For families with approximately $100 million and above, many believe that $10 million to $15 million per child is sufficient. Finally, for families with a new worth greater than $500 million, the inheritance often ranges from $25 million to $50 million or more.” Wealth in Families Third Edition (Charles W. Collier) Page 27
““True economic freedom is the ability to wake up in the morning and be able to decide what you will do for the day,” Hughes concludes. “Thus, an appropriate inheritance maybe that amount of financial wealth that will allow you to live in this way. Any amount of money beyond that is discretionary because it is not what you need to be free.”” Wealth in Families Third Edition (Charles W. Collier) Page 28
““It makes more sense to give money to your children during your lifetime than at your death,” said Dick Watson. “Leaving money to your children at your death is not nearly as tax-effective. Also, the money often arrives too late to have a positive impact on your children’s lives.”” Wealth in Families Third Edition (Charles W. Collier) Page 29
“So when would it be best for your heirs to receive their inheritance? People tend to choose one of two approaches. First, define the inheritance and give it to them sooner rather than later Talk with them, provide age-appropriate financial education, and help them understand and work with the money. Financial education and discussion of wealth responsibility are critical to this approach. Openness and access early on, coupled with education, also enhance their ability to choose careers not solely based on economics of the profession.” Wealth in Families Third Edition (Charles W. Collier) Page 29
“In the long run the possessor of great wealth is judged in part by the use he makes of his riches, including in that use his disposal of them at his death.”Charles W. Eliot AB 1853. President of Harvard University, 1869-1909. From Great Riches (1906). Wealth in Families Third Edition (Charles W. Collier) Page 91
“The real wealth of your family is not financial. Because of this, your individual principles and family’s vision should be discussed before implementing various estate planning strategies.” Wealth in Families Third Edition (Charles W. Collier) Page 91
“The highest and best purpose of the estate planning process is, for me, to facilitate the effective transfer of an appropriate amount of financial assets to succeeding generations of family members in a way that will improve their life course. Families that are effective in this process exhibit a number of common qualities. They treat their adult children with respect, openness, and clear communication. They strive to work with them as equals. The family money provides freedom and flexibility for their children but is not so important as to be key to their sense of self-worth. They use considered principles to guide their decision-making surrounding the uses of the family money. Foremost among the guiding principles is the assumption that adult children should take responsibility for their lives.” Wealth in Families Third Edition (Charles W. Collier) Page 96
“Parents should leave children “enough money so they would feel they could do anything, but not so much that they could do nothing.” Warren Buffet
“Often clients are far more idealistic and interesting than you would ever know from reading their documents. It is a shame for the client and for society when a client’s highest aspirations die with them. To prevent, it is our responsibility to get the client to talk about what he or she most deeply wishes to accomplish, and then to line the planning up so it fulfills that mission.” A CONCEPTUAL FRAMEWORK FOR PLANNING WITH PHILANTHROPIC TOOLS. Phil Cubeta, CLU, ChFC, MSFS, CAP, The Sallie B. and William B. Wallace Chair in Philanthropy at The American College
- “The top three reasons why advisors believe their HNW clients engage in charitable giving are consistent with the top motivations reported by HNW individuals themselves, which are: being passionate about a cause, having a strong desire to give back, and having a positive impact on society and the world. After that, however, reasons provided by HNW individuals and advisors differ significantly:
  - • The next three most cited reasons by HNW individuals were: to encourage charitable giving by the next generation (30%), religious or spiritual motivations (23%), and because they believe giving back is an obligation of wealth (22%). Meanwhile, advisors believed their clients’ next most popular motivations would include: reducing their tax burden (46%), religious or spiritual reasons (41%), and creating a family legacy (30%). The study found that, in fact, just 10% of HNW individuals cite reducing taxes among their motivations for giving.
  - • Further evidence of a disconnect on the topic of taxes was found when advisors cited a belief that 40% of HNW individuals would reduce their giving if the estate tax were eliminated, and that 78% would do so if income tax deductions for donations were eliminated — whereas just 6% and 45% of HNW individuals, respectively, indicated that they would reduce their charitable giving if these tax policy changes occurred.”
THE U.S. TRUST STUDY OF THE PHILANTHROPIC CONVERSATION: Understanding advisor approaches and client expectations OCTOBER 2013 Conducted in partnership with The Philanthropic Initiative (TPI)
““True economic freedom is the ability to wake up in the morning and be able to decide what you will do for the day,” Hughes concludes. “Thus, an appropriate inheritance may be that amount of financial wealth that will allow you to live in this way. Any amount of money beyond that is discretionary because it is not what you need to be free.”” Wealth in Families Third Edition (Charles W. Collier) Page 28
“In the long run the possessor of great wealth is judged in part by the use he makes of his riches, including in that use his disposal of them at his death.” Charles W. Eliot AB 1853. President of Harvard University, 1869-1909. From Great Riches (1906). Wealth in Families Third Edition (Charles W. Collier) Page 91