Marvin Blum’s Journey into the “Soft” Side of Estate Planning
July 20, 2021
This week in our Family Legacy Planning Series, I want to discuss my journey into the “soft” side of estate planning. Like most estate planning advisors, I began my career focusing on the technical and tax aspects of estate planning, what I often refer to as the “head” side of estate planning. After several decades of witnessing challenging family dynamics, often fueled by inheritances passing into unprepared hands, I began to ask what could we, as planners, do to help our client families avoid these pitfalls? My focus then shifted from all “head” estate planning to “head and heart” estate planning.
Many of our clients are hurting, and almost all worry about what impact an inheritance will have on their heirs. Estate planning advisors have skills to help, more than we realize. We also have a special seat at the table. If we don’t bring up these issues, who will?
I discussed tapping into those skills earlier this month with John A. Warnick as part of the Purposeful Planning Institute’s “Thought Leader & Industry Innovator Series.” Click on the link below to hear my guidance on how to help our client families achieve multi-generational success and pass down a meaningful legacy.
Topical outline available here.
Marvin E. Blum
Every Family Needs Some Kind of “Family Office”
July 13, 2021
In last week’s email in our Family Legacy Planning series, we focused on how to set up a family governance system. The core document that outlines the family governance structure is called a Family Constitution. We recommend that every family create a plan for how it will operate, and then document it, just as every family business needs a documented governance structure (a Charter and Bylaws). In listing the key provisions of a typical Family Constitution, included is the need to address the structure and function of a “family office.”
A “family office” is still a fairly new concept. Over the last decade or so, successful families have prioritized creating a centralized “office” to handle all the family’s needs. For families of higher net worth, a “Single Family Office” is often the solution, where the office is dedicated to the affairs of just one family. Where the budget doesn’t allow for a single family office, there are other solutions. The most common is a “Multi-Family Office” where a team of people serve the needs of several families who share the cost. Another solution, of especially rising popularity during COVID-19 “Zoom” era, is the “Virtual Family Office.” A family advisor serves as “quarterback” and assembles a team of all the necessary players, each of whom work from their own location and meet virtually as needed, avoiding the overhead of a physical office.
Functions served by the family office include overseeing all the family’s financial needs, but the kind of family office that helps create and preserve a family legacy will do much more than financial tasks. In addition to monitoring business, investing, tax, accounting, estate planning, insurance, bill paying, property management, philanthropy, and other financial matters (what Tom Rogerson of GenLeg Co. refers to as the “right rail” of a railroad track), the modern family office also addresses strengthening family relationships, culture goals, family dynamics, psychological needs, and fostering the family’s purpose (the “left rail”). The family office plans family enrichment and education activities to serve as “cross-ties” to build communication and trust, bridging the right and left rails. The family office manager will involve all the family members in these activities, drawing from each one’s skill set so everyone feels a part of the team. There’s a role for everyone, even for those without financial acumen.
A family office is also an important part of “family glue” after selling a family business. Often, the family’s identity is lost when their business is sold, but a family office can keep the family unified around jointly managing the “family enterprise.” Moreover, it can be of major psychological benefit when the business founder is searching for a new role after the “business-baby” is sold. As I’ve heard from a number of founders’ wives: “I married him for breakfast and dinner, but not for lunch.” The founder can find continued purpose by playing a key role in the family office.
Each family needs to design the family office structure that’s right for it. There’s no cookie cutter for this, and no two will match. As Tom Rogerson says: “If you have seen one family office, you have seen ONE family office.” Regardless what yours looks like, your family will benefit from it, and preserving your legacy may depend upon it.
Marvin E. Blum
The Family Constitution: “We, the People…”
July 6, 2021
With the Fourth of July celebration just behind us, it’s a good time to reflect on governance, in this case—Family Governance. In our last email, we covered WHY it’s important to adopt a Family Governance System, and then shifted to HOW to do it. Critical to the process is for the family members to participate in the decision-making. The goal is for the family to have buy-in and feel they own the governance system they adopt.
However, the family shouldn’t go it alone. The family needs experienced advisors to guide the process, ask the right questions, facilitate the conversation, and mediate when necessary. The advisors can synthesize all the input and craft governing documents, starting with a Family Constitution, sometimes called a Family Charter. Just like our country’s constitution, the family’s is a framework of fundamental principles and ideals that determine how the family will make decisions, operate, and be governed.
Here are key provisions of a typical Family Constitution:
- Start with the Family Mission Statement, which guides all major decisions. The family may expand this section to cover the family’s core values and its vision for the future. By setting out these principles and training heirs to understand them from an early age, you improve the odds they won’t get lost with time.
- Create a governance structure, including some or all of the following:
- Family Council of selected family members to make management decisions, similar to a company’s board of directors
- Voting Family Members, similar to shareholders of a company, who elect the Family Council and must approve certain major decisions
- At-large Family Members, defining those who attend family meetings along with the Voting Family Members
- Family Advisory Board, consisting of the family’s “go-to” outside advisors (attorney, CPA, trust officer, financial advisors, other counselors)
- Identify who qualifies for each of these roles: determine the role of in-laws, step-kids, minors (at what age do they join?), former spouses after a family member dies or divorces, unmarried partners of a family member, etc.
- Set out voting procedures (quorum, decisions requiring a majority vs. super majority vs. unanimous vote)
- Procedure for resolving conflicts (a system for mediation and/or arbitration)
- Policies for educating heirs about family wealth and responsibilities (when and how)
- Process for onboarding in-laws
- Addressing behavior that leads to disqualification
- Guidelines for family meetings/retreats (how frequent, location, who plans them, etc.)
- Broad investment guidelines
- The structure and function of a Family Office
- Process for amending the Constitution
These items are merely a suggestion and not an exhaustive list. There’s no “one size fits all.” Some families will need all of these bells and whistles; some will need only part of them. The critical point is that each family should examine its needs and create a system that’s right for it. A final point: as the final bullet point above reveals, the Constitution is not set in stone. It is a living document that will evolve over time to meet the needs of an evolving family.
Marvin E. Blum
Marvin, Laurie, Adam, and Lizzy Blum 31 years ago atop the U.S. Capitol, looking out on Washington, D.C. and celebrating our system of government.
Family Governance: The Ties That Bind
June 29, 2021
In our last Family Legacy Planning email, we introduced the topic of a Family Governance System. In learning from the best practices of successful multigenerational families, we found they adopt and follow a governance structure to help them navigate the uncharted waters of family life. In order to look like the family they want to be 25 years from now, families need a procedure for making group decisions, resolving conflicts, onboarding in-laws and younger generation members, and charting out a path to achieve the family’s long-term vision. They don’t leave things to chance. That’s the WHY of creating a Family Governance System. Now let’s address the HOW.
We are all familiar with the governance structure of a business. Let’s look to that example for guidance. There are shareholders, who elect directors to set policy and strategy, who elect officers to run the day-to-day. There are board committees for special purposes. There is a set of governing documents including a charter and bylaws. Board meetings happen on an established frequency with prescribed rules for voting. All of these add up to helping strengthen a company’s core and weather through the ups and downs. The governance system makes for a strong business. Likewise, for a family to endure, it needs a governance structure comparable to that of a family business.
Ironically, it’s obvious to business owners that a company needs such a structure. However, it isn’t as obvious to most business owners that their families need one too. Many business owners feel that a strong business will keep the family tied together and unified. In actuality, it’s the other way around. As noted family consultant and my good friend Tom Rogerson of GenLeg Co. says, “A strong business cannot hold a family together, but a strong family can hold a business together!”
Rogerson uses the analogy of a railroad track to illustrate the multiple goals of family governance. The right rail represents the financial goals of a multigenerational family. The left rail represents the family’s relationship and culture goals. The crossties unite the two rails together where the family learns communication skills and builds trust in family decision making. Strong crossties are the ties that bind a family together through thick and thin. By having a structure and engaging in learning exercises, the family becomes more connected. It develops a healthy interdependence, so the support system is in place to be there for each other.
In future emails, we will continue exploring HOW to create this structure, but we’ll close with one cardinal rule. A successful governance structure is not established by some higher power and imposed on a family. Instead, to achieve “buy-in,” each family member needs to participate in the process and own it. To build an empowered family, each participant needs to feel some responsibility and authority over its governance system. As Tom Rogerson so eloquently sums it up, “Wealth without responsibility or authority is a formula for resentment and failed self-worth.” Involving the family in the activity of building and maintaining healthy family governance is one of the keys to raising responsible heirs.
Marvin E. Blum
Marvin Blum (right) speaking with Tom Rogerson at a Family Governance Conference in Las Vegas.
A Conversation with Marvin Blum—”Last Chance” Tax Planning
June 22, 2021
In our Family Legacy Planning series, we are shifting gears this week to cover a matter of urgent importance. With new tax proposals pending in Congress, the tax landscape may soon drastically change. Now is the time to engage in “last chance” tax planning and get in front of the new legislation. You don’t want to wake up with regret on January 1, 2022, wishing you had acted before it was too late.
I recently joined Scott Bishop, CPA, CFP to discuss potential income and estate tax changes under the Biden administration for the Financial Planning Association’s Tax and Estate Planning Knowledge Circle. Click on the link below to hear my analysis, predictions, and planning tips.
Here are the topics discussed:
- What are the key developments since the November 3, 2020 election?
- What are the key proposals to raise taxes?
- What are the key provisions of each of these legislative proposals?
- What is likely to pass?
- Given all this uncertainty, what kind of planning are you seeing?
- What other tax law developments are being considered?
Topical outline available here.
Family Legacy Planning is a matter of both the heart and the head. Today’s emphasis on more on the “head” side of the ledger, dealing with the tax and financial aspects of holistic planning. Next week, we return our focus to the other side of the ledger, Family Governance Planning, in order to properly prepare your family for the financial inheritance heading their way.
Marvin E. Blum
Why Your Family Needs a Family Governance System
June 15, 2021
Throughout 2021, The Blum Firm has been sending weekly emails about our latest initiative, Family Legacy Planning. We’ve discussed the compelling statistic that 90% of families fall victim to “shirtsleeves to shirtsleeves in 3 generations.” We have stressed that the single most important action is to hold regular family meetings. Our emails provided suggested topics for family meetings, with particular emphasis on creating a Family Mission Statement. We also shined a spotlight on how to write a “Legacy Letter,” also known as an “Ethical Will.” Most recently, the focus has been on creating an in-house family education program to train heirs to be responsible inheritors. Today, we highlight another important aspect of Family Legacy Planning: creating a Family Governance System.
When we study the best practices of the “ten percenters,” those families who beat the shirtsleeves curse, we learn that they are intentional about creating a successful family. They don’t leave things to chance. As we’ve said before, they understand that “hope is not a strategy.” Over time, as a family grows and evolves, family dynamics becomes more complicated. This is especially true as in-laws join the family, and as siblings and cousins interact. Inevitably, conflicts will arise. Relationships will be strained. This happens in every family, even in the most harmonious ones. Successful families think ahead. They get in front of these stresses by adopting a formal Family Governance System that will guide them through the twists and turns that every family experiences.
In upcoming emails, we will dive deeper into the “how to’s” of family governance. As a hint of what’s coming, be ready to learn more about concepts such as:
- A family constitution and bylaws
- A family council
- Family committees
- An advisory board of the family’s “go to” outside advisors
- Determining which family members vote
- The procedure for making decisions
- The procedure for resolving conflicts
- The process for onboarding in-laws
Keeping a growing family operating smoothly and lovingly can be even more challenging than running a business. It’s well-accepted that a business needs a governance system. It’s even more critical to provide your family that kind of structure. As with everything else when it comes to families, there’s no “one size fits all” governance system. Each family decides what fits them best, but every family deserves some kind of governance system to help them swim through the uncharted waters of family life.
Marvin E. Blum
Happy summer from Marvin Blum and the growing Blum family! I see eleven good reasons here for a family governance system to help us swim through life.
Create a “Red File” to Prepare Your Heirs for What’s Coming
June 8, 2021
In last week’s Family Legacy Planning email, the focus was on creating an in-house family education program to train your heirs. All too often, an inheritance lands in unprepared hands. Giving your heirs the gift of advance preparation improves the odds that they’ll know how to handle the inheritance when it comes their way. We wrote before of a football field where the quarterback hurls a pass to the other end of the field, where receivers are standing around without a clue what’s coming or what to do with the football when it arrives. The quarterback is Generation One, the football is the inheritance, and the receivers are clueless future generations. Unless you prepare your heirs, the odds are high they’ll fumble the football.
Part of preparing heirs is to also leave them a “Red File.” A Red File is a roadmap containing critical information to guide the family through a loved one’s incapacity, estate administration, business succession, and creation and continuation of a lasting legacy. The Red File covers the items missing from even the most carefully crafted legal documents. Your will and other estate documents don’t contain items like key contacts, passwords, caregiving wishes, and heartfelt reflections. The process of preparing heirs includes providing them this information so they won’t have to go fishing for it after you’re gone.
Many put off this task, assuming they have time to take care of it later. However, we all know that people in seemingly excellent health can die quickly and unexpectedly. For example, the leading cause of death in the United States is heart disease. For two-thirds of women and one-half of men who die from heart disease, their FIRST SYMPTOM WAS DEATH—not chest pain, not discomfort in an arm, and not shortness of breath. Make it a goal to create a Red File this summer.
Click on this link for The Blum Firm’s Red File checklist, containing the following four sections:
- Centralized File of Personal Information: Passwords, contacts, listing of assets you own, location of assets and documents.
- Plan for Incapacity: Who will provide care, will they be compensated, where will you live, favorite TV shows, movies, colors, foods (don’t make your caregiver guess).
- Business Continuity Plan: Your will says who will own the business, but not who will manage it. Give your family management succession guidance to facilitate the transition for the day WHEN (not IF) you are gone.
- Legacy Plan: A Red File is the ideal place to document the “heart” side of your estate plan. Provide information on ancestors, obstacles they overcame, meaningful memories, lessons learned, values, and goals for the family.
After preparing a Red File, be sure to update it periodically. Also, tell your loved ones where they can find it. It can be handwritten or electronic, but be sure they know the password so they can open it.
Marvin E. Blum
An entry from Marvin Blum’s “Red File”—Favorite Dessert: Apple Pie.
Create a Family Education Program to “Train Up” Your Heirs
June 1, 2021
In The Blum Firm’s research on Family Legacy Planning, we discovered (not surprisingly) that one of the greatest causes of family failure is unprepared heirs. To combat that problem, you have to be intentional. You can’t expect heirs to just automatically learn all they need to know to become responsible inheritors. We recommend that every family create an in-house education program tailored to your family’s specific situation.
Here are the steps to create a family education program:
1. First, assess where you are. Then decide what information you’d like your heirs to know. Every family has its own needs and its own vocabulary. This is not a “one size fits all” process. The difference between where you are and where you want to be defines a “gap” that you want to fill.
2. Meet everyone where they are, at their age and sophistication level. Design separate programs for different groups. Deliver the content in an age-appropriate way, spoon feeding it out as they’re ready to receive the doses of information. Don’t overload their brains with a “fire hose” blast of detail.
3. Use a variety of formats, such as reading materials, games, teleconferences, and outside speakers. Make it interactive and not a lecture. Find a balance between finance and fun.
4. The curriculum goes beyond finance. Be sure to include family history, values, lessons learned, philanthropy, wealth stewardship, as well as financial literacy, money management, estate planning basics, and legal duties.
5. Identify who will be responsible for implementing and monitoring the education program. Choices include a learning committee formed within the family, an outside advisor, or a family office employee.
6. Modify the program over time to continue meeting the family where they are. As family members grow and learn, the education content and methods will need to evolve.
The next big question is always: At what age do we start? Answer: It’s never too early. There are lessons that even very young kids can learn, if delivered the right way. In the Jewish tradition, as expressed in Ethics of the Fathers, we learn: “Train up a child in the way he should go, and even when he is old, he will not depart from it.” In the Blum family, we’re already starting with our grandchildren. Remarkably, I’m teaching them, but they’re also teaching me!
Marvin E. Blum
Marvin Blum and his grandchildren: “Counting my blessings: 1, 2, 3, 4, 5.”
Here’s a F.A.S.T. Solution to Legacy Planning
May 25, 2021
In last week’s Family Legacy Planning email, we stressed the “last chance” opportunity to take advantage of the $11.7 million estate and gift tax exemption before it reduces by half or more—“use it or lose it.” Now is an ideal time to use that exemption to invest in your family. By funding a FAST (Family Advancement Sustainability Trust) now, you can help your family avoid falling victim to “shirtsleeves to shirtsleeves in 3 generations.” Statistics show that 90% of families fail. A FAST can improve the odds that your family will be one of the 10% who succeeds.
We have all witnessed the disaster when an inheritance passes into unprepared hands. Families who succeed engage in best practices like family meetings and family education, all aimed at preparing heirs to be responsible inheritors. In my experience, the biggest issue that keeps matriarchs and patriarchs awake at night is worrying about how their kids will handle all that life throws their way. A FAST equips your family to remain healthy and connected through the generations.
In a nutshell, the FAST does two things:
(1) It is funded with assets that will be used to pay for family enrichment and family education activities such as family retreats, family travel, and preserving the family’s heritage, as well as maintaining legacy real estate assets the family wants to pass down to future generations; and
(2) The FAST appoints trustees/committees who are paid to do the legwork in planning these activities and making sure they happen.
The end result is a gift to your family of a meaningful and lasting legacy.
Our experience is that when Generation 1 (“G-1”) hears of the best practices of successful families, it embraces these activities, pays for them, and will make sure they happen. G-1 has hopes and dreams that future generations will continue to engage in these best practices, but the reality is that after G-1 is gone, G-2 often drops the ball. G-2 may balk at paying for them, and G-2 often is too busy or preoccupied to do the legwork in planning them. The FAST is a practical tool to help the family continue the process of preparing heirs. It can be an add-on to an existing estate plan without disrupting the existing plan. With the current all-time high exemption, now is the ideal time to fund assets into the FAST.
Here’s another tip: You can substantially leverage your gift by using the funds in the FAST to purchase a life insurance policy on G-1. When G-1 is gone, the proceeds are paid into the FAST free of estate tax and generation skipping tax. With proper planning, you can endow your family’s success for many years to come and fund a legacy that will live on long after you are gone.
Marvin E. Blum
“Last Chance” Tax Planning & Family Legacy Planning—It’s Not “Either/Or.” It’s BOTH.
May 18, 2021
When The Blum Firm embarked on this Family Legacy Planning series several months ago, we described this new dimension of our practice as bringing both “head” and “heart” to the estate planning process. The key to holistic estate planning is to consider both “quantitative” and “qualitative” concepts and merge them into an estate plan. In the spirit of recognizing the marriage of these “soft” and “hard” issues, we want to focus on how to address family legacy planning during today’s hot legislative climate. We can’t ignore the fact that this family legacy conversation is happening during a time of potential tax law upheaval.
As we study the proposed tax changes in the American Families Plan and Senate bills known as the “For the 99.5% Act” and the “STEP Act,” we become aware of the urgent need to get out in front of these proposed changes. We read daily articles urging the wise to engage in “last chance” tax planning or else wake up with regret in January 2022. We need to pay attention to these warnings and take action, but do so thoughtfully, in a way that blends head and heart. Now is the chance to create a multi-generational estate plan to help set up future generations for success.
The estate and gift tax exemption is at an all-time high of $11.7 million, but legislation threatens to drop to the estate tax exemption to $3.5 million and the gift tax exemption to $1.0 million. It’s a “use it or lose it” situation. By using “squeeze & freeze” techniques that are currently available but now on the chopping block, you can remove far more than $11.7 million from your estate. For example, a married couple can transfer $36 million of assets to a Family Limited Partnership, where the discounted fair market value of the FLP units may be $23.4 million (after a 35% valuation discount). After gifting those FLP units to trusts, the couple can sell additional FLP units with a value of $150 million to grantor trusts and carry a note, shifting all the future appreciation on the assets out of the estate. Here’s the urgency: you can lock in the current exemption and grandfather the “squeeze & freeze” techniques used, as long as you complete your planning before the law passes.
Now may be the last chance to achieve this kind of wealth shift without having to pay income tax, estate tax, or gift tax. When you use creative tools like SLATs, DGTs, 678 Trusts (or BDITs), and GRATs, you not only get assets out of your estate, but you can carefully design the plan so you continue to have access to assets, control over investment decisions, and flexibility. That’s the “head” part. Now here comes the “heart” part. You can create a structure that includes future generations and begins training them to become responsible inheritors. You can build into the plan family governance procedures to teach heirs about philanthropy, entrepreneurship, family heritage, and values. After Generation 1 passes away, the assets continue in trusts designed with mentoring opportunities to continue educating and empowering future generations.
The ultimate merging of head and heart comes in the creation of a FAST (Family Advancement Sustainability Trust), a trust that endows the process of family meetings and covers the cost of preparing heirs. Now is the ideal time to use the $11.7 million exemption to fund a FAST. In next week’s email, we’ll dive deeper into the FAST solution to Family Legacy Planning.
Marvin E. Blum
A “Love Letter” to Your Family – Part 3
May 11, 2021
As part of our Family Legacy Planning series, this is the third email devoted to a topic that is stirring up lots of hearts—writing a “legacy letter” or “ethical will” to future generations.
It often helps to see samples of other legacy letters. There’s a wonderful collection of such letters in Ethical Wills: Words from the Jewish HEART by Dr. Eric L. Weiner. Thanks to my dear friend and family counselor, Dr. Carole Rogers, for gifting me this treasured book.
Here’s one of my favorites:
I plan to leave you with something of spiritual and material value that will help you become responsible and caring members of society. The world is yours to explore and in that exploring, you will come to understand and appreciate your place in the big picture of life. A loving heart, positive values, strong character, and a social conscience are far more important than material wealth.
What a meaningful gift to leave wisdom like that to future generations. For more samples, click here.
A final word: Don’t lock the legacy letter away. Make it a family tradition to read it each year at an annual family meeting. It will be great fuel for meaningful conversation and fostering a lasting family legacy.
Marvin E. Blum
An “Ethical Will” memorable moment from the late 1980’s—Marvin and Laurie Blum passing down traditions to son Adam and daughter Elizabeth. An estate plan passes down not only valuables, but also values.
A “Love Letter” to Your Family – Part 2
May 4, 2021
In last week’s Family Legacy Planning email, we encouraged everyone to write a “love letter” (also known as a “legacy letter” or “ethical will”) to future generations.
I use the word “write” intentionally. This is a time when I urge you to put the letter in your own handwriting, even with scratch outs and insertions. Imagine how powerful it would be for future generations to see their ancestor’s words in their own script, written straight from the heart.
There are workshops devoted to writing such ethical wills, but you can sit quietly anywhere and create your own. Let the words flow. Don’t overthink it.
Family legacy consultant Dennis Jaffe speaks of a letter by the matriarch of a wealthy family read each year to G-2 and G-3 at the annual family meeting. Listen to her words:
Greetings to all of you as you gather for the annual family meeting. I want you to think about a paradox—Money is important/Money is not important. There’s a lot of truth in both statements. You’ve come a long way, babies, but remember where you came from—know your roots. T. S. Eliot said, “Where is the life we have lost in living? Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in information?
You need knowledge, wisdom, and vision. It’s our job to be good stewards of the gifts Papa left us. There are pitfalls inherent in having a family business. Be vigilant for the warning signs. I would rather you dismantle the family business than squabble over it.
A legacy letter is your chance to make your estate plan personal. The wills cover important legal matters, but there’s more to an estate plan than legalese. Look for more samples in next week’s email.
Marvin E. Blum
Marvin and Laurie Blum in a “legacy letter” moment in 1998 when son Adam played football and daughter Elizabeth was a cheerleader at Trinity Valley School—“as good as it gets!”
A “Love Letter” to Your Family
April 27, 2021
As part of The Blum Firm’s Family Legacy Planning series, we are focusing on the gift to your family of not just your valuables, but also your values. One of the greatest gifts you can leave your family is a “love letter” addressed to future generations.
Such a letter also goes by the name “legacy letter” or “ethical will.” This letter is your chance to communicate things you want future generations to know. It can include what you value most in life, your best memories and favorite moments, your hopes and dreams for your descendants’ lives, and wisdom you want to share.
There is no set structure for a legacy letter. It can be addressed to your spouse, your children, the whole family, or a separate letter to each. You can include a dozen topics or just your definition of happiness.
Here’s a list of possible topics:
- Your goals and hopes for the future of the family.
- Your values and beliefs.
- Experiences that helped build your character and lessons learned.
- What you want to be remembered for.
- Traditions you want future generations to continue.
- Your family’s history and family stories.
- Important events in your life.
- Memories and happiest moments.
- Your definition of success or happiness.
- The family’s mission statement.
- Causes important to you.
- People who influenced you the most (your heros) and what you appreciate the most about them.
Next week, we’ll dive deeper into this topic and provide some samples. Our hope is that we inspire you to pull out pen and paper and start writing!
Marvin E. Blum
Marvin Blum, celebrating a “Legacy Letter” memorable moment at the Bris (circumcision) of his grandson Oliver Savetsky. Marvin is joined by the Rabbi, daughter Elizabeth, and son-in-law Ira. The tradition continues.
Here’s the Blum Family Mission Statement
April 20, 2021
In last week’s email in our Family Legacy Planning series, we introduced the topic of a Family Mission Statement, setting out a family’s guiding principles. Although all families are diverse, there are certain core values that unify the family. Identifying the family’s purpose ties the family more closely together. In today’s frenetic world, it centers us to know that we stand for something solid. The ideal mission statement is visionary, setting out a path for our heirs to follow. By making it a part of our regular family communication, the mission lives on long after we are gone to help future generations remain connected.
As mentioned last week, there are no rights or wrongs. It can be short or long, but I like to think of it like the “elevator speech” that everyone can remember and recite during a single elevator ride. We adhered to that principle in setting the Blum Family Mission Statement, which came in handy when a New York Times reporter asked our mission when interviewing me for an article entitled “Looking for Ways to Keep Money From Dividing a Family.” Here’s what I revealed about the Blum family’s three-fold mission: “We value relationships. We value productive work. We value meaning in our life, from spirituality or whatever else can offer you something in terms of meaning.” The reporter commented that it might sound “like a sentiment scribbled on a Hallmark card” but acknowledged that we take it seriously.
I recently read an article in The Atlantic by Harvard professor Arthur Brooks that contained a sentence that grabbed my attention, as it lined up right on the mark with the Blum mission. In his weekly series on “How to Build a Life,” Brook urges us to Dream the Possible Dream, closing with this wisdom:
Dream of the person you want to be—not of how rich or powerful or famous that future self is, but about the life you will lead and work you will do to serve and enrich others maximally, leaving behind a world that is better than you found it. Then, consider what it will take for you to get there, and the happiness you will gain from the joyful journey of creating value and loving others with abundance. Finally, focus your attention on what you will do this day in your work, spiritual life, and relationships that keeps you on that path.
There you have it—the three tenets of the Blum mission: relationships, productive work, and spirituality. It’s reaffirming to know we’re on the same wavelength with Professor Brooks.
Marvin E. Blum
Marvin Blum with wife Laurie, mother Elsie, son Adam, daughter-in-law Brooke, granddaughter Lucy, daughter Elizabeth, son-in-law Ira, and granddaughters Stella and Juliet. Grandsons Oliver and Grey have since joined the Blum family.
What’s Your Family’s Mission Statement
April 13, 2021
In our series on Family Legacy Planning, The Blum Firm has been sharing ideas to discuss at family meetings. We recommend starting with visionary topics dealing with a family’s history, shared values, and the kind of family you want to be in years to come. The agenda then shifts to informational topics such as estate planning, business succession, and philanthropy. As learning comes together on both visionary and informational topics, the family has an enhanced understanding of who it is. Such a family is now prepared to tackle the next step: adopting a family mission statement.
The mission statement anchors a family. It sets out principles that are at the core of who the family is and what is important to it. The mission statement can go by different labels, but the purpose is the same. Whether it’s called a Family Values Statement, a Family Vision Statement, the Family’s Guiding Principles, or the Family’s Purpose, it guides the family on all major decisions. The mission should become part of the estate planning documents, guiding trustees when they exercise discretion or interpret the language of documents. All decisions should be consistent with the family’s mission statement.
The process of creating a mission statement is a unifying activity. All family members should offer input, as they will then feel a connection to it, achieving critical buy-in. A facilitator can aid the family in reaching consensus on a statement that reflects the essence of a family. The statement should be reviewed each year at an annual family meeting, and if necessary, may be periodically modified.
A mission statement can be short or long. There are no rights or wrongs. Here’s an example of one family’s mission statement: “We believe clear, constructive communication is at the core of our long-term success as a family. We encourage all efforts to further harmony, develop humor and perspective on life, and balance long-term concerns while enjoying the present; and to enhance communicative, caring and amicable relationships among family members.”
This is a family who understands that open communication is at the heart of family success. For five more examples of family mission statements, click here.
Be on the lookout for next week’s email where I’ll share the Blum family mission with you.
Marvin E. Blum
What if a Family Meeting Participant Is Disruptive?
April 6, 2021
It happens in every family—a family member “goes off” about something at a family meeting. Do not feel bad about it or feel your family is unique. This is part of normal family interaction. The key is to be prepared for it to happen and not let it throw off the process.
In our email series on Family Legacy Planning, we have stressed repeatedly the importance of having an experienced, objective third party serve as the facilitator at the family meeting. The patriarch and matriarch should be participants, just like everyone else. A neutral party can moderate the conversation, guide the process, synthesize comments, and shape consensus. Moreover, the family’s trained consultant can help restore calm when feelings are hurt or tempers flare.
Hot topics will invariably emerge. At the outset of the meeting, the facilitator can clarify that when (not if) such issues arise, everyone commits to remaining in the meeting and trusting the facilitator to handle it. Be prepared to deal with disruptions and assertions such as:
- sibling rivalry
- feelings that something is “not fair”
(Side note: It’s a difficult concept for some to grasp that “fair” doesn’t necessarily mean “equal.”)
Those feelings are normal and are a part of almost every family’s dynamics. The facilitator can moderate the temperature by acknowledging such issues, but put them in the “parking lot” to address later. Alternatively, the facilitator can call for a break and have private conversations to hear out the views and cool things down.
Unfortunately, there are occasions when things become so hot that a disruptive member prevents the process from being successful. At times like that, you can’t have unanimous participation. It is better for the process to continue with the rest of the family than for the process to stop. The facilitator can communicate the hope to the absent family member that he or she can rejoin the process later.
At The Blum Firm, we have developed a network of consultants to facilitate family meetings. We welcome the opportunity to help you find the right fit for your family.
Marvin E. Blum
A Deeper Dive into the Family Meeting Agenda
March 30, 2021
In recent emails in our Family Legacy Planning series, we stressed the importance of ending each family meeting by setting the agenda for the next family meeting. We recommended that the agenda topics for the first family meeting be more visionary or lofty, aimed at identifying a family’s ethos and shared values. As the meetings proceed, the family is ready to tackle more informational topics. At the conclusion of each meeting, poll the group to find out what issues are top of mind. Ask questions like: “What are you thinking about these days? What subjects would you like to explore?” The facilitator can then help the family reach a consensus on the topics for discussion at the next meeting.
Consider these suggestions:
- Update on the family’s business operations
- Plans for management succession
- Overview of the estate plan
- Review of the family’s philanthropic history
- Patriarch’s presentation on mistakes made and lessons learned
- Introducing the family to its team of advisors
As to the last suggested topic, many younger generation members aren’t acquainted with the family’s advisors. Lacking an understanding of the role they play, there is a tendency to replace the advisory team when the older generation is gone. Doing so deprives the family of advice from a team with valuable historical perspective. The family meeting is an ideal environment for younger family members to get to know the family’s advisors and learn the importance of working with a team of trusted advisors.
Topics such as these not only help a family learn who it is, but it also opens up lines of communication. Family members get to know each other on a deeper level and begin to develop trust. Recall that a breakdown of communication and trust is responsible for 60% of family failures. Families who become more inter-connected provide each other with meaningful support, especially during stressful times. Those families are better equipped to beat the odds of “Shirtsleeves to shirtsleeves in three generations.”
ONE FINAL TIP: I want to share a recommendation from a very wise client (and longtime friend of mine) who is a veteran of the family meeting process. (Thanks, Bryan.) On the day following a presentation by the family’s advisors, the family regroups on a follow-up call. Each shares what they heard and learned. Often a family member who was reluctant to ask questions in front of advisors is more willing to open up in a family-only debrief. Such a follow-up meeting insures that everyone heard the same thing and provides a chance to clear up any ambiguities. Now the family is moving into an important realm of lifelong family education: becoming skilled at teaching each other and learning from each other.
Marvin E. Blum
Warren Buffett’s Advice to Avoid Raising Entitled Kids
March 16, 2021
In The Blum Firm’s email series on Family Legacy Planning, last week’s email raised a question that stirred up a lot of interest. The focus of the email was suggested topics for discussion at the first family meeting. Our recommendation is to start the process with visionary, or “heart,” topics such as “What does it mean to be a member of this family? What do we stand for? Who are we as a family and what are the benefits of being part of this family?” Coming together to explore questions like these helps a family discover its ethos. This discovery helps unify the family around the family’s shared values. Following that opening discussion, future meetings can shift to more informational topics.
But before we shift from visionary topics to more concrete ones, let’s dive deeper into one of last week’s questions that generated curiosity: “How do we avoid raising entitled kids?” We at The Blum Firm have discovered that this question is one that keeps many of our clients awake at night. They worry about money ruining their kids. They often ask: How much is the right amount to give my kids? Here’s my favorite answer: The right amount to give your kids is the amount they are prepared to receive. The problem is less about the amount the kids receive, and more about the kids not being prepared to receive it. We have to be intentional about training our kids to be responsible inheritors. Preparing heirs is a big part of the family meeting process.
This question brings to mind an important Q & A I was privileged to have with Warren Buffett. At a Berkshire Hathaway annual meeting a few years ago, I was selected to ask the “Oracle of Omaha” a question. I decided to ask about his estate plan. I recalled his famous statement that he wanted to leave his kids “enough so they could do anything, but not so much that they could do nothing.” I asked him to share with us how much that is. In his thoughtful answer, Mr. Buffett went further. His advice sheds a lot of light on the challenge of raising kids so they don’t become entitled.
For a summary of my Q & A with Warren Buffett, click this link to read an article in The Globe and Mail (Canada’s version of the Wall Street Journal). The first sentence of Buffett’s answer to my question is powerful: “I think more of our kids are ruined by the behavior of their parents than by the amount of the inheritance.” In a nutshell, Buffett warns that our kids are watching us more than they are listening to us. There’s a lot to do in order for us to raise responsible kids, but it all starts by setting a good example.
Marvin E. Blum
Marvin Blum and Warren Buffett.
Bring a Crystal Ball to Your First Family Meeting
March 9, 2021
Now that The Blum Firm has added Family Legacy Planning to our offerings, we are often asked: “How do we get started?” After an initial assessment so we know the family’s starting point, the first big step is to plan a family meeting. We recently provided some “do’s” and “don’ts” for the first meeting’s agenda. In particular, we suggested to start by focusing on values, rather than valuables. Asking everyone to tell their favorite family traditions, stories, and memories offers a non-threatening way to kick off the discussion. Then “look into a crystal ball” and encourage the family to dream big. Start with visionary questions, such as “What you want the family to look like in 25 years?” Then create a plan to help get from the family you are now to the family you want to become.
Here are some additional visionary topics to consider. Feel free to pick and choose the ones that best suit your family’s situation.
- What is the purpose of our family?
- What is the purpose of the family’s wealth?
- How does wealth impact your life (both good and bad)?
- What do you want for your life?
- What do you want collectively for the family as a whole?
- How do we avoid raising entitled kids?
The advantages of starting with lofty topics is that it levels the playing field. Everyone’s view is valid, regardless of age or level of sophistication. There are no rights or wrongs. Every voice counts and needs to be heard. It opens the door for more free-flowing communication, rather than a technical topic where the presenter may appear to be talking down or lecturing to some in the room. The goal is for everyone to participate and feel respected.
At the end of the first meeting, engage in brainstorming to select topics for upcoming family meetings. After the visionary topics, the agenda shifts to more informational items, such as the family’s business, estate plan, finances, and philanthropy. Getting input on future agenda topics from G-2 and G-3 is not only insightful, but it creates important buy-in. Be on the lookout for upcoming emails that will dive deeper into suggested agenda topics for future meetings.
A FINAL TIP: At the end of each meeting, schedule the next family meeting. By always setting the next date, place, and agenda, the family meeting process will drive itself. Staying a step ahead assures the process continues, as a family meeting is not a “one and done” event.
Marvin E. Blum
Marvin and Laurie Blum with grandson Oliver Savetsky.
Do You Love Your Pets?
March 2, 2021
As part of The Blum Firm’s series on Family Legacy Planning, today we’re addressing another important part of family planning—pets. The pet owners I know consider their pets to part of the family, even closer family than many of their relatives. If you’re like 2 out of 3 American homes, you have a pet. Just as with other precious assets, pet owners need to consider what happens when they are no longer able to care for their pet. Most assume their family will step in, yet more than 500,000 pets are euthanized each year because there was no plan for their care.
Every state now has laws authorizing a “Pet Trust.” Consider adding a Pet Trust to your estate plan, naming a trustee to be in charge of carrying out your wishes. The trust should be funded with sufficient assets to provide for the annual cost of pet care times your pet’s life expectancy, plus an extra sum for unexpected needs, transportation, and the final disposition of your pet. The Pet Trust ensures that the money you designate is actually used for pet care.
In case you become unable to care for your pet while you are alive, consider adding provisions to your Power of Attorney to (1) allow your agent to give your pet to the new caregiver, and (2) authorize your agent to create and fund a Pet Trust if you become unable to do so.
The Blum Firm is committed to holistic estate planning that addresses both financial needs and matters of the “heart.” We would be honored to help you provide for all your loved ones, including the furry ones.
Marvin E. Blum
It’s all in the family: Marvin Blum’s granddaughters Juliet and Stella with Marvin’s “granddog” Basil Blum.
Don’t Let a Funeral Director Plan Your Next Family Gathering
February 23, 2021
As part of The Blum Firm’s new initiative on Family Legacy Planning, we have been stressing that the single most important step to family success is to plan regular family meetings. All too often, family gatherings occur only at holidays or are (heaven forbid) randomly dictated by a loved one’s passing. Family meetings should be intentional and planned, providing an opportunity for both meaningful content and fun interaction.
As last week’s email emphasized, the first rule is “Don’t Go It Alone.” We can help you select the right advisor to facilitate the meeting. The next steps are to determine who attends, when, and where. Pre-meeting interviews between the facilitator and each attendee will identify key topics for discussion. The family may also fill out an assessment form to further reveal issues needing the most attention. The next step is to set the agenda for the first meeting.
Here are some suggested “do’s” and “don’ts” for a first meeting:
- Don’t lead with the money. Many assume the first order of business is to review the family’s financial picture, entity structure, and estate planning documents. Although those are important topics, push them off to a later meeting.
- Start with a focus on the family’s values, not its valuables. Engage in an exercise to identify each family member’s key values, and then find the overlaps. By identifying common values, the meeting starts on a positive note. We want to begin with commonalities, and when “hot” issues or disagreements arise, put them in the parking lot to address later. The first meeting is better used to identify values the family treasures, which will be useful later in crafting a family mission statement.
- Another early activity is to engage in an exercise to identify each family member’s communication style. Knowing each one’s way of interacting, and even the way each one expresses love, will help as we work on opening communication channels and building trust. Recall that the single greatest cause for family failure isn’t inadequate planning; it’s lack of communication and trust.
- Tell family stories, especially stories of resilience and times ancestors overcame obstacles. When (not if) adversity strikes, knowing that you descend from survivors builds confidence that you also have what it takes to survive.
- Address visionary topics, such as each person’s ideal vision for the family’s future. Ask each to look into a crystal ball and envision what you want the family to look like in 25 years. What steps can we take now to improve the chances of looking like that family?
As we continue with this email series, be on the lookout for a deeper dive into suggested topics for family meetings. There are no right or wrong approaches. Let us help guide you to select the best topics for to kick off your first family meeting.
Marvin E. Blum
The First Five Steps to Plan a Family Meeting
February 16, 2021
Question: What percentage of families face communication challenges, or have issues they have swept under the rug, or have heirs who are not fully prepared to inherit?
When the patriarch and matriarch are gone, those issues cause many families to unravel. The solution is to face the issues head-on. The way to do that is by holding regular family meetings where the generations come together to connect and learn. Having a strong, interconnected family provides individuals with critical support to confront life’s challenges, recover from obstacles, and thrive.
The hardest step is to plan the first family meeting. People just don’t know how to get started. Fortunately, there are advisors who are trained to guide you through the process. Don’t try to go it alone. At The Blum Firm, we have resources to help you identify the advisor who will be the right fit for your family. For optimum results, the patriarch and matriarch need to be participants at the meeting and not lead it. Leading the meeting, moderating the conversation, objectively (and delicately) addressing the “hot issues”—that’s the job for a trained facilitator.
So here’s the way to get started:
- Step 1: Select an advisor to guide the family meeting process.
- Step 2: Identify the family members who need to attend the meeting.
- Step 3: Decide on a mutually convenient time.
- Step 4: Choose the location. Note: COVID has taught us that we can even do the meeting virtually, by zoom (“Brady Bunch” style), making scheduling a lot easier.
- Step 5: The facilitator conducts a pre-meeting interview with each participant to set expectations and identify hot button issues.
In our next email, we’ll dive into Step Six—creating the agenda for the first meeting. Hint: The first topic won’t be to discuss money. Stay tuned!
Marvin E. Blum
The First Step is the Hardest: Family Legacy Planning
February 9, 2021
In our last email about the Family Legacy Planning work we’re doing at The Blum Firm, we pointed out the sobering statistic that 90% of families fail. The main two causes of failure are (1) lack of communication and trust, and (2) unprepared heirs. Only 10% manage to escape the adage “shirtsleeves to shirtsleeves in three generations.” By looking to the successful 10%, what steps can we take to improve the odds our family will be in the 10% column?
After much research, we have determined that the first and foremost contributor to success is to hold regular family meetings. Families need to be intentional about meeting in order to build a healthy connection with each other. Those are the families that build communication and trust. Those meetings also provide a setting to prepare heirs to become responsible inheritors.
I have been preaching this gospel for years, going back to a workshop I co-facilitated years ago in New York. The New York Times covered my work in an article “Looking for Ways to Keep Money From Dividing a Family.” (Link here.) Allow me to share a heartwarming story about that article that just came to my attention.
A prominent executive in Memphis, Tennessee recently died, and a group was going through his possessions. One of them came across that article, now more than six years old, which he had saved among his important papers. On it, he’d written the notation “Family Mtg,” double underlined with a star. It turns out the article inspired him to hold a family meeting. I didn’t know the gentleman, but one of his team members tracked me down to tell me I’d made a difference in the lives of this family. Learning that I made an impact on people I never met inspires me to keep preaching the gospel of conducting regular family meetings. It’s why Family Legacy Planning is an important part of the holistic estate planning we do at The Blum Firm.
We recognize that the hardest step is to plan the first family meeting. In the next email, we’ll focus on some tips to help you plan that first meeting, but here’s the first one: Don’t go it alone. Engage a trusted team of advisors to facilitate the meeting. The Blum Firm would be honored to help guide you through the family legacy process.
Marvin E. Blum
A copy of The New York Times article “Looking for Ways to Keep Money From Dividing a Family,” found among a deceased executive’s important papers with “Family Mtg” written on it, double underlined and with a star.
Do I Need To Do Family Legacy Planning?
February 2, 2021
In reading The Blum Firm’s email series about our newest initiative, it may lead you to ask yourself: Do I need to do Family Legacy Planning? The answer often follows from honestly asking yourself these two questions:
- “Are my heirs truly prepared to inherit?”
- “Are there issues in my family that if not addressed could lead to a breakdown in communication and trust?”
Consider these daunting statistics:
- 90% of families dissipate their wealth within two generations after inheriting it, falling victim to the proverb “shirtsleeves to shirtsleeves in three generations.”
- Research reveals the causes for this failure: 60% is due to lack of communication and trust, and 25% is due to unprepared heirs.
If your answer is “Yes, I need to do Family Legacy Planning,” the next question is usually: “How do I get started?”
In the next email in this series, we will begin unpacking the process. The first step is to find the right advisor and plan a family meeting.
Be on the lookout for more to come on how to be one of the successful 10%.
Marvin E. Blum
The Super Bowl of Estate Planning: Family Legacy Planning
January 26, 2021
We recently introduced the topic of Family Legacy Planning, an offering The Blum Firm provides as part of the estate planning process. The aim is to help families succeed. With the Super Bowl coming up, let’s put this into football terms.
Noted family governance consultant James Grubman uses the analogy of a football game to illustrate what happens if you fail to prepare your heirs. At a football game, the focus is on the quarterback. The quarterback has perfect throwing skills. He hurls a pass from one end of the field to the opposite end. The football (the inheritance) is coming at the receivers, but no one has told them it’s coming, prepared them for how to catch it, or taught them what to do with it if they catch it. They’ve never been to a practice. They’ve never been taught the rules. They don’t even know how to coordinate with each other as team players. What are the odds that the receivers will catch the football and run the length of the field, without fumbling it, to score a touchdown? A family with unprepared and disconnected heirs almost always “drops the ball.”
Just as in a football game, you need to tackle these issues head on. You can’t wish them away and hope your heirs will figure it out. Hope is not a strategy. Let us at The Blum Firm help your family adopt a strategy to win the game.
Marvin E. Blum
Painting by Marvin Blum of his son Adam when Adam played football at Trinity Valley School. Let’s win this Family Legacy game!
What is “Family Legacy Planning?”
January 19, 2021
Last week, we announced that The Blum Firm is launching a new initiative: Family Legacy Planning. That announcement generated a lot of interest, as well as the question: Why?
After 42 years as an estate planning attorney, I have witnessed many heartbreaking situations where an inheritance tore a family apart. Over the last decade, I have been studying successful families and asking:
- “What are the best practices of successful families that my clients should be doing?
- “As a lawyer, how can I help my clients implement these best practices?
This research is what led us to add Family Legacy Planning as an offering for our clients.
In a nutshell, just what is Family Legacy Planning? Traditional estate planning addresses the family’s valuables—where, when, and how they pass to future generations. Family Legacy Planning addresses the family’s values. Its mission is to pass down more than wealth, but also a family’s ethos, improving the odds the family will remain meaningfully connected for generations to come. Its aim is to pass down the skills and tools to help heirs face life’s inevitable challenges and not only survive as a family, but thrive.
The COVID pandemic is a natural time of reflection. It has made all of us aware of family issues we’ve been sweeping under the rug. These issues don’t go away. In fact, they tend to erupt when a senior generation member dies. Addressing them is hard, but it’s an act of love. Now is the ideal time to start.
Over the coming weeks, be on the lookout for regular emails as we explore the steps you can take to help your family succeed. The Blum Firm is proud to partner with you on this critically important endeavor.
Marvin E. Blum
Generations of family legacy: Marvin Blum’s mother is seated at far left; in center is his great grandfather “Zaidy.” Marvin is now “Zaidy” to five grandchildren. A legacy passes down a heritage from generation to generation.
New Initiative Launch: Family Legacy Planning
January 12, 2021
When The Blum Firm reached our 40th anniversary three months ago, I announced the milestone by reflecting on how our estate planning law firm has grown and evolved over the years. In that announcement, I shared that we would be launching a new initiative in early 2021. I’m excited to celebrate that new offering with you now: Family Legacy Planning.The aim of this new endeavor is to partner with you to create a process and structure to help your family succeed from generation to generation. It takes more than hopes and dreams for future generations to thrive. Hope is not a strategy. We need to be intentional.
Family Legacy Planning has started to emerge as a critical part of the estate planner’s toolbox. It was born out of asking clients: “What keeps you awake at night?” We learned how much our clients worry about their family’s future. We have all observed horror stories of inheritances that failed.
Labels began to surface to try to put a moniker on this new aspect of planning: Family Governance; Holistic Estate Planning; Family Dynamics; “Heart” vs. “Head” estate planning; Qualitative vs. Quantitative estate planning; the “Soft” issues of estate planning (although, ironically, these issues are typically “hard” to address). We believe the term “Family Legacy Planning” encompasses all these concepts.
Coming out of 2020, now seems an ideal time to focus on the family. The pandemic heightened our awareness of our need for family, as well as the fragility of this precious asset. On a personal note for Laurie and me, mixed in with the hard times came the gift of two new grandsons, born only a few weeks apart. There’s nothing like having grandkids to make you even more acutely aware of the importance of both the “head” and the “heart” aspects of estate planning. A family’s financial success, important as it is, is only part of the story. We want to create a meaningful legacy and pass it down to our heirs. As we say in Hebrew, L’dor Vador, from generation to generation.
In the coming weeks, be on the lookout for regular emails from us explaining the features of Family Legacy Planning. We urge you to make it a New Year’s Resolution to focus on your family this year and learn the steps you can take to help set up your family for success.
Marvin E. Blum
Marvin and Laurie Blum and their growing family.