Leaving a family legacy - far more than will making and wealth transfer.

We have all heard the statistic that over 50% of adults in Australia don't have a will. The number one reason being that they "haven’t gotten around to it yet". We could put it down to procrastination or an unwillingness to face one's own mortality - but it is more likely to be because people just can't decide what is best or "fair" or that they just don't know how to talk to their families about their expectations without starting a family war.

Families need help holding the conversation

After attending the W A Lee Equity Lecture at the end of last year I learned from guest lecturer R Hugh Magill (Vice Chairman of The Northern Trust Company USA) that as soon as there was any complicating factor involved in a family - whether that be a slightly complex family structure, a disparity between the circumstances of intended beneficiaries or a disruption in communication between nuclear family members - people were far less likely to prepare a will at all. The reason being that they just didn't know how to go about it, nor how to hold the conversations with their families about this important topic.

That's hardly surprising when you think that just a generation ago it was considered crass or rude to speak about money, let alone what might happen to it before someone died. There was often no discussion about wealth transfer, yet there were strongly held expectations of "entitlement" and incensed reactions when those expectations were not met.

Today people are more open to the idea of speaking about how they want to transfer their wealth. But the statistics show, that most don't know how to invite input from all of their family members about their plans without the fear of triggering family conflict in the process.

As soon as there is any "complicating" factor that might mean making the traditional "equal" distribution unworkable - will makers tend to throw their hands up in the air quipping that they will let their family work it out when they are gone. After all they will be dead and won't care what happens to their money after that.

But those of us who work as professional advisers to the families left behind know that most would have preferred to do almost anything not to have to deal with the family conflict they are then inevitably left with.

How can we help families have the conversations?

As professional advisers working with those undertaking estate planning, we often encourage families to tell their loved ones about their planning, but seldom do we offer to help facilitate those discussions after documents have been prepared, much less BEFORE the plan is discussed with will making clients.

But with statistics showing an ever increasing number of court claims being filed contesting estates - which numbers will only increase as we see the largest transfer of wealth from generation to generation in world history - should we not be more pro-active about helping clients through this process in a way that has the potential to avoid future family dissatisfaction?

The problem I suspect is that as professional advisers we feel that we don't have the interpersonal skills nor the conflict resolution skills that might be required to help a family have the conversations (or the series of them). These skills of course can be learned and supplemented by others who are "interpersonal communications coaches" working together as a team.

It's about far more than money or assets

If families could better understand that the legacy passed on from generation to generation is far more than just the value of their assets - perhaps they too might see the greater value in holding the difficult conversations. If they could access the support of their "wise counsel" to make those conversations less scary or confronting, we might just see well made wealth transfer plans that are not challenged post death.

R Hugh Magill in his lecture spoke about the concept of defining family wealth more broadly than just the dollar value of assets. This concept was based on that of Charles W. Collier, who in his highly respected book Wealth in Families (Harvard University, 2001) suggests that families consider their "capital" across four broad categories.

Human capital (who individual family members are, and the role they play within the family)

Intellectual capital (how family members communicate, learn from each other and make joint decisions)

Social capital (how family members engage beyond the family and with society at large)

Financial capital (the assets of the family) 

Imagine how differently families might approach their estate planning if that plan focussed around stewarding the succession of their family wealth in these terms rather than just focussing on the transfer of the value of their assets.

Values based questions about family legacy not just wealth transfer

Collier suggests that families should ask and answer five questions before estate planning is undertaken:

1. What is really important to your family?
2. What are the true assets of your family?
3. What should you do to guide and support the life journey of each family member over time?
4. How wealthy do you want your children to be?
5. Do you feel you have a responsibility to society?

Imagine the conversations that might arise even in your own family if you turned your mind to answering these questions as a family, holding the broader conversation about legacy beyond distribution of financial wealth.

Approaching will making as part of a greater family conversation over family legacy building might just deliver the peace of mind that will makers crave - knowing that their wealth transfer plan will leave a legacy of ongoing, healthy family relationships enhanced by a financial legacy that empowered their family members to live on well.

Want to learn how?

If you are a professional adviser - estates lawyer, financial adviser, family relationships counsellor or mediator wanting to learn broaden your skill set to be able to deliver this type of planning service to your clients then book in to one of the collaborative practice training sessions for wills and estates being run around Australia this year. To learn more about the workshops or to book click here.