THIS ARTICLE IS FINAL ARTICLE IN A FOUR-PART SERIES THAT EXPLORES ESTATE AND LEGACY PLANNING.
Our first article discussed the importance of understanding the difference between eulogy virtues and resume virtues in estate and legacy planning. Our second article explored the five capitals of estate planning: financial, intellectual, relational, character and spiritual. The third column delved into how to make legacy plans both technically proficient and relationally informed.
Legacy. It’s a weighty word.
But how do you plan your legacy? Can you design it? Or is it merely left to a default setting?
In the final installment of our four-part series on legacy and estate planning, we’re getting practical. We’re going to describe how to be intentional about increasing your legacy quotient. This article will challenge you to think, apply and reflect on the five capitals of estate planning (financial, intellectual, relational, character and spiritual) through thoughtful questions.
It’s common to talk through strategies to increase financial competency, intelligence quotient (IQ) and emotional intelligence or emotional quotient (EQ). These are all good. But why not track a quotient for all five capitals and add relational, character and spiritual quotients? Who wouldn’t want their kids to have a high character or spiritual quotient?
The sum total for your wealth transfer is your legacy quotient. The end of the planning process is building or bequeathing quotients for each heir in the five capitals.
I’ll spoil the ending of this article. You aren’t going to walk away from this blog series with a simple formula to change line X in your documents and be done with estate planning. Relationships need unique solutions. We will spend time helping you better identify the problems you need to solve. This is good news for most high-capacity leaders who tend to solve problems for a living. We want you to solve the correct problem. Wealth transfer is not a math problem, but a relational issue.
To increase your quotient in each of the five capitals, I have listed a guiding question to help you focus your problem-solving skills.
The truth is that financial capital might be the easiest of the five capitals to pass along to your heirs. But passing a legacy through this one can get mistaken for the technical aspects of estate and legacy planning. The guiding question for financial capital is:
How are we stewarding our resources with excellence, and who is the next steward?
Key in on the word how. How are you taking time to process your wealth transfer? Are you talking with others? Reading books and articles?
Who will get your assets once you pass? How can you best set them up for the blessing of money? How can you minimize the potential curse?
Intellectual capital is more than formal schooling. It involves IQ, books, classes and more. Step back for a moment and look at the most important lessons in your life. Think about which principles, ideas and values helped you most? Sure, formal education helped. But these principles that have so deeply affected you go beyond the four walls of a classroom.
When passing your legacy, include your intellectual capital. The guiding question for intellectual capital is:
How are we transferring wisdom and life experience?
Yes, fund the 529 college savings plan. Yes, help with the formal education. But do more than that. How are you going to pass along the experience you learned from failures in life? Which stories do you need to tell? How do you need to follow up from those stories to help your heirs really get the message? Where do you need to be, physically speaking, to best tell that particular story? Campfire time? An old broken-down building? Road trip? Think through it.
Some have called relational capital “human capital.” If you like that term more, go for it. But for clarity’s sake, I like pinpointing the relationships, and human capital sounds like HR department jargon. Relational capital is something I can invest in through time together with friends and family and build trust. That leads us to our guiding question.
How am I investing in my relationships?
True relational equity or capital needs regular positive communication, and needs to have weathered a few seasons. But it really can be invested in, like the market.
Character is who you are when no one’s looking and when all the pressure is on. Character is the essence of who you are at your core. Stressors, trials and challenges don’t necessarily create character, but they do reveal it. I had a pastor friend who liked to say, “Squeeze a lemon, you get lemon juice. Squeeze an orange, you get orange juice. Squeeze a person, and whatever they are full of will come out.” The squeezing reveals what is inside.
With our heirs, character needs to be instilled before wealth is bestowed. A substantial inheritance is a test of sorts. Inheritance will test in unlikely ways, but mark my words, it will reveal more about them.
And character is more caught than taught. Our guiding question here with character capital is:
How am I modeling Integrity?
Do-as-I-say-and-not-what-I-do parenting will only take us so far. Eventually, our patterns will win out over our lectures. You become more like those you spend time with most. As the late, great author, motivational speaker and adviser Charlie “Tremendous” Jones used to say, “You will be the same person in five years as you are today except for the people you meet and the books you read.” As a parent or grandparent, you are one of the most critical people your heirs will meet. If you have a healthy relationship, pull back the curtain on how you make decisions. Let them enter your world in the deeper places.
In the book “Complete Family Wealth,” the authors define spiritual capital as “the family’s ability to share and sustain an intention that transcends each member’s individual interests.” This capital is not inherently religious. You can call it a family’s dream, vision or purpose. Spiritual capital is how we make meaning out of life. Your worldview plays a huge role. It’s how you see, interpret, and make meaning of daily life. Spiritual Capital’s guiding question is:
How are we sharing purpose and meaning and fostering humility?
Humility is essential. Pride brings much destruction. If we foster a humble attitude in ourselves, its fruit will show up in so many other areas. Alternatively, arrogance pushes away so many other lessons. Yet wealth tends to shove us to pride and self-sufficiency.
The pace of life for high-capacity leaders also tends to distract from seeing issues such as purpose and meaning in the day-to-day. Pausing enough to recognize and reflect on these issues can be very rewarding refection points.
Although I’m not offering a math formula to give you a hard number for your legacy quotient, by intentional design you can build your legacy. There is always hope to make tomorrow better than today. No matter the place you are in the race, the end can be improved.
So instead of action steps, we’ll end with reflection questions. The only action step is schedule time to reflect well.
1| Which capital have you neglected? What steps will you take to remedy this?
2| Go back through the guiding questions from each capital and write out an answer. Compare your answers to your spouse’s. Let the discussion begin.
3| To help tease out this idea further, let’s add in the idea of assets and liabilities. Others have found this list helpful. It’s not a definitive list. Please feel free to add more and make it your own.
a| Assets of the financial capitals are: resources, self-control and opportunities. Its liabilities are: unchecked appetites, the deceitfulness of riches and harmed relationships.
b| Intellectual capital’s assets are: wisdom and discernment. Its liabilities are intellectual arrogance and false wisdom.
c| Relational capital’s assets are: community, accountability and vulnerability. Its liabilities are: isolation, manipulation and shame.
d| Character capital’s assets are: virtue, discipline and self-awareness. Its liabilities are: moral compromise, unacknowledged idols and failure to launch.
e| Spiritual capital’s assets are: humility, faith-life and happiness. Its liabilities are: pride, religiosity and apathy.
4| How are you doing with each asset and each liability? What action step jumps out to you from your answers? Are you going to strengthen the top or build up the bottom?
If you could benefit from estate planning and need advice on taking care of your loved ones, please contact me or any one of our professionals at 800.375.4646. We are ready to help.