- Ryan Ponsford
- 10 Dec 16
Growing up, our family holidays and events were the times when we reflected on and shared the many experiences and adventures we’d had as a family. As a kid, many of the stories were about relatives that I hadn’t event met, crazy things people had done long before I came into the picture. There were endless stories of the camps my grandparents ran, the crazy things my Uncle Verne would pull off, last minute adventures pulled off by my Mom, and of course the story of Grandma Dotty’s dream to own a live elephant, which she eventually did (obviously a lengthy story in itself!).
Throughout all of these stories, there was a trend. They weren’t all stories of amazing success or accomplishments; in fact, many were lessons in defeat, survival, and sheer determination. In all cases, it was the resilience and unending faith of the characters that defined the outcomes. On occasion, my grandfather would share his stories from WWII. Or when my grandmother spoke of being at the side of four of her five children when they passed into forever, she spoke of it as an honor. As she shared,
“I was there when they came into the world,
and I was blessed to be there when they left the world.”
As kids, we don’t necessarily know the impact that these stories and times together will have on our lives, but it turns out, their importance is of significance.
I recently read an article that was shared by a good friend and colleague, Scott Farnsworth.
(Scott is a master of story, so if there’s someone who understands the power and impact of story, it’s Scott.) They article was written about the results of a study that was done among kids – examining those that had an upbringing in which stories were shared and cherished, and those did not have the same experience with stories. (You can read the entire article here.)
In short, they found that kids that knew the stories of their families – how their parents met, where their grandparents were from, failures or illnesses in the family; these kids had an overwhelmingly stronger sense of control over their lives, higher self esteem, and far better ability to handle stress.
They also made the correlation to businesses; those that knew the story of the heritage of the business, it’s origin, the challenges, successes, and failures, were also far more likely to succeed over time.
So often, it’s our commitment to survive and to thrive, ultimately our resilience that determines our outcomes. As I’ve shared in the past; there’s a formula that I like to share; especially with young adults. I didn’t come up with this and am not sure who did, but it’s worth sharing:
EVENT + RESPONSE = OUTCOME
Think about the events that occur – especially the challenging ones. We often can’t control the event, but we can certainly control how we respond to the event; and it’s this response that determines our outcome.
When my grandmother told the story of her dream to own a live elephant, the headwinds she faced, then ultimately the achievement of her dream, we were instilled with a belief that there’s no dream too large we can’t achieve. When she experienced the death of four of her five children, she very easily could have responded very negatively. She didn’t. She overcame and became an example of resilience to her entire family, many grandkids, nieces and nephews.
So, as a parent, don’t we all want the best possible outcomes for our children? Don’t we want them to be resilient, confident, and capable of overcoming great challenges? I know I want that for my three children! So how do we get that?
It turns out it’s not that difficult and like most great things, there’s no financial requirement. We simply need to tell and retell our family stories, and we need to create some new ones. There is, however, a required investment from each of us. The investment is time. The investment is to be intentional and purposeful about creating the space and opportunity to share these stories. The investment is that this holiday season we may need to sit at the table a little longer, don’t rush to do the dishes, don’t escort grandma and grandpa out of the house, don’t allow your kids to sit on the couch lost in their new electronic worlds; at least not while the family is together sharing stories.
Let’s make this the Most Wonderful Time of the Year by making an investment in the future of our kids. Let’s impact them with stories about our family history, adventures, challenges and victories.
They’re depending on us to prepare them for the world,
this holiday season may be our greatest opportunity.
Don’t miss it!
While Susan sat in the waiting room to meet with her parents’ financial advisors, she was nervous, excited, sad, curious, overwhelmed, and anxious, all at the same time. She knew these guys had worked with her parents for a very long time; Mom and Dad spoke very highly of them, but she had never met them in person. Neither had her brother or sister.
Receiving the call that her father had passed away, just four months after losing her Mom, had come as a pretty big shock. He had seemed so healthy, so vibrant, so alive just a month ago, and now he was gone. When she was informed that she had been selected as the successor trustee of the estate, the person that would have to “handle all of the affairs,” she became even more overwhelmed. She knew Mom and Dad had done pretty well in their years, saved well, planned, invested, even owned a few properties. But she had no idea where to begin to get everything figured out and finalized.
Both her brother and sister had been a little surprised when they found that Susan had been selected to manage the estate. In fact, they didn’t just seemed surprised; they seemed a little skeptical. Susan had been the one to care for Mom in her final year. What did she know that they didn’t? Had she had some input in determining who would get what? Did she encourage Mom and Dad to put her in charge so she could be in control?
As Susan waited to meet with these unknown financial people, her nerves began to kick in. Would she even know what they were talking about? Should she trust them? Would they be able to answer the flood of questions that filled her mind every night as she lay awake in bed?
While Susan couldn’t anticipate what would happen in the next two hours meeting with her parent’s financial advisors, she had zero clue what would happen in the coming months as she attempted to settle her parent’s estate. She had no idea of the complexity in understanding the legal documents that defined what she could and couldn’t do. She had no idea what she would do with the funds she would inherit. But most importantly, she was completely unaware of the strain that would be placed on her relationships with her brother and sister.
Even though they had always gotten along well, over the coming months, making financial decisions together, discussing who would get which assets and personal possessions, what was fair, what would be kept, what would be sold, what would Mom and Dad have wanted – every one of these decisions seemed to end in disagreement. In the coming months, their relationships would fracture in ways that would become irreparable. In the coming years, each of them would have challenges maintaining the wealth they had inherited.
Susan and her family were not a rare unfortunate situation. They were just like 90% of the families in the world. When wealth transfers from one generation to the next, the odds of failure of maintaining the wealth, and the probability that family relationships will fracture, are astounding. If you’re losing sleep when your portfolio declines by 9%, try considering addressing the 70-90% risk that could deplete by 100%! To make it a little worse, while the loss of assets is certainly disappointing, the destruction of relationships is tragedy. Siblings no longer talk to each other, in-laws become out-laws, and attorneys seem to end up benefiting the most.
What’s interesting is that we all know this happens. If this hasn’t happened in our own family, we know someone who has had a negative experience with an inheritance. The money was squandered, the kids now hate each other. We don’t think this is possible with our family, but not only is it possible; it’s likely.
Even more interesting is that we do nothing effective to solve this issue. The problem here is that when asked, most families think the cause of the fracture will be bad investment decisions, a flawed or non-existent trust or estate plan, economic downturn, taxes, or a myriad of other technical or planning breakdowns. Examining the characteristics of families that have failed in transfer, and those that have been successful, it’s quickly learned that these are rarely the issue. In fact, in a study of 3,250 families over several generations, less than 5% of the time was the family failure attributed to poor estate planning, taxes, or any of the other technical solutions that we all focus on. That doesn’t mean we shouldn’t address those aspects of our plan, in fact one could argue that it means that most legal and financial advisors do a pretty good job of preparing our assets for transfer. However, here’s the rub – the problem isn’t the positioning of your assets; it’s the preparation of your heirs.
What are you doing to prepare your heirs for the decisions they’ll face? How often are they making joint financial decisions where they share in the benefits or consequences of the outcomes? Do your heirs have a shared purpose or vision of the future that will help them get through challenging situations? Would they know how to evaluate and select qualified advisors? Can they communicate effectively in emotionally charged situations (like when Mom and Dad die)? Has your plan, and the reason for your decisions been communicated to them?
Overcoming the issues associated with the transfer of wealth is not rocket science. Many solutions are very simple and can be implemented by a family on their own. Others require facilitation or coordination. Regardless of how you approach or solve the issues, addressing them and getting started will make the world of difference. For families looking to protect your hard work and earned wealth, seek understanding of the risks that you face. Evaluate with honesty your own family situation. If a better outcome is important to you, seek assistance from those that can help.