By Alan Pratt, CEP, CAP

Years ago, I heard Bill Neukom speak about what he did when his Microsoft stock options turned into millions. One of the original corporate counsels for Microsoft in the early 1980s, he’s now a multi-millionaire and owns the San Francisco Giants baseball team. Something he said stuck with me, “I never viewed it as mine.” This attitude of stewardship around the windfall enabled him to retain and build his wealth. The same can be said of my clients. They live their legacies with a stewardship mindset. A portrait of my dad hangs in my office and a photo of my family graces my desk, reminding me daily of my own legacy and why I’m inspired to help others find theirs. I am blessed by the twist of circumstance that led me to a career in estate planning twenty-seven years ago.

In 1991, along with the rest of the country, my hometown of Seattle experienced a recession that lasted nearly a year. Nationwide, an economic downturn caused a savings and loan crisis. The housing market collapsed. I’d been a banker for sixteen years following my graduation from the University of Puget Sound in Tacoma, Washington, in the mid-1970s. At the time, I was working for a large Savings and Loan institution. It was hit hard by the recession. Suddenly, at 37-years-of-age, with a wife and three kids to support, I was unemployed. Given the chance to figure out what I wanted to do with my life, this dramatic career shift led me to a commission-based job in estate planning. I really didn’t know anything about it, but for the next few years I fully applied myself to learning the business. About three to four years into it, I felt a strong calling that there was more to estate planning than tax and legal structure. It was human. It was about showing the people we care about how much we love them by providing for them via structured, beneficial planning. After five years of work in the industry, I decided I wanted to work exclusively with people who were charitably minded and outwardly focused. They were developing lasting relationships and applying financial stewardship that would better their communities and leave a meaningful legacy for their heirs. In 1997, I decided to open my values-based estate-planning firm.

What is values-based estate planning? As a financial counselor or as I like to call it, a “family legacy architect,” I help families construct plans that not only preserve their wealth but identify their values. This process fosters loving family relationships and inter-generational legacies.

When people think about estate planning, their first thought is often what’s going to happen to their financial portfolio when they die. However, values-based legacy planning isn’t about dying. It’s about living … with purpose and intention. Our clients choose how to live life fully and enjoy their relationships. Active and enthusiastic, they are generous, philanthropic, and outwardly focused. Cultivating an attitude of stewardship of their time, talent, and resources, they use their financial portfolio as a tool to build their legacies. Rather than using their wealth to control others, they use it to create good in their families and communities.

Through life experience and working with our clients, we’ve learned that wealth in life can be measured fundamentally by loving relationships, health, spiritual development, and intellectual growth. Financial assets are tools that can empower wealth and bring lasting happiness or, in some cases, tear a family to shreds. This underscores why our firm advises families to work together as a team to identify their members’ strengths and giftedness. We encourage clients to see how holding these up as valuable can balance other members’ weaknesses and create understanding, connectedness, and strength. We encourage families to bring all their members’ points-of view to the discussion. Open communication in the estate planning process helps families realize where each one of their members can be most productive, particularly when dealing with an enterprise or foundation.

At our firm, we use a process called Legacy Planning from the Heart™. We believe that meaningful planning comes from our clients being fully aware of their deepest intentions, knowing their values and planning from them. Through in-depth workshops and family consultations, we help them identify and/or reaffirm what their values are and how to apply consistently these values as guiding principles to make wise decisions for the future. Families emerge from our process with an estate plan that clarifies and reflects all their members’ expectations and principles. Every member of the family is included in this communication process, from spouses to children to grandchildren. Bringing the entire family into the conversation generates trust as well as a sense of being equally valued. As a result, relationships flourish and, going forward, everyone has a clear understanding of what lies ahead. Building stronger communication and trust in families also fosters intergenerational mentoring. Planning with your family instead of at them builds trust, not fear. And building trust in families means the legacy you want to leave behind will be the legacy your family lives well after you are gone. Within families, secrecy leads to people being unprepared. However, opening family wealth and inheritance up to discussion brings heirs into the conversation to talk responsibly about managing their inheritance and developing stewardship skills. Then when heirs do inherit the wealth, they’ll be much more likely to be appreciative of it and learn to view it as a legacy that will have an impact on other people beyond just themselves and their generation.

Our firm guides people toward viewing their wealth as it relates to their values and to being transparent about their intentions with all family members. But sometimes when clients come to us, spouses and children have not been invited to the table. One of my clients said that she was excluded from family talks about her husband’s wealth, resulting in her being secretive with her own children and their spouses. In order to avoid heavy taxation by the government, she had decided to make financial gifts to the children rather than will them an inheritance. Whatever was left at the end of her life would be donated to charity. However, she feared her plan would upset her children and their spouses, so she had said nothing. As she reached her senior years, though, she realized she didn’t want her daughters-in-law to be excluded from conversations about family wealth in the same way she had been. So, our firm held a workshop during which every family member filled out a values sheet on each other. Her eldest son questioned the process, saying there wasn’t a point to it because everyone loved each other. But remembering how she’d felt when she wasn’t part of the conversation about family wealth, she insisted it was necessary. Ultimately her insistence did increase trust. Including all family members in the conversation also set an example for future generations.

Another client grew up with extreme wealth and later inherited it. Now, at 68, she’s one of six children who inherited 10 million dollars in 1982. Four of her siblings have little to show for it. But she’s lived modestly and used what she had to benefit others. She made her money grow in such a way that it’s not only caring for her, but also making a significant impact on others’ lives. During one of our estate planning workshops she realized the importance of involving her daughter in future discussions. As a result, she discovered her daughter’s philanthropic views aligned with hers. Her daughter had worked for nonprofits and had a heart for helping people. Our firm showed them how to redirect resources to nonprofits they believed in with funds that would have otherwise gone to federal taxes. My client was thrilled because she said she felt that she was doing her part to make the world a better place. She also loved that she included her daughter in the process. She plans to be equally transparent with her daughter’s husband, as they just married a few months ago.

A third client came from a family that didn’t initially have money. My client’s father had built a mill in the 1930s. Amongst other things, it provided work for displaced laborers during the height of the Great Depression. It was this hard-earned money and concern for others that laid the foundation for her family’s wealth. When she was thirty years old, her father had asked her to help with the family business. Our firm guided her through a process to channel her resources to many nonprofits that otherwise would have gone to taxes. Today, her foundation supports education, Catholic schools and services, and community outreach. The Fremont District of Seattle has grown exponentially under her caring hands. To honor her father’s legacy, she’s also involved her children in the business. Her son manages the family’s real estate with a focus on helping their community.

Opening lines of communication between people is our priority. As a faith-based professional, helping others plan their futures with philanthropic intention brings me great joy. Conclusively, I’ve learned that wise stewardship and ongoing, inclusive family communication creates longevity while reinforcing purpose and intentionality. In other words, selfish wealth doesn’t last very long and generally destroys relationships. Selfless wealth, however, fosters love and builds lifetime legacies, generation after generation.

For more articles on legacy planning, click here to subscribe to Legacy Arts Magazine.

Alan Pratt, CEP, CAP is a family legacy advisor specializing in philanthropy and family wealth preservation. His company, Pratt Legacy Advisors, practices estate planning that extends far beyond strategic wealth distribution. His firm has created Legacy Planning from the Heart™, a process that helps families integrate core values, life experiences, and philanthropy with their estate plans. He also uses Advanced Life Insurance Designs, a key component in successful family wealth transition plans. Alan lives with his wife, Helen, in Seattle, Washington. They have three adult children and three grandchildren.

Click here to view an interview with the author!