The term legacy planning refers to and indicates the process of planning about and around a family, in as much as corporate planning refers to the planning process undertaken by a corporate about achieving its mission and vision.
The Iroquois tribe have lived by a simple mantra:
“As we begin our sacred work of tribal decision-making, let us hope that our decisions today as well as the care, deliberation, and wisdom we use in making those decisions will be honoured by and truly beneficial to the members of our tribe seven generations from today, as we today honour the decisions made by our ancestors seven generations ago.” (Paraphrased)
Decisions made today will still have to be truly beneficial to the tribe seven generations later.
A peek into the mind of the tribal chiefs reveals that their predecessors had the same thoughts. The tribal chief made a concerted effort to perpetuate the tribe by imbibing and transferring a set of values, social behaviours and boundaries (in current parlance – governance mechanisms) for its members. These tribes have hence achieved a certain degree of success in planning their legacy and handing it down the generations.
How have they achieved this feat? – Is it training? Is it conditioning?
Does such intensive planning for seven generations hold true for tribes alone? Or does it also hold true for those families who wish to preserve their hard-earned wealth for generations to come?
The Western and Indian scenarios
Throughout history, in the Western world, many families established great businesses, colleges, hospitals and universities in the name of philanthropy.
In their abundant wisdom, they also created financial and administrative structures that ensured financial unity and success, allowing their family wealth to continue to do good work long into the future. They have left their legacies in those institutions for posterity. In short, the Western families have interwoven their legacy planning into their estate and wealth management practices.
The Indian scenario presents a mixed picture. Despite a tradition and culture of civilisation dating to back to the ‘BC’ era, ‘legacy’ is not a celebrated word.
While India had its own share of eminent families who had built venerable charitable organisations, temples (place of worship for Hindus), rest houses for travellers, etc, very little is known of them. What little is known about these families is through word of mouth or at best, from ad hoc narratives.
With the evolution of modern day financial and taxation systems, successive governments did not consider legacy and wealth planning as instruments of the State for building a vibrant, modern day State.
Punitive taxes drove the family wealth underground and philanthropy and legacy planning were the victims.
What then is legacy planning?
The term legacy planning refers to and indicates “the process of planning about and around a family, in as much as Corporate Planning refers to the planning process undertaken by a corporate about achieving its mission and vision.”
Legacy planning means capturing some things that are priceless to a person, family and/or a community. Some of those priceless moments could be times of triumph, tribulations or celebration. If we fail to capture such moments in a way that can be passed on or given away they lose their value.
Some of the modern day corporations, which have carried on the legacy of their founders, have started building and publishing their stories – the highs of growth and great successes, and the lessons learned from the crises they have faced.
One of the key challenges of legacy planning is the capturing of values. Values include the use of wealth, conduct of businesses, conduct of oneself, giving and philanthropy, and expected behaviour among family members – especially when differences surface between them.
Is legacy planning relevant?
In the current context of the global financial meltdown and the expectation of a severe recession, how relevant is Legacy planning?
Even in times of economic boom, we have witnessed families and at times, generations, destroying prosperity for a variety of reasons: sibling rivalries; cannibalisation of businesses built by earlier generations; lack of foresight; lack of cohesion among family members and lack of family purpose.
Legacy planning today, in the midst of ‘bust’ and massive wealth destruction, has therefore probably never been so important.
The current generation of self-made rich are keen to use their wealth as a force for the good in the world, as well as for their families. For them success is more than just money: they want their families to remain harmonious and cohesive; they want their children and succeeding generations to lead fulfilling and meaningful lives; they want to cultivate their potential and they want to make a difference in their societies.
Above all, they want their children and future generations to learn to value “wealth”.
These goals can be achieved only through a professionally managed legacy planning process focused on passing-on of values, wisdom, purpose and ethics; which brings together financial professionals, tax specialists, attorney’s and family members to set the legacy in place.
Legacy planning is for all those families who genuinely want to prevent the “shirt sleeve to shirt sleeve in three generations” syndrome taking over their hard toiled fortunes.
With the wind blowing in favour of change and shift, the wealth management industry, particularly in India, needs to make the option of legacy planning available to their clients and customers.
Finally, legacy planning should not just remain an option but should be an attractive one, too. Therein lies the real challenge.
“???..it’s the family stories that are worth the storage.” – Ellen Goodman
The author is head, legacy planning, Altamount Capital Management