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Advisors Face an Impossible Problem

We have to lead by example, and it has to start much earlier.

At long last, the wealth planning industry has started to place more emphasis on the “softer side” of the practice: issues such as the psychological and emotional well-being of clients. The reasons for this shift are fairly simple: more frequent and bitter estate disputes; lower transfer tax rates and higher exemptions; greater potential for estate tax repeal; and a more enlightened society in general (even if it doesn’t always feel that way).

Solving the Impossible

Large transfers of wealth can have the potential to create future generations who are unmotivated and immature and have poor self-esteem. The most successful estate plans transfer not just monetary assets but also human capital, meaning the client transfers his skills and knowledge so that the future generation is prepared to perform in the world and produce economic value. 

Yet, when clients, who are already in their 60s, 70s and 80s, come to me for estate planning advice and ask me about potential family sensitivities and conflicts (or when they don’t ask, and I offer my input anyway), I often feel like I can place Band-Aids on the issues, but I can’t ever really solve them. How can I solve impossible issues such as how to divide the family business among the children or make descendants like and respect each other and be happy and satisfied with what they will or won’t receive? Many of the deeper emotional and psychological issues involved likely have persisted for decades, maybe even since the children were very young and relate to how their parents raised them. Some may involve individual mental health issues that even psychologists and therapists can’t solve. Perhaps we can state that part of these issues is “nature” and the other part “nurture,” but in either case, wealth planners can only do so much, especially so late in the game. 

Getting to the Root of It

Many of my clients are (or at least should be) worried about future estate disputes, the success of their businesses, waste and squandering of assets by spoiled descendants and how their children will get along when the clients are no longer living. Often, to help deal with these issues, we create legal structures like partnerships, draft key employee and company operating agreements and all sorts of types of trusts, such as incentive, marital, discretionary, support and asset protection and focus on who will serve as trustees and their powers to help deal with these issues.

Don’t get me wrong. The wise and empathetic estate planner can certainly help minimize the potential for, and the effects of, a later dispute or problem and help descendants to become more productive as well as protect their assets. However, as my own still-young children and I grow older, I realize that these structures and documents don’t get to the root of the issues.

What’s really needed is teaching the next generation to be self-sufficient, productive, grateful, self-fulfilled, loving and happy people. When substantial money is involved (or conversely, sometimes if too little money is involved and there’s tremendous hardship), it’s much more difficult to inculcate higher ideals and values.  

So, what’s the solution? Education and preparedness starting at a young age. We can’t just start educating our loved ones in the later years of our lives. It’s likely too late if our children are already grown. We also have to start leading by example, and it has to start much earlier.

To convey this message to relatively young or new parents who may not yet be visiting an estate planning attorney, there must be far greater understanding and collaboration among all the financial professionals, including insurance, banking, brokerage, accounting, legal and perhaps the educational and mental health communities as well, to truly get this important message across. I certainly welcome feedback and advice from the readers of this article as to how to accomplish this extraordinarily complex mission.    


This is an adapted version of the author’s original article in the January 2018 issue of Trusts & Estates.

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