Excerpt from Living Richly
You Need a Team
No matter how simple your life was before you got your arms around the scope of your wealth, there’s no going back. Some people get by with $50 in software and a few hours to complete their taxes each year. Not you. Some people spend a grand total of one hour a month at the kitchen table to pay their bills. Wouldn’t that be nice? A lot of people have relatively simple answers about what they own and what they owe. Bye-bye simplicity, hello complications. Alysa’s situation may be more in line with what you’re facing (whether you know it or not).
Alysa ...And the Prospect of a Family Partnership
"When I started wealth coaching for Alysa, she had a relatively small portfolio. Gradually, over the years, we learned that she was due for a significant inheritance directly from her grandmother. As the estate initially stood—largely tied up in rental real estate properties— millions of dollars would have been burned unnecessarily in probate fees, appraisal costs, and other expenses across the properties’ eight different home states. Since the titles to the properties were nearly all in Yia Yia’s name, these costs—and frankly the sheer amount of red tape involved—would have been crushing."
"One part of the solution came to light through Alysa’s participation in my workshops and wealth coaching sessions over the years: a “family limited partnership.” That family partnership would need a leader. With a better understanding of the personalities involved (thanks to her family diagrams—see page 53) and the specific interests of all family members, Alysa realized it was her calling to take that role. This was a valuable revelation for both Alysa and her family since, frankly, no one else was stepping up to the plate."
"The financial benefits in her case were significant. She now earns a salary from the family partnership, thus shifting her grandmother’s assets to the lower tax rates that apply to earned income. It’s one way she’s found to avoid the onerous generation-skipping taxes that she would have otherwise incurred (at the time—see page 53). The opportunity also gave Alysa a more compelling sense of purpose. In our years working together, she has admitted that she sees herself maturing out of those youthful years of video games, sleeping late, and seeking nothing but leisure time with friends."
In the early stages of her new role, however, she faced a confusing array of real estate holdings, as well as the prospect of working with an estranged aunt and a general lack of direction in how to manage an estate. That’s a whole set of skills and knowledge that Alysa would have to work on with me and the other members of her team in the years to follow.
If you find yourself in a similar situation to Alysa’s, you could try to sort it out alone, cowboy through it all, be the rugged Marlboro Man. That would be your first mistake. In Alysa’s case, she appreciates her ability to make some sense out of the family’s finances, but she’s not exactly eager to stay up nights sorting it all out. If you really want to make something beautiful out of all this, given the amount of work facing you and the years of expertise you’ll need at every turn, then start assembling your team of experts.
There are aspects of your life where you should be the star player. Namely your dreams, the things that are unique to your ideals, your imagination, and your aspirations. Please tell me that managing the unwanted, burdensome details of your inheritance is not your aspiration! Good. So take yourself off the field and leave the daily grind, the gridiron battles, the back-and-forth, to your designated team players. Out there on the field is a tough place to be; ask any old, arthritic sports star. You won’t be turning your back. You can oversee from the sidelines; you can direct from the owner’s box.
Back to your inheritance. Certain specialists are crucial for their specific areas of expertise and can provide critical advice on bigger issues that cross multiple fields. For instance, drafting a will involves an attorney and often a tax expert and sometimes a philanthropic advisor. In some cases, as many as six different specialists will weigh in on aspects of a key document like that. If you’re ambitious, you may choose to take it upon yourself to coordinate, orchestrate, manage, and even motivate all the members of your team for such projects. But even in that role, inevitably, you could use a peer—an assistant coach.
When you take responsibility as owner of the team that manages your finances, that’s a huge step forward—and eventually every inheritor should get there. For those just getting started, though, you probably said to the last paragraph: “Peer? Assistant coach?! I need someone to tell me what to do!” Fair enough. There are plenty of people out there you could turn to. Some are eager to help; others not so much. Some are competent; others not so much. The team analogy is helpful here. When starting a new team, who would you hire first? Loudmouth fans who will tell you how to run your team? A star player (without knowing the culture of your team as a whole yet)? The backup placekicker? I guess it was a loaded question: you need a coach.
Regularly listed among the country's top financial advisers by Worth magazine, Myra Salzer is the founder and president of The Wealth Conservancy, Inc., an independent financial planning firm in Boulder, CO. As a renowned wealth coach and inheritor's advocate with over 26 years of experience, Myra helps heirs manage and preserve their inherited wealth. A notable expert in her field, Myra has been recognized for her efforts in Worth, Wealth Magazine, Investment Advisor, Boomer Market Advisor, and most recently as the “Technology Wizard” recipient at Financial Planning magazine’s 2010 Innovator Awards. Learn more about her books:Living Richly: Seizing the Potential of Inherited Wealth (2010) and The Inheritor’s Sherpa (2005)..
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