Family Legacy Planning
Family legacy planning at Bethesda Family Therapy offers a space to integrate human elements to wealth management, estate planning, wealth transfer, non-material legacy, and business succession.
Families who want to preserve not only the wealth but foremost the family, need to define the family’s position to the wealth, how to manage the assets, how to transfer them to the next generation along with non-material legacy, and if there are businesses involved, how ownership and management will be passed down.
This practice has traditionally been the exclusive field of wealth managers, lawyers, and C.P.As. Nevertheless, research has shown that when experts in the field of behavioral sciences are part of the process, the results are far superior. Dr. Charles W. Collier, who trained at the Bowen Center for the Study of the Family, was a pioneer in the integration of knowledge of the emotional functioning of the family into wealth management and business succession. His book, Wealth in Families, published by Harvard University, has become a classic in this field. Also, the mainstream media has understood the significance of incorporating the human element in legacy planning, and has reported on this game changing approach that is re-shaping the field.
The conversations about family legacy
“What is the legacy you want to pass on to the next generation?” This is the central question that family leaders should ask themselves. They have to begin by defining what constitutes their wealth. Families generate and pass down the generations more than financial capital, which is certainly very important. They also generate and transfer human, intellectual, and social capital, which is another kind of wealth, and arguably more fundamental.
Other important questions that are part of the conversation around family legacy are: What do you want your family to stand for? Who should be actively involved in this process? What are the strengths and vulnerabilities of this family? How can the family be projected into the future as a cohesive group? What is the responsibility of each individual in relation to the legacy? The answers to these questions inform the short term action plan but also outline the trajectory for subsequent generations.
Relevance of family legacy planning
Those who have devoted years of work to creating something of value (a business, financial assets, knowledge, or a tradition) desire that the product of that work benefits their descendants.
There are two goals that must be attained. First, that the wealth be maintained or increased to provide the coming generations with enrichment, safety, wellbeing and opportunities. Second, and more importantly, that the family that owns the wealth be preserved and strengthen.
Risks involved in the transfer process include the possibility of “spoiling” the new generation by strapping them from motivation, sense of achievement, and appreciation for work. Likewise, there is a risk that the inheritance becomes the source of conflict between family members resulting in the family’s breaking up. Moreover, there is a risk of losing the family wealth altogether.
Family legacy planning is the process by which these risks are minimized by making well thought and well informed decisions regarding the management of wealth and the process by which capital and businesses are transferred to the rising generation. All this done in accordance with the family’s values and unique mode of interacting.
The method of family legacy planning at Bethesda Family Therapy
Dr. Martínez applies Bowen family systems theory to provide families with a solid platform from which to incorporate the human element into wealth management, estate planning, wealth transfer, and business succession. The goal is not only to preserve and grow the family wealth, but also to unite and strengthen the family who owns it. She guides those who want to make decisions in relation to the management of their wealth and the transfer of family assets in alignment with their values and shared family dream.
When families own a business, she assists in deciding the best way to transfer the business ownership and management to the next generation. She leads the way as the family considers the implications of succession for the life of the individuals and of the family. Her work is based on the exploration of each member’s life plan as well as on the dynamics of the family and the family’s shared project.
Dr. Martínez facilitates important conversations among family members helping to coordinate the many human factors that are at play when planing for the future. Her expertise is best used before the family’s wishes are translated into legal, financial and organizational instruments, at which point intervention from other specialists in her network is recommended.
Dr. Martinez intervenes at three different moments:
Planning phase. She leads the development of a strategic plan that sets the direction defined by the family´s shared dream. In this long term plan families define the manner in which wealth may sustain each member’s life plan as well as the family project. Families that consult at this stage want to be intentional in the way they conduct their every day life (education, recreation, life style, participation in the community, financial investments, use of resources, etc.) in order to be coherent with what is important and meaningful for them, and with the values they want to maintain over the generations.
Decision making phase. This phase has to do with a time when families are faced with the need of making specific decisions and taking action. Consultation focuses on the human and family factors that are relevant when making decisions in relation to the state planning, transfer of wealth to the next generation and business succession. Families at this stage need to be clear about these factors so they can be sure that the legal, financial and governing structures (for the corporation and for the family) in fact sustain the life plan of individual members and the long term family project. Consultation at this stage include the coordination with other specialists.
Conflict resolution phase. This is a process of analysis and resolution of family problems which are the result of disagreements about the management of family wealth, transmission of wealth to the next generation, and/or business succession. Families that consult at this stage want to understand the impact of emotional and family factors that are in the way of finding a common ground. These families are willing to address difficult topics, to challenge their own perspectives, and question long standing family “truths” that aren’t relevant or useful any more. Families that work at conflict resolution are willing to find a way out of the conflict through honest and open dialogue, commitment, the re-establishing of trust, and by honoring the family ties that binds them together.
Family legacy planning is crafted on a case by case basis. It may include individual interviews with family members, conversations with the couple, sessions with the group of siblings, family meetings with parents and their children (with or without sons and daughters in-law), and multigenerational family meetings with three generations present. Family advisors can also be part of the process if the family chooses so.
The method consists of bringing on board those family members who need to be involved in the process. Dr. Martínez facilitates the conversations in a way that each individual can express his or her unique point of view. Also, Dr. Martínez guides the exploration of the family’s past and present in relation to wealth and other important areas introducing knowledge about family dynamics and emotional functioning.
The outcome of these conversations provide family leaders with elements that allow them to make informed decisions that will point the family in the desired direction for generations to come.
When the family is ready, it moves to develop more formal governance structures and use other instruments to capture the ideas and decisions that emerged during the discovery phase.
Being fully bilingual and bicultural herself, Dr. Martinez offers a unique understanding of cultural aspects involved in the processes. She is particularly able to working with diversity families, mainly those of Hispanic descent.
Results from these meetings include more clarity about what the family stands for, what they are up against and what their resources are. This knowledge informs the decisions that need to be taken in order to strengthen the family and preserve the wealth as it moves from one generation to the next.
There is no certainty that value created in one generation will be increased or even maintained in future generations, or that the family as a group will be sustained over time. But without a doubt, family legacy planning will give it a much better chance to attain a positive and long standing outcome.