We've passed on all we know. A thousand generations live in you now. But this is your fight. – Luke Skywalker

Below is a letter I wrote that will be sent to some of our prospects that I felt was worth sharing on my website. And yes, I wrote the entry quote too.

I think one of the joys of being a financial advisor, is if you so choose, you can explore the outside and inner world. The outside world is the economic machine, history, and the structure of society. The inner world is the human experience and the stories we tell ourselves. My anecdotal life experience tells me that these stories are important and if you’re in a position of leadership in your family, worth communicating to the next generation, because you never know what is going to stick.

On one side of my family the story is that we are Germans. Competent, industrious, and humble whether farming on the Volga River in Russia or in the United States. Every generation building as a launch pad for the next. On my mom’s side the legacy of overcoming slavery and discrimination in Brazil. After reading Frederick Douglas’s Narrative, I realized I am incredibly blessed to not deal with any of the challenges my ancestors endured. In fact, because the joys of life were stolen from some of my ancestors, it would dishonor their legacy and suffering if I didn’t try to be the best person I can be.  

It's probably healthy that most people don’t take stories and legacy planning as seriously as I do. For some people the scale of the universe makes it difficult to take things too seriously and to be fair, we live on a rock, rotating fast enough to trap life sustaining gases, in a galactic super cluster that has been around for some billions of years. But material wealth and the blessings it provides won’t last forever, and we all need stories to sustain us. If you don’t plant the fire of a family story, your descendants will find one from society’s library, and chances are it will be a lot less fulfilling.

When I founded HFG in 1983 the team was just me in an office broom closet that my father was too embarrassed to charge me rent for. Fast forward nearly 40 years and it’s incredible to reflect on the growth we’ve experienced. Part of that growth has been hiring new and younger faces. My team includes four such talented individuals. Periodically you’ll receive letters with valuable information but written by Anthony, Cody, Brent, or Nick. A topic of concern over the past couple of years has been wealth transfers. Over the years I’ve seen significant wealth transfer to heirs only to be spent down frivolously and in contrast to the originator of that wealth’s vision. It’s an interesting challenge. The legal system has crafted plenty of tools to assist with wealth transfers and provide parameters, but I suspect the biggest gains to be made are teaching children character and imparting a legacy.

-        Ty

Legacy Planning and Taking Care of Heirs

I spend a lot of time reflecting on Maslow’s Hierarchy of Needs. There are few concepts as succinct in their description and as intuitive in their architecture; a foundation of basic needs providing support for psychological and self-fulfillment needs. In our profession as financial advisors, we are fortunate to make an impact at every stage of this pyramid, with self-actualization being one of the most rewarding.

But what is self-actualization? Self-actualization is what I call a “suitcase word.” It means nothing on its own but holds a bunch of ideas that require unpacking. The ideas I want to unpack today are legacy planning and taking care of heirs. These are not the same. While everyone can plan their legacy, not everyone can take care of their heirs.

Taking Care of Heirs

Taking care of heirs requires assets and estate planning tools. On the asset side of the equation think of investment accounts and properties. For estate planning tools there are beneficiary designations on retirement accounts, wills, and trusts. Technical proficiency is required to build a plan to take care of heirs. It requires identifying what physiological and safety needs on the pyramid need to be met, how much money or which assets will flow to the heirs and ensuring events like death or remarriage don’t create an accidental disinheritance. Though the assets involved have changed, humanity has built different tools and contracts to take care of heirs for thousands of years.

Legacy Planning

Legacy planning is a far more ancient art than taking care of heirs. You can legacy plan without physically taking care of your heirs, but you shouldn’t take care of your heirs without legacy planning. Legacy planning is giving someone the historical, emotional, and spiritual meaning to go out and build their own pyramid. We’re fortunate to work with many people who plan to leave enough wealth behind to meet their family’s physical needs. Which is excellent. This means children and family members can start their journey with a solid base, but families still need a story and meaning to ascribe purpose to where and how they started their journey, lest they lose the drive to succeed.

This gets to the heart of why stories and legacy planning matter. Material wealth is finite and legal tools at best delay the inevitable. You may take care of one generation of heirs but there is no guarantee they will pass on material wealth to the following generation. Future generations will need something more to help rebuild. Your story and your family’s story can be a wellspring of energy and dynamism for future generations to draw upon as they build their own pyramid.

In closing, it is important to have the technical know-how to craft plans that get the right assets, to the right heir, at the right time. However, planning is not enough. It is of equal and sometimes greater importance to help heirs understand the wealth they’ll inherit has a history and purpose.