The Legacy Family A Family For The Generations Presented by Lee - PowerPoint PPT Presentation

The Legacy Family … A Family For The Generations Presented by Lee Hausner, Ph.D. Douglas K. Freeman, J.D., LL.M .

“In union there is strength ” Aesop, 6 th Century B.C . 2

Legacy Families are families who remain productive and contributive four to five generations past the original wealth creator. 3

The Members of Legacy Families Demonstrate: Capacity … they add value to society Competency … they have skills and education Connection … they feel connected to their ancestors and their descendants Compassion … they are generous of their time, talent and treasure 4

What Keeps You Up at Night? Family Legacy 54% Family Governance 50% Family Relationships 43% Investment Performance 36% Family Business Leadership 32% Family Dynamics in Business 32% Family Reputation 29% Philanthropic Legacy 29% Family Office Oversight 29% Asset Ownership 25% Fiduciary Exposure 25% Legal Exposure 25% Source: Family Office Exchange Research; Family Office Exchange Benchmarking *six to ten on a ten point scale 5

Legacy Families Understand… • The “business” of the business • The “business” of the family 6

Legacy Families Focus On… Balanced deposits in the four capital accounts of: – Human capital – Intellectual capital – Social capital – Financial capital 7

Legacy Families Enjoy and Celebrate… • Shared values • Effective communication • Process for collaborative decision-making • Conflict resolution skills 8

Legacy Families Enjoy and Celebrate… • Diversity • Managed expectations • Financial competency • Generational leadership and governance 9

Legacy Families Enjoy and Celebrate… • Model of “work” ethic – Focused achievement • Accountability • Heritage and traditions • Expressed gratitude • Fun and laughter 10

Legacy Families Ask & Resolve Questions, Such As… How much is enough? How do I keep wealth from poisoning worth? I want to leave to my children “enough money so that they would feel they could do anything, but not so much that they could do nothing.” Warren Buffet, Fortune Magazine, September 29, 1986. 11

Wealth Planning Focuses On Such Questions As… If there were no estate tax, would you leave all your wealth to your children? “Money brings some happiness. But after a certain point, it just brings more money.” Neil Simon 12

Legacy Families Ask & Resolve Questions, Such As… • What do I want for my children? My grandchildren? • What do they want for themselves? • How do I provide tools vs. toys, empowerment vs. entitlement? 13

Legacy Families Ask & Resolve Questions, Such As… • What opportunities has the next generation been given for collaboration in decision making? • How will the family empower each member to achieve their dreams? • Will my child or grandchild become a “trust fund junkie”? 14

Legacy Families Ask & Resolve Questions, Such As… • How am I contributing to making the world a better place? • What important lessons do I wish to teach future generations? • How am I preparing the next generation for responsibly managing assets they may inherit? 15

Legacy Families Ask & Resolve Questions, Such As… • Are “fair” and “equal” the same? • Are family members who are in the family business entitled to a greater share of ownership? • Have family business policies been clearly articulated and documented? 16

Wealth Planning Focuses On Such Questions As… • Does your estate plan reinforce core values or just shift money? • Will the plan encourage dependence and indolence or achievement and productivity? • Has or should the plan be discussed with your adult children? 17

Wealth Planning Focuses On Such Questions As… • Are your chosen trustees qualified and prepared for – The financial responsibilities? – The emotional responsibilities? – The time required? • Are your wishes and intentions clearly documented? • Will your choice of trustees help to bind or disrupt your family? 18

Tools Utilized by Legacy Families • Strategic plan – the roadmap • Family constitution – establishing governance and process • Family meetings – ensuring effective communications; conflict resolution • Wealth plan – allocating resources, creating opportunity; rewarding effort, managing expectations 19

Legacy Family Use of Inherited Wealth Birth to 18 Healthcare Family Bank College Home Incentive Launch Pad Marriage Philanthropy Special Needs Lifestyle Legacy 20

Tools Utilized by Legacy Families • Family bank – capitalizing entrepreneurship • Shared asset agreements – ensuring accountability and responsibility • Family foundation – perpetuating core values • Brain trust – insight and advice; qualitative and quantitative 21

Tools Utilized by Legacy Families • Family business policy handbook • Generational governance structures such as: – Family council or assembly – Family advisory board – Family board of directors – Trustees 22

Final Thoughts How you leave your wealth is as much a reflection of who you are as how you earned it, and likely to be remembered a lot longer. “Would you tell me, please, which way I ought to go from here?” “That depends a good deal on where you want to get to,” said the Cat. “I don't much care where…” said Alice. “Then it doesn't matter which way you go,” said the Cat. Excerpt from Lewis Carroll’s Alice’s Adventures in Wonderland Alice and the Cheshire Cat , 1869, by Sir John Tenniel 23

Additional Reading The Legacy Family: The Definitive Guide to Creating a Successful Multigenerational Family By: Lee Hausner and Douglas K. Freeman Published by Palgrave Macmillan (2009) Available on Amazon.com 24 2 5