Non Financial Aspects of Estate Planning

2016-03-09 15.23.39A friend asked me to¬†give this talk to his firm, but I prefer to write short articles. ūüėČ

When families talk about estate planning the discussion can center around cash flow, assets and tax minimization. While those topics need to be sorted, dollar-centric living can lead to regret.

If¬†you apply last week’s tips about family leadership, you might¬†discover certain realities about financial wealth.

2016-03-16 13.56.23Namely…

The highest use of¬†an asset lies in its capacity to enable better choices…

  • flexibility to allocate time towards shared experiences
  • the ability to control one’s schedule
  • the opportunity to tag along when other people are doing what they enjoy
  • health in the context¬†of body, mind and spirit

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2016-03-13 21.51.50Cash flow without education, connection and meaning can be a negative. Examples are the challenges faced by lottery winners, professional athletes and young, highly paid professionals.

With cash flow, I would go further and point out that excess family cash flow will ultimately be consumed by the least responsible adults in a family system.

You might tell yourself that you are “doing it for the kids” but the money ends up being blown¬†by someone’s aunt or uncle.

2016-03-11 20.04.44-1What to do?

  • In your lifetime, use¬†money to acquire time.
  • Share time with people you wish to influence with your values. Be the brand.
  • Remember that it’s better to¬†earn, and spend, our own way in life. It’s what you did.
  • Have a bias towards “assets used for shared experiences,” rather than cash flow.

Ask the question, How do I wish to be remembered?

Be that person, today.

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2016-03-10 08.52.21Shared experiences, both positive and negative, bridge generations across time.

As a child, I had¬†four grandparents and three great-grandparents. Of my childhood elders,¬†only one made the transition into my children’s consciousness. The elder that bridged across did so because¬†my daughter and I were involved in her end of life care.

Love, not money, is what travels across time.

2016-02-24 16.51.20

Two Gifts

2016-01-09 19.05.25For a number of years, I’ve chosen one thing and constantly reminded myself that I have far more than I need of this item.

If you’ve heard me talk about my experiences with finance, or sport, one¬†theme that I emphasize is a feeling that I was¬†far more successful¬†than I expected to be.

Another example might be talking about living with preschoolers… it’s the most hugs I’ve ever had in my life. I’m very well loved.

Or what it’s like to be married to my wife… sharing my life with her¬†is far from a hardship posting.

This habit need not be built with the “big” things in our lives.

2016-01-09 16.56.53Each time I leave a tip at a restaurant, I might pause and say, internally, “isn’t it wonderful to be in a position where I have a little extra to give.”

Each time I reach into the fruit drawer of my fridge, “pretty amazing that we can have crispy apples, year round.”

If I shovel my neighbor’s sidewalk, “it’s so cool to have the time to help this person out.”

The point being to create, and reinforce, a trigger than reminds me that I am surrounded by examples of having more than I need.

So the first gift I wish for you is a feeling of having enough, in at least one area of your life.

2016-01-03 12.59.47++

A new habit I’m seeking to build is paying attention to how I feel when I’m walking.

I picked this one up from The Art of Power, by Hanh. It’s a wonderful book, filled with stories about how¬†I fool myself!

I have found walking a little slower feels better.

I’ve noticed that breathing a little deeper feels better.

Strengthening those two habits will lead to better outcomes.

Because…

Most my errors come from quick action when anxious.

So the second gift I wish for you is short, pleasurable breaks whenever you find yourself walking.

2016-01-01 11.49.55

Give A Minute

minuteA simple way to reduce the noise in your head.

  • When you can feel yourself closing off,
  • or anger rising,
  • or have been asked to do something that you’re rather not…

…give a minute

2015-08-30 18.20.58

  • When my kids aren’t listening to me…
  • or I think they aren’t complying…
  • or they are arguing with each other…

…give a minute

2015-08-20 17.02.24By giving bits of time, I immediately removed half the conflict out my life and was able to leave the past, in the past.

It’s wonderful.

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You are¬†going to tell yourself that you don’t have the time to give a minute.

I can feel rushed as well.

Perhaps you can start small.

I started by giving seconds away when driving.

Yield.

If you start then pay attention.

Pay attention to what happens after.

By giving time I feel less pain.

Yes, I am a little slower when we are together but this is more than compensated by peace of mind when we are apart.

You’ll be surprised at how little time it takes to transform yourself.

Stay open.

Fatherhood: Giving Myself A Break

disneyDuring the school year, my son and I have a routine. When I come back from my afternoon workout, he takes a bath while I have a shower. It’s a win-win-win as the two of us end up clean and my wife likes a fresh family.

Last week, as I was heading out the door for date night, my son asked me to help him get clean.

One of my reactions was fear.

  • Fear that if I gave into this request then I’d never get out of the house.
  • Fear that if I gave into the request then the requests would never stop.

Fortunately, I was able to pause before I acted on my fear.

While pausing, the thought arrived that I MUST break this pattern of behavior in my boy.

What pattern was that?

Loving me, or wanting to spend time with me? ūüėČ

Pausing a little more, I thought about everyone in the situation.

  • The Sitter – being left with a dirty, unhappy four-year old
  • My Wife – sitting outside, content with her apps
  • My Boy – wanting his dad to spend time with him
  • Myself – feeling a wall rising¬†inside me as I’m tempted to close out my son

I sent my wife a text that I’d be a bit late, enjoyed giving my son a bath and everything worked out fine.

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I share this story because it highlights a dangerous habit that is easy to create.

Closing my inner life because I’m scared of future demands.

If you look for this pattern then you will see it everywhere.

  • Gifting – refusing to help now, to avoid being asked later
  • Parents – giving into the desire to break the child now, to “help” them later

Inside me, the habit feels like a form of revenge.

I’ll turn away from you now, because that’s “easier” than having to say no later.

Looking deeply, I’m the one that is hurt by this habit (and I’m robbing myself of the feel-good benefit of being a nice guy).

Harsh people think their hardness is a long-term favor to the people in their lives. They probably learned this habit in a difficult childhood.

My heart tells me that I’ll be OK with the risks of staying open to the people in my life.

Be brave.

Effective Wealth – Legal and Strategic Considerations

alvinIn my first¬†piece on effective wealth, I laid out…

  • Individual wealth => 5 to 10 years cost of living
  • Generational wealth => 10 to 25 years cost of living
  • Multi-generational wealth => 25 to 40 years cost of living
  • Surplus¬†(excess?) wealth => beyond 40 years cost of living

We hold our individual wealth in Living Trusts – these have the benefit of being fully revocable (assets in and out easily) and transparent to the IRS (easy for taxes and administration).

TIP Рfive years cost of living in a debt-free balance sheet will change your life and make you far less susceptible to corruption and influence. Once you hit ten years cost of living (in a debt free balance sheet) then you should consider cutting expenses and working part time. At a minimum, 5-10 years worth of wealth should trigger a sabbatical to consider personal wellness and how you allocate time.

Generational wealth is held in an irrevocable Grantor Trust that benefits my spouse and kids. I can’t get the assets back nor can any creditor or petitioner. In my lifetime, I retain the obligation to pay taxes on the trust as well as the ability to swap assets in/out for fair consideration. Admin is about the same as¬†managing a partnership/LLC with similar assets/earnings.

TIP Рonce you are nearing 20 years cost of living in a debt-free balance sheet you are close to the breakout point where you can stop working, forever. Now is the time to shift towards personal wellness!

Multi-generational wealth Рthis is small part of my family balance sheet, because I followed my advice at each of the above segments. We use a Private Trust Company (in a state without income tax) that oversees a trust that benefits my descendants. We also use 529 (college) accounts.

TIP Рthe first time you realize that you might be making money for your adult children STOP and undertake a life review that focuses on how you allocate time and personal wellness.

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What does all this cost? Charging market rates for my work, I oversee the structure for less than $5,000 per annum. Living Trusts/Will were $5,000 to set up. Grantor Trust was $5,000. Private Trust Company and Family Trust was $10,000. These are Boulder, not New York, rates.

How does this give you peace of mind? My personal assets are the smallest of any adult in my family tree. By value, I own less than 1% of the above structure. I am free to give my family the gift of service.

I’ve said what needs to be said.

I’ve done what needs to be done.

I’m free to focus on loving those that love me.


 

The legal and tax consequences of an error in your family structure can be severe. Take expert, local advice. Nothing on this site should ever be considered professional advice.

The Village in my Sienna

mobileMonday’s article touched on a trait that makes me an effective investor: the capacity to see the options inside the deal.

My ability to see second and third order effects isn’t limited to finance.

Last week, Mr. Money Mustache published an article about the cost of buying more assets than we need.

I confess that I am an expert at living above my needs.

The fact that I have earned the “means” does not change the reality of my choices.

A story!

Our local hospice has a partnership with an organization in Tanzania. One of their joint projects is building houses for widows and orphans.

It costs $600 to sponsor a house.

These days, I drive a 2011 Toyota Sienna AWD van. The Sportsmobile (pictured above) was sold when my kids arrived.

$600 is the semi-annual cost to insure and register my Sienna. Two houses a year.

Last week, I spent a house on new tires!

The good people at Mint.Com tell me that my Sienna is worth $21,499.

Swapping my Sienna for a cargo bike, would net 30 houses and save my family 6 houses annually, forever.

Over a decade, this choice could help 500 people with the loss of their spouse or parent.

I have been to Tanzania and these are good people to help.

The cost of this change is inconvenience when the weather isn’t great and a reduced ability to go on driving vacations.

The benefit would be knowing that hundreds of kids ride with me each day.

I told my wife that I’m going to wait a year on selling the Sienna.

However, the cargo bike arrives this month. I financed it by selling items that I put to one side last spring.

Change slowly.

Too Kind Too Generous

ax_and_bellaHow do you deal with someone telling you that you’re too kind or too generous?

What if the person telling you is your inner voice?!

I wasn’t sure how to handle, so I went for a bike ride to consider my alternatives.

Riding along, I laughed when I realized that people never tell me that I’m too kind to them, only too kind to others.

A little later, I laughed again when I realized that I seem to have everyone fooled. My too-kind-too-generous strategy is solely in my self interest.

So, rather than get grumpy. A better reaction is to share that…

You are a good person.

Remember that my capacity to help another person isn’t limited to them. It’s how I treat you.

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I looked a little deeper and considered the times where I felt that life was giving someone else too much of a good thing.

These feelings are related to the difficulty that I can have with other people’s success and happiness.

I realized my criticism was flowing from a fear that there wasn’t enough for me.

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I’ll end with a song that my son learned when he was two-years old.

The song is called Magic Penny and this is my favorite part…

Love is something if you give it away,
Give it away, give it away.
Love is something if you give it away,
You end up having more.

It’s just like a magic penny,
Hold it tight and you won’t have any. 
Lend it, spend it, and you’ll have so many
They’ll roll all over the floor.

My children are excellent teachers.