Estate Planning vs Legacy Planning

Estate Planning vs Legacy Planning

I have been very intrigued by the content in this month’s Kingdom Advisor’s study group centring around legacy and the importance of having an impact beyond my lifetime. Everyone was challenged with the difference between estate planning and legacy planning. In particular, legacy planning not only represents a change in terminology, but it changes the lens through which we see things. Specifically, estate planning has a one-generational focus (transferring wealth to your heirs) while legacy planning looks to impact 5-7 generations (transferring values to multiple generations). That requires a bigger vision and a broader perspective than advisors or clients typically focus on.

Financial professionals are uniquely positioned to invest in the lives of clients. I know as an advisor my discussions focused more on Estate/Wealth Planning rather than Legacy Planning, so this study stretched me to expand my thinking.

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My parents are presently visiting with us and this past weekend our son and grandson visited, so we had four generations in our home. My Dad shared stories with us about how his faith and relationship with God were developed as a young minister and also the impact his own father had upon that faith. Most of these stories I had heard before but my son and daughter-in-law listened intently while baby Ernest slept through it all. I thought how important this time was and wondered if generations yet unborn would benefit from hearing the same stories. To see how God was active in the lives of my parents and grandparents helps to inspire my faith so I am sure it can impact others.

4generationsThink about the business of family for a moment – isn’t it truly about legacy planning?

I will teach you hidden lessons from our past–stories we have heard and known, stories our ancestors handed down to us. We will not hide these truths from our children; we will tell the next generation about the glorious deeds of the LORD, about his power and his mighty wonders. For he issued his laws to Jacob; he gave his instructions to Israel. He commanded our ancestors to teach them to their children, so the next generation might know them–even the children not yet born–and they in turn will teach their own children. Psalm 78:2-6

These verses instruct families specifically to focus on legacy planning which is clearly beyond one generation. I encouraged my Dad to write these things down so the events of his life could be passed on to the children not yet born. That way, his life reaches beyond his years lived on this earth. Many people may feel estate planning is just for those who have wealth, but legacy planning is for everyone.

Ron Blue provides some excellent advice in his book “Splitting Heirs,” when he describes the “Wisdom Principle” which is to “transfer wisdom before wealth. Wealth never creates wisdom. Wisdom may create wealth.” If you think about it “wealth” is the focus of estate planning, while “wisdom” is the focus of legacy planning.

We need to think deeper about the time we are each given. We all have 24 hours per day, and 168 hours per week. On the topic of stewardship Ken Boa says,

“What differentiates people isn’t the amount of time available to them, but the manner in which they exercise their gifts and talents within the available time. We can waste time; we can spend time; or we can invest our time wisely. That’s what stewardship is about: faithfully developing and using our gifts, talents and resources within the amount of time God has allotted to us.”

We have time in an equal measure, but we must be intentional about how we spend it or invest it. The fact is that we often just spend our time when we should be investing it.  Talents are not in equal measure to everyone. We are unique and each has different gifts. Our focus tends to be more about using these gifts to grow wealth and much less  about the growth of our heirs.

Thinking beyond our life can be very challenging because it stretches us outside of our normal pattern of thought. Maybe our perspective needs an adjustment so we consider more the impact we can have upon “the children not yet born.” That takes intentionality and a shift of focus. Our efforts must move toward transferring our values and wisdom  as a guide to govern future generations and less effort on accumulating and transferring wealth. It seems if we get the legacy planning right, the estate planning will be so much easier.

The accumulation and eventual transfer of wealth is a major part of financial planning. If we fail to give proper attention to the legacy planning, we have truly missed the reason that we were entrusted with the wealth in the first place.

Are we spending our time creating something that will only benefit one generation? Can we be more intentional in our investment of time and leave a legacy that extends 5-7 generations?

What Have I Become?

What Have I Become?

We are all on a journey in life and the one thing that remains constant is change. My wife recently took on the task of capturing some of our home videos (30 years worth). These include so many memories and changes, from hair styles to the way we dressed. The music at our youth events seemed radical to some at that time, but now, much heavier music is typically used in many worship services on Sunday mornings all across North America.

TrumpThink about politics for a moment. Just look back one year when the United States was in the midst of an election campaign. Let’s be honest, when you first heard that Donald Trump was running for President, how many thought he would actually become President? Most didn’t believe he had a shot at becoming the candidate to represent the Republicans in the run up to the election, let alone be in the presidential race. For many, the unthinkable happened … Breaking News: Donald Trump is now the President.

How was this possible? Many were left wondering how this could happen. Think about one of the things that politicians do everyday. They talk a lot, sometimes getting themselves in trouble because they say the wrong things. Things change because there are people who speak to influence others to bring about that change. 

For America, this was a major change. What was the basis for that change? I think you will have to agree that media of all kinds, was and remains a major influencer that results in significant change in our culture. Have you ever felt outrage when you hear about people who have been unfairly mistreated? Often times we hear about these types of circumstances through some form of media. When there is frustration over an issue, the media drawing attention to it can be the very means to bring change.

The fact is, whatever media you tune into begins to shape you and slowly your opinions can change, sometimes without even realizing it.

Change is constant and often comes through relationship and communication. Here’s an example in my life. I met a pastor in the early 2000’s who was a cyclist. He would often ride 30-50 kilometres (20-30 miles) at a time, and then on many Saturdays, he would double that distance. I first thought the guy was nuts, until he looked at me and said, “You would make a great cyclist.” Well, I wasn’t involved in any other sport and knew I could use the exercise, so I bought myself a bike and started. First, it was shorter distances, but in a very short time, I was riding those same distances too. Before long, I was challenging myself and one day, rode 120 kilometres (75 miles). My point is this: I became a cyclist, because someone said, “You would make a great cyclist.” I agreed with that statement and decided to become what I was told I could be. 

In 1991, I became a salesman of life insurance, partly out of necessity, but also because I was told I would be good for the role.

On 3.16.2017, our son, became a father, making me a grandfather. Well how did that happen? Without making this a PG rated blog, allow me to explain: It started with a conversation. Cathy (now my wife) and I, had our first date in May 1985. We talked together a lot on that evening. We shared our dreams and visions for the future and discovered that we had so much in common (at least until we got married, but that’s a story for another day). Well the words we shared eventually led to our marriage, where we publicly spoke our commitment to one another (before God and this company, I believe is how it traditionally goes). I still recall memorizing our vows in which we promised to “speak words of grace that would build one another up.” Maybe, I remember that so well, because it was one of the most difficult parts to keep.

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Well 25 months after those vows were spoken (to the very day), our son, David was born. He made similar vows himself when he was married (20 years later).

Here is the point: change comes to our lives because words are spoken.

Marriages happen because words are spoken (vows), divorces happen for the same reason. Politicians are elected in many cases because of promises made (words spoken) and not re-elected in other cases because promises were broken.

We are constantly becoming or changing because of the influence that comes into our lives through media (words that are spoken to us). You may not even realize it, but you are actually very much an influencer, and are helping others become who they are. The words you speak are more important than you realize because they are agents of change and with them you impact those around you.

Interestingly, the Bible says “the word became flesh” referencing, of course, the coming of Christ to live on this earth as a man. The Bible is the only book that has the claim of being alive and still desires to become something, or bring about change in us.

My son and daughter-in-law have discovered that when new life entered their lives, change was immediate. In my next few blogs I will walk through the impact  words have within us and how they impact what we become.

So let me ask you this: How have words spoken to you impacted your life? What change are you bringing in others through the words that you speak?

 

The Value of Community

As the National Director of Kingdom Advisors in Canada, one of my goals is to bring Christian financial professionals into membership. With this drive for memberships before the end of the year, I have been talking much about the benefits. These include new study group content monthly, regular teleconferences, Core training to equip advisors with biblical financial advice and wisdom in practice management.

Last week, I had a conversation with a long time friend, Melvin, about his membership renewal and he talked at length about his 2-year-old granddaughter Isla. She was diagnosed with cancer a year ago, had recently been doing well after lengthy chemo treatment, but last week took a turn for the worse.

islaAfter more testing and scans, it was discovered she had two tumours on her brain. This past Thursday, just as Melvin was arriving home, his son Michael (also his partner in his practice) called saying,“Isla may not make it through the night.” Michael asked his Dad if he could call as many as possible to prayer. Within an hour, more than 100 had gathered to pray at the church. Isla did make it through the night, is now back on chemotherapy, and Melvin told me, the tumours are shrinking. This has been a roller coaster ride for them.

Back to his membership, Melvin said,“I just do not have the time right now to be engaged with Kingdom Advisors, but I would like to continue membership because I want to be connected to people who pray.” So the value Melvin feels he has received is through prayer support, not the tools and resources I was promoting, at least not right now.

It has made me realize that one of the greater values of Kingdom Advisors, or any organization for that matter, is Community. We can support one another, not just with great ideas, but also by simply being supportive of one another. Prayer is a means of connecting with a higher source and having at least two or three agree is truly important.

There are likely other members of Kingdom Advisors and other persons that we are presently in community with that are facing a similar challenge this Christmas. Let us pray one for another. I would like to take this time to wish everyone a blessed Christmas season. May the peace that passes all understanding be yours!

 

The Family Meeting After 30 Years

Processed with VSCO with m5 presetThis past month, Cathy and I celebrated 30 years of marriage. Over the years, we have gathered the family together for a specific purpose but in October, we had a meeting that focused on inheritance. This idea came from a book by Thomas Deans called Willing Wisdom, where he suggested a family should have this type of meeting every year. I saw this intentional time as an opportunity to pass wisdom to my heirs before the time of any type of wealth transfer.

It felt a little awkward at first and I figured that my kids would just see this as another of Dad’s crazy ideas. I have heard it said it is inevitable that there will be a family meeting where your financial affairs are discussed. However, it is up to you whether you will be alive to attend. I have determined to be there; the discussion time is valuable and the conversation will deepen if this happens yearly.

To begin, everyone was asked to share a word to describe our family and then an example of why that word was chosen. The answers received are a testament of our family dynamic: fun-loving, unique (in family discussions), accepting (it is ok if we disagree), supportive (of each other), in tune (connected to each other) and confident. Hearing these words was encouraging and a result of our investing in the lives of our children. It was like a reward for 30 years of marriage but we are not done yet. We must continue the family communication in order to finish well what we have started.

Keith Costello, president and CEO of the Canadian Institute of Financial Planning (CIFP) recently wrote about the great wealth transfer. He stated, “Baby boomers will inherit $750 billion over the next several years in the largest-ever transfer of wealth in Canada, estimates a recent report from Toronto-based Canadian Imperial Bank of Commerce (CIBC). Specifically, the report suggests that 2.5 million Canadians over the age of 75 have a total net worth of $900 billion or more — and the beneficiaries of this wealth will be Canadians aged between 50 and 75 years old.”

The most common approach for wealth transfer is to divide the inheritance equally among heirs but the challenge is to also ensure an appropriate distribution of wisdom to equip our heirs to properly manage this wealth. I recently spoke to some friends about my children having grown and matured. With sarcasm, I stated, “They grew up to have their own opinions that are not the same as mine.” The reality about our children is they will likely have different priorities than their parents, which is the reason family meetings are so important. Finishing well involves successful transfer of wisdom before any wealth transfer.

As a steward of all that has been entrusted to me, I feel responsible to prepare the next stewards to manage anything I may leave them. An annual family meeting where probing questions are posed can help the next generation connect with the values and plans that guide financial decisions.

Some examples of questions that will create discussion and reveal values are:

-What are your dreams? How would receiving an inheritance impact your dreams?

-What did you learn from your parents about money and generosity?

-How should each child be treated: equally or uniquely?

 

Leaving An Inheritance

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As my wife and I went for a walk last evening, we spoke of our grandparents (all now deceased) and then our great-grandparents. In particular, we spoke of how little we know beyond two generations. We then talked about our grandchildren (not yet born) and great-grandchildren, wondering how much impact we will have on them.

Proverbs says, “A good man leaves an inheritance for his children’s children.”

On this subject, Larry Burkett wrote this: “If I had to identify the area of Christian finances that is least understood, it would be inheritance. Not only do people wreck their lives by hoarding, but they also wreck the lives of their children and grandchildren with abundant inheritance.”

In ancient times, an inheritance was often necessary for survival. Land being passed down was essential to provide food for the family. Today, an inheritance can be like winning the lottery or a windfall because, in many cases, children are making more money than their parents ever did and are often financially independent.

Ron Blue said, “Wealth never creates wisdom. Wisdom may create wealth. If you pass wisdom to your children, you probably can pass wealth to them. If they have enough wisdom, then they may not need your wealth.”

When we think about inheritance, we usually think wealth. In considering wealth and wisdom, which offers the most value? And which is most difficult to pass to the next generation? Since wisdom can create wealth, it seems logical that it is more valuable than wealth itself. Since wealth without wisdom has the ability to wreck the lives of our heirs, we must consider how best to pass on wisdom prior to passing on wealth.

All of our adult children are planning to be home for the Thanksgiving weekend. They will enjoy Mom’s home cooked meals and endure my Dad jokes while we play games, have a bike ride and go for a beautiful fall walk through the park. I cherish these times together, not just to make fond memories, but I am realizing these times are occasions for discussions where wisdom can be shared. So I am going to be deliberate and intentional about a family meeting in order to learn more about the basis of our values.

Having worked in the financial industry for 25 years, I know the conversation about finances is personal and private, yet these dialogues are so essential. I have some specific questions to ask that will probe deep into the hearts and minds of all of us. I plan to share these questions and the importance of a family meeting in my next blog.

Will you spend this long weekend with your family? What important discussions will you have with those you love?