Seedlings

Is There a Greece in Your Child’s or Grandchild’s Future?

“When you have too much month for your paycheck, then what you need to do is realize that there is abundance all around you and focus on the abundance and not your lack and as night follows day abundance will come to you.”—Sidney Madwed

I was in a London airport lounge recently scanning the headlines of the Sunday newspapers .   I found one story after another detailing the struggles of the European community to find a solution to the fiscal and financial crisis in Greece.  These stories often asked if the economic contagion would spread not just to other members of the Eurozone but to the U.S. and other corners of the world. 

Shortly after my return to the U.S. I heard several presidential candidates warning that if the United States didn’t bring its deficit spending binge under control we would face a crisis similar to what is rocking Greece.  One morning my reflections led me to ponder how many families throughout the world are on a course which may lead them—no matter how vast our current financial resources—to a bankrupt future in terms of purpose, significance, and character development.

A few days after Christmas I had the opportunity to spend a half day with Lee Brower, author of The Brower Quadrant, a book I’d highly recommend.  Lee introduced me to a powerful concept he is developing called Empowered Sustainability.  I have been reflecting since that meeting on what a positive legacy we might leave our children and grandchildren if we could help them live every day of their adult lives through the paradigm of Empowered Sustainability.

I believe that what Lee Brower is seeking in the concept of Empowered Sustainability is an antidote to the shirtsleeves to shirtsleeves in three generations wealth cycle that James E. "Jay” Hughes, Jr. discovered in his professional odyssey.  What can we do to not just preserve a family’s financial wealth through future generations but allow the family to flourish both individually and collectively?

There is no question that societies in the developed nations have become increasingly materialistic over the last century.  The “more is better” mentality is a siren song which will shipwreck both individual and family happiness.  That mindset puts us on what some call the hedonistic treadmill.  It is an unsatisfying, in every meaningful way, race to acquire more; to have better toys, gadgets and lifestyles.

How can we make sure there isn’t a Greece in our child’s or grandchild’s future?

I think it starts with The Power of Example.  It is what we model in our own lives which will reflect the brightest in the future lives of our children and grandchildren.  It starts when we tune into our personal purpose and calling.  Then, we should make sure we help our posterity understand this wisdom from Wayne Dyer:

“Doing what you love is the cornerstone of having abundance in your life.”

And, we need to help them understand the math of less can be more.  Choosing purposefully how we spend our paychecks; living within our means rather than beyond; and making sure we are wise consumers are all part of this sustainability discipline.

There is a huge need in the U.S. today for financial education.  But no matter how much we know about investing, until we can exercise the self-control necessary to not mortgage our futures through excessive use of credit cards, home equity loans, and pay-day cash advances we will remain in economic serfdom. 

I believe the path to Empowered Sustainability starts with honest introspection.  It begins with understanding the difference between needs and wants and committing ourselves to be grateful for what we already have.  Gratitude is a key component of Empowered Sustainability. I love this wisdom on unleashing the generative influence of appreciation by focusing on what we already have:

Both abundance and lack [of abundance] exist simultaneously in our lives, as parallel realities. It is always our conscious choice which secret garden we will tend … when we choose not to focus on what is missing from our lives but are grateful for the abundance that’s present—love, health, family, friends, work, the joys of nature, and personal pursuits that bring us [happiness]—the wasteland of illusion falls away and we experience heaven on earth”-- Sarah Ban Breathnach, in John Cook, comp., The Book of Positive Quotations, 2nd ed. (2007), 342.

As we become aware of how we are spending our financial resources and where we are investing our time and energy, it opens up the opportunity to commit ourselves to a plan which will ultimately reduce stress, increase our opportunities to discover greater joy and fulfillment, and make the Power of Example a sustainable influence within our families.    

"Earth provides enough to satisfy every man's need, but not every man's greed”—Mahatma Gandhi

MORE LESSONS FROM THE LIFE OF RAY CHARLES

“My mom would say ‘You might not be able to do things like a person who can see.  But there are always two ways to do everything.  You just have to find the other way.” - Ray Charles

 

“He left not only the phenomenal music he sang and recorded, he left the indelible impression on people that it's all right to be yourself" - Johnny Mathis, who recorded a duet of Somewhere Over the Rainbow with Ray Charles just a little over three months’ prior to the Genius’ death

 

Ray Charles’ life was not only a testament to the unique ability each person possesses to overcome adversity and weakness but in finding the way to become the person you were meant to be. 

 

He felt it was important to share his financial success to improve the lives of others.  In 1986, Ray Charles created a private foundation dedicated to providing support in the area of hearing disorders and the empowerment of young people through education.  The vision of The Ray Charles Foundation is to instill in the youth of America that “there is no challenge too great one cannot overcome.”

 

Just a few years before his death Ray Charles gave Wilberforce University, our nation’s oldest African-American college in Ohio, $2,000,000 to fund music scholarships because “"It was what I had to do, and the reason I had to do it is too many people have been good to me."  In 2001 he donated another $1,000,000 to Morehouse College in Atlanta, Georgia.

 

He then gave $3,000,000 to Albany State University.  A few years after his death his personal representative threatened to sue the college to get that money back.  

 

Mr. Charles’s children strongly opposed that move and sent a letter to the attorney for the estate stating: “Ray Charles would be outraged by your threats to rescind the gifts he made...to Albany State U.”

 

Shortly after his death tabloids reported Ray Charles died broke and was a negligent father.  This publicity so angered his children that they shared with the public a very private story about what their father had done for each of them.

 

A few days before Christmas 2002, Ray Charles called a meeting of his 12 children at a hotel in Los Angeles. Few of his children knew each other as they had 10 different mothers.  Ten of the children, ranging in age from 16 to 50 – came to this luncheon to listen as their father told them he was mortally ill and outlined what they could expect from his fortune.  What we know about this family meeting comes largely from Ray’s second oldest son, the Rev. Robert Charles, who recalled:

 

"He called and we had a sit-down lunch...We took a lot of pictures. And we had a really good time getting to know each other. There were 10 of us there because two couldn't make it. My dad talked about how they always wait until a person passes. He said, 'Why do that? I'll give it to you now so you can build on that now.' It wasn't publicized because he was a very private man."

 

At that time, Ray Charles presented each child with a check for $1 million and explained that most of his financial assets would be left at his death to his charitable foundation.  When he passed away it is believed Ray Charles’ holdings were worth between $25,000,000 and $50,000,000.

 

Another son, Ray Jr., responded to the rumors that his father had died penniless with these words:  "How can you be broke when you give us $1 million and pay the taxes on it? What does that tell you? My father was second to none. He died not owing anyone anything. Everything he had belonged to him. He has 12 kids and he recognized them. He gave them $1 million in the prime or peak of their lives."

 

It really doesn’t matter how large Ray Charles’ estate was or how much he left his children.  The key to his personal and family legacy is found in the strength he exhibited in overcoming weakness and adversity and in the desire he had to give something to his children before he died that they could build on.

 

How will you tell your children about what your testamentary intentions are?  In what ways will your personal and family legacy empower your children to build upon what you have given them—both monetarily and through that family wealth that isn’t taxed, your wisdom and experiential reflections?

 

"Heaven wanted some music, and God sent for Ray Charles," - The Reverend Jesse Jackson speaking at Ray Charles’ funeral

 

"Through his darkness, he enlightened and brightened our lives." - Cecily Tyson, who along with Clint Eastwood, was present with Ray Charles at his last public appearance in April, 2004

What does money mean to you?

A New Paradigm Around Inheritance and Gifts

“What does money mean to you?” asked my host, a very successful businessman.  Before I share my answer let me tell you a little about this fascinating man whose question brought me a valuable perspective on how we should view gifts and inheritances.

My host had been born in mainland China.  Before his second birthday his parents fled to Hong Kong as the communists took power.  His father had a dream and business talent.  The small company he founded in Hong Kong has grown into a worldwide enterprise with 12,000 employees.  At age 18 my friend was sent off to the U.S. to begin his freshman year at an Ivy League university.  His mother had placed $3,000 in a secret pocket she sewed in his blazer.  That was to last him until he would come back to Hong Kong the following year to report to his father what he had learned.  He repeated that odyssey to Hong Kong each year until he eventually completed medical school.  He chose a difficult field of specialization within medicine and rose to the top of his profession.  Clearly, by any definition he was successful.

As he told me this story over lunch, our conversation turned to family wealth and what he was doing to help his children get successfully launched in life.  He had just returned from Hong Kong.  His father, at 86, was still running the company his way.  He insists that the factory floors are waxed his way, the machinery maintained his way etc.  On virtually each trip to Hong Kong my host is reminded by his father of the Chinese saying “Rice Paddy to Rice Paddy in Three Generations”.  This is the same proverb that Jay Hughes introduced to the West in his book, Family Wealth – Keeping It in the Family.  Here in the U.S. we are used to hearing it as “shirtsleeves to shirtsleeves in three generations”.

In these conversations with his father, my host has been asked what he is doing to prepare his children for the opportunities and responsibilities that come with family wealth.  My friend then proudly shared with me some of his children’s accomplishments.  I wondered, given the magnitude of this family’s wealth, what had motivated his children to achieve the levels of success they had already attained.

My friend then asked: “Do you mind if I ask you some very personal questions?”

“Not at all,” I replied with a growing sense of curiosity over where this turn in the conversation was taking us.

“I’ve shared with you a little bit of my Chinese heritage and my feelings about the importance of family.  But let me ask you a few questions about how you, as an American, view money, gifts and inheritance and then I’d like to contrast that with what I was taught the Chinese view is.  So tell me, what does money mean to you?”

I was somewhat disarmed by the question.  A number of concepts raced through my mind.  “Well,” I replied, “it really can mean or represent a lot of different things.  For instance, money is a medium of exchange.  It is the way I buy goods or services.  But it also represents power and status.  On the negative or dark side it represents control and dependency.  And perhaps at the highest level it means opportunity, stewardship…”  My voice trailed off as I thought of the powerfully positive ways in which I had seen some of my wealthy clients use their money.

“That is such an American definition,” my host gracefully chuckled.  “Now would you like to learn how the Chinese view the money which they receive as a gift or inheritance?” 

“Oh, yes.  Please share that with me.”

“In China, when we receive an inheritance we view it as the life energy of the person who has given us that money or property, whatever it is.  It represents all of their love, toil and experiences.  In fact, in a way it not only represents the culmination of their life’s efforts but it is an extension of the opportunities, successes and sacrifices of all of their ancestors.  So when we spend some of our inheritance, it is to us as if we are spending the life energy of our ancestor(s).”

As I walked back to the office that day I wondered how my children would view the inheritance I might leave them.  And then I marveled at how different the outcomes would be if American families could imbue their children and grandchildren with that same sense of stewardship as is represented in the Chinese view of the meaning of money and inheritance.

About six weeks passed and I was asked to join my host again.  In this interlude he had gone into winter seclusion and let his passion for sharing the wisdom he had received and developed express itself in a manuscript.  He wanted to share with me a few of the powerful metaphors he had used in talking about family wealth and how parents can pass more than money to their children.  This time, as in our first meeting, he shook me with another powerful question:

What Would You Rather Do? Build a Better Boat or Train a Better Captain?

I was reminded immediately of the empirical evidence offered in the book Preparing Heirs by Roy Williams and Vic Preisser.  In that book Williams and Preisser shared the social science studies around inheritance that they had conducted with approximately 2,100 wealthy families.  They found that 70% (seven out of every ten) of the families that participated in their survey had experienced one or more of six “failure” events in the transition of their family wealth from the oldest generation to the next generation.  What was even more powerful to me was their conclusion that 85% of these failures could be traced to two problems: lack of communication and trust and lack of preparation.  Or, if we want to look at it from the proactive and positive side of this paradigm, with intra-family communication and preparation of the next generation of family members we could avoid 85% of the failures in the intergenerational transfer of wealth.

So my host had given me a powerful metaphor to use around the need for both communication and preparation: the metaphor of training a better captain.  As I have reflected on this metaphor I realize that the dominant emphasis in traditional estate planning today is centered on building a better boat.  But no matter how well conceived or constructed, the best vessel in the hands of an illprepared captain will not be able to survive the pressures of wealth transfers.