How to Choose a Trustee: Why the obvious choice may not be a wise choice

One of the most important estate planning decisions is that of selecting a trustee or executor. The choice can be a game changer for how your heirs live with and execute your decisions. However, too often the selection is made without the benefit of talking through the potential pitfalls or consequences.

Common pitfalls to avoid
Many families select the oldest adult child as their power of attorney during life and trustee and executor at death. While a strong family bond may exist with first-born children, it doesn’t automatically make them the best fit. It’s important to consider their adult history with regards to decision making. How do they handle their own medical and financial life? How do they behave in business or with family obligations? Do they have a track record of making consistent decisions and being accountable?

What to look for in a trustee
The person should have the affinity, desire and experience to step into the role. They’ll need the capacity or training to understand complex legal, financial and investment situations. Alternatively, they need to be able to discern who to hire for help and when. This includes having a track record of making sound financial decisions and generally being well organized with their own affairs. Ideally, your trustee will have the capacity to think like you and make judgment calls in the manner you would for yourself. They should be aligned with your value system and able to objectively make decisions from your vantage point; as if standing in your shoes.

Sustaining relationships requires eliminating surprises
A family trustee can easily become doused in negativity from other family members. It’s crucial to consider whether the selected person can handle conflict, and truly wants the role. Ideally, it’s best to eliminate the element of surprise for everyone involved by communicating your plans in advance. On the medical side, this involves documenting and communicating your Advanced Directives – specific decision making guidelines to follow should you be unable to make decisions for yourself.

With regards to the role of trustee and executor, all family members should understand not only your choices, but the reason you made the choices. They should understand the context for your estate decisions – hearing it directly from you so they can air their questions and listen to your thinking. The family member(s) chosen for leadership roles should understand why they were selected. Likewise, siblings or other heirs should understand this too. That way, you can set the stage for the selected individual(s) to succeed in their leadership role(s).

Beyond the legalities
Finally, it is important to transition all of your decisions in context of your vision for the use of your wealth. Develop a Family Mission Statement and share it with all heirs. Ensure they understand your philosophy and expectations for the family wealth going forward. Ensure they receive the training they need to be effective stewards of both your vision and your financial resources.

A New Year Offers the Gift of Pause

One of the greatest aspects of starting a new year is the opportunity for a clean slate perspective on longstanding opportunities or dynamics in life, family or business. We can choose how we see things and influence the actions that follow. We can choose to leave dormant projects or issues dormant, or we can raise them to the surface of our thinking, behavior and relationships. We can let pressing matters remain at the forefront of daily life or we can choose to tie up loose ends and take a step forward into new territory in a relationship or a business venture.

The New Year seems to offer both permission and bandwidth for contemplation and introspection. For planning and parsing things out. A new year is a clean sheet of paper from which to prioritize our energy, resources and focus.

Out of this clean slate thinking can arise a renewed sense of leadership and gratitude. If our own thinking is clear and more precise, it paves the way to lead others to clarity. It models the very behavior of taking time to assess or reset our priorities. If we take pause to consider, record and communicate what we’re grateful for, it can inspire others to follow suit. And the recipients receive the greatest gift of all: our undivided attention.

In a society where busyness and doing are celebrated over the simplicity of sitting still and doing nothing, the New Year is a chance to assess the direction and focus of our thinking and our activities. It’s a chance to be highly intentional as we step into a full calendar year of promise for family, career and business. A chance to choose outcomes and notice opportunities. To brush away cob webs that need clearing out and shine a light on people and projects that might warrant our focus.

Certainly every day that we wake up and step into the world is likewise an opportunity for this kind of reflection and assessment. Yet a brand new year offers momentum – a powerful point of pause.

Successful people are inherently great planners. They’re typically highly strategic. Looking ahead is embedded in their thinking. Intentionality is infused in their DNA. If you’re reading this article, that likely applies to you. Yet there’s always something left to evaluate. Something latent or pressing that needs a breath of fresh perspective or the opportunity for added focus.

If this resonates with you, consider setting aside some focus time to consider three relationships, issues or opportunities on which you’d like to focus. Perhaps it involves something you’d like to fix, pursue or communicate. Then make a game plan for following through. As you do so, celebrate the gift of pause that 2012 has bestowed upon all of us.

Looking Forward – Which Road to Take

For most owners of a closely held business, building the business is a labor of love.  It provides a major reason for living, however because we don’t live forever, one day that business asset will have to transfer to a partner or family members or a third party.

That transition will require significant planning to realize the business owners goals for themselves and their family.  And with any good plan, you’ll first need to know where you want to go.  As the Cheshire Cat observed, “If you don’t know where you’re going, any road will take you there.”

The following article addresses some of the questions that business owners need to consider to determine, “Where are you driving?”

Identifying a Successor for Your Family-Owned Business

Last week I was introduced to a family owned business owner by his estate attorney.  They were interested in learning more about succession and exit planning.  The business owner described his reluctance to begin planning for succession because he still had 20 years to go before retirement.  Though dedicated to his large family, he loved his work and was extremely proud of the organization he had built and the team of 100 employees he had assembled over the last 3 decades.  Yes, the last 30 years.  The gentleman is over 70 years old.  Yet, ironically he doesn’t see the immediate need to address the issue of “What is the future of the company should he not be there to continue to lead the day to day operations?”

Resistance by business owners to begin their planning for the inevitable transition is common.  The reasons vary from “I’ve got plenty of time.” to “I love my work, I’m never leaving.”  The truth of the matter is that many times we are not in control of the date we exit our businesses.  Life events might dictate our decision.  We might get an offer we can’t refuse or information from any of a myriad of sources that will change our previous thinking.  Even if the business owner plans on staying at the job forever, someday they will not be reporting to work.  Isn’t that a good reason to plan on the possibility you might want to realize the value of your life’s work for you and your family?  It is an important issue and the effect of your decisions will be felt by many families; yours, your employees, your clients, and your vendors.  Many times this business represents a disproportionately amount of the business owners net worth and the source of their largest income stream.  Are there any guarantees that its value will be realized?  The following article from Forbes discusses this very issue:

Why Families Should Ask Their Advisors to Collaborate

As we discussed in the previous article, estate and financial affairs for established families are highly complex. Each of the disciplines – tax, legal, investment, insurance – are inextricably linked. And, planning can actually change after it’s executed, even if the family doesn’t touch it. This is due to the dynamic nature of the tax code, legal stuctures and the financial markets. Ongoing compliance and accuracy must include true collaboration among your various advisors.

The difference between coordination and collaboration
Coordination is often referred to as “quarter-backing”. It may refer to one party posing a specific question to a colleague or informing the colleague of a decision. In contrast, collaboration requires all advisors to participate simultaneously in conversation. The group designs solutions together using the family’s documented vision as a filter for whether an idea is relevant.

The magic of true collaboration
Think of a time when you were involved in a group discussion and everyone in the room had mutual respect, and a commitment to work as a team toward a documented result. The spirit of collaboration causes you to listen more attentively. It quiets your own mind while you’re opening up to others’ contributions. That space in your thinking inherently increases your creativity. Questions and thoughts raised by others challenge or deepen individual and collective ideas. The result is a body of work that no single person, discipline or vantage point could arrive at independently.

Decreased costs and increased efficiency
Some families feel that bringing advisors together for group meetings may increase fees. Ironically, the opposite occurs. With communication occurring real-time amongst all parties, better ideas are formulated in less time, often reducing taxes or other expenses. The team arrives at more relevant solutions faster and there’s less chance of one person’s style driving the result. Also, collaboration reduces the likelihood that an idea from one vantage point will cause costly problems – in a neighboring discipline – that have to later be unraveled.

Getting started: an action checklist

  • Call each of your existing advisors. Explain why you’re interested in creating a collaborative effort. Define what collaboration is, and what it’s not.
  • Bring all your advisors together socially. Allow them to become acquainted in a casual unstructured environment.
  • Schedule your first team meeting. Identify a process or methodology for refining or creating your overall vision for your wealth. The collaborative team will need this documented vision to drive their future idea development. 
  •  Together, create communication ground rules for future meetings. 
  • Create a schedule for future meetings and ask everyone at the table to commit completely to the structure. Many of these meetings may be held with the advisors only. Then you’ll schedule a group meeting at which advisors share ideas with you – only the short list of ideas they all believe are relevant.

Once you’ve begun, make sure the process and ground rules are followed. Keep in touch about what’s working or not working and commit to achieving true collaboration over time.

Why Entrepreneurs Sabotage the Succession Process

Recently, while having an in-depth discussion with a client regarding the potential of transitioning ownership of his company to one of his four children, he made the comment, “I will take this company down before I let it ruin my family.” This was in response to a series of questions about treating his children “equally and fairly.” It is a reflection of an emotionally charged issue. It is also just one of many issues that need to be addressed to have a successful business succession to a family member.

Along the planning path to exit a business there are many potential pitfalls. Some are created by elements outside of their control and others are caused directly by the business owner. This two-part article published on the Harvard Business Review blog speaks to some of the unique challenges for succession in entrepreneurial family businesses.


R.I.P. Steve Jobs – Thank you for all your brilliant inventions!

“Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life.  Because almost everything — all external expectations, all pride, all fear of embarrassment or failure – these things just fall away in the face of death, leaving only what is truly important.

Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose.  You are already naked.  There is no reason not to follow your heart.  Stay hungry.  Stay foolish.”

Steve Jobs

Words to remember, words to live by…more importantly, a reminder to live life.

The Impact of Collaboration on Managing Your Affairs

When a family addresses their affairs, whether it’s a small change or a big decision, they’re in search of a quality result. Established families have inherent complexity in their affairs. The tax code, legal system, financial markets and various financial or insurance instruments are inextricably linked. Even if the family changes nothing, their past planning changes with the passing of time.

Let’s look at how advisory models traditionally rise to this momentous occasion for families. Historically, advisors in different professional disciplines working with a common family haven’t had an intentional model for frequent communication. This article suggests that not only is communication essential, it’s no longer enough. In today’s world, collaboration is the ideal advisory dynamic for affluent families.

Why is communication between your advisors essential?

A great advisory team has a central goal: to understand the family’s vision and carry that vision forward effectively and with integrity. To achieve this, advisors require a common starting point – a confirmation of the client’s vision. In order to act on the vision effectively, planning implementation has to be airtight. For any given decision a family makes, three to four advisors may need to touch the implementation to get it right. It would seem difficult to achieve effective implementation without a model for intentional communication. 

The difference between communication and collaboration

Communication is essential; however there is a deeper opportunity at hand for families – the opportunity to have a collaborative advisory team. Communication is more about the coordination of tasks; one person informing another about their actions. This passing of information back and forth is helpful, yet families can ask for more.

Collaboration, is defined by The American Heritage Dictonary as: to work together in joint intellectual effort. Consider the impact of having a truly collaborative advisory team. The team assesses the families’ challenges and opportunities and brings the necessary advisory strengths to the table to move the family forward. Advisors sit together at the table and brainstorm on a family’s behalf. Ideas are more innovative and more refined. Consensus builds confidence and momentum into the execution phase – for the advisors and the family.

How families can foster collaboration?

Two dynamics must be in play. Collaborative advisors assess their strengths and proactively invite additional talent to the table based on the family’s vision and goals. This requires self-confidence and confidence in their relationship with the family. 

Families must also play a role. Insist that your advisors collaborate. Consider bringing all of your advisors (tax, legal, financial, insurance) together for a social outing. Foster communication and relationship first. Then move into a more formal brainstorming process. Enlist assistance from the group in confirming your vision. Then draft some ground rules around how the professionals can move beyond communication and into collaboration on your behalf.

How can I protect my family’s wealth from creditors, divorce and future taxes?

It’s best to arrange for asset protection as early as possible, preferably before the asset has been created.  We analyze estate planning strategies that afford you and your family maximum asset protection from creditors, divorce, and taxes.  Our clients find great comfort knowing a lawsuit or a divorcing spouse will not have a negative impact on the family’s assets that they have worked so hard to build.

Although I have substantial assets, am I going to afford retirement? Will I run out of money?

Planning for the future is never easy. Unfortunately for many people with significant wealth, they have not analyzed their personal financial security in relation to their lifestyle. This leads to needless uncertainty about the future.  In reality, personal lifestyle needs drive a wealth security plan.  We work closely with our clients to build plans that organize their financial affairs making certain personal desires are incorporated. WealthPoint can help you take a holistic view of your wealth, and work with you to create a plan that provides security for financial freedom today, while helping you to meet the challenges you may face tomorrow.