The Legacy Family … A Family For The Generations

The Legacy Family … A Family For The Generations

Presented by Lee Hausner, Ph.D.

Douglas K. Freeman, J.D., LL.M.

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“In union there is strength”

Aesop, 6th Century B.C.

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Legacy Families are families who remain productive

and contributive four to five generations past the original wealth creator.

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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

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What Keeps You Up at Night?

25%

25%

25%

29%

29%

29%

32%

32%

36%

43%

50%

54%

Legal Exposure

Fiduciary Exposure

Asset Ownership

Family Office Oversight

Philanthropic Legacy

Family Reputation

Family Dynamics in Business

Family Business Leadership

Investment Performance

Family Relationships

Family Governance

Family Legacy

Source: Family Office Exchange Research; Family Office Exchange Benchmarking

*six to ten on a ten point scale

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Legacy Families Understand…

• The “business” of the business • The “business” of the family

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Balanced deposits in the four capital accounts of: – Human capital – Intellectual capital – Social capital – Financial capital

Legacy Families Focus On…

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• Shared values • Effective communication • Process for collaborative decision-making • Conflict resolution skills

Legacy Families Enjoy and Celebrate…

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• Diversity • Managed expectations • Financial competency • Generational leadership and governance


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• Model of “work” ethic – Focused achievement

• Accountability • Heritage and traditions • Expressed gratitude • Fun and laughter


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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.

Legacy Families Ask & Resolve Questions, Such As…

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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

Wealth Planning Focuses On Such Questions As…

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• 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?


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• 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”?


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• 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?


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• 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?


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• 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?


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• 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?


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• 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

Tools Utilized by Legacy Families

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Legacy Family Use of Inherited Wealth

Birth to 18 Healthcare Family Bank

College Home Incentive

Launch Pad Marriage Philanthropy

Special Needs Lifestyle Legacy

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


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• Family business policy handbook • Generational governance structures such as:

– Family council or assembly – Family advisory board – Family board of directors – Trustees


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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

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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

Additional Reading

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Documents

The Legacy Family … A Family For The Generations