It's Not So Easy
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As with a lot of life's important tasks, there is both good news
and bad news associated with estate and business planning. The good
news is that a sensible and careful plan can protect and preserve
capital, and guide and enable your family, in ways and to degrees
which would, I believe, greatly please and surprise you.
The bad news is that an optimum result does not come about
automatically or easily. Alas, it comes about quite seldom,
everything considered, for a wide variety of reasons.
One of those reasons, which I am going to try to address here, is
the typical client's apparent inability to devote, to the question
of disposing of his wealth, even a tiny fraction of the time,
energy and creativity which he cheerfully gave to the process
of acquiring and keeping it. There are a number of possible
reasons for this.
One may be the
distracted and hurried pace of modern life, in which people seem
to be forever hurrying to put out fires but never taking the time
to sit back and try and figure out what started the fires in the
first place.
This is particularly noticeable with the highly motivated
entrepreneurial types, to whom the notion of calm reflection is
quite clearly abhorrent, that is, if they even recognize the
possibility at all.
Another may be the degree to which the
process is cloaked in seemingly arcane language, unnecessarily
impenetrable prose, and other mystifications and obfuscations, which,
unfortunately, some planning professionals do little to relieve,
possibly in a misguided attempt to increase their status with,
and thus their apparent value to, their clients.
Happily, I have the answer. In order for you to be an effective
client, and thereby extract the maximum value from the planning
process, you must focus upon the following issues:
1. The Landscape. You must get to know something of the
planning "landscape" generally. By this I mean you should
gain an overall sense of what may be do-able and what is clearly
not. This initial stage of the process will not provide you all
of the answers, but it will, to continue the painting metaphor, put
a frame around the picture which you and your advisors are trying
to paint.
2. The Words. You must get to know something of the specialized
vocabulary which is involved. This is not as daunting a prospect
as it might first appear, because you do not need to have an
expert's depth of knowledge.
To the extent, however, that the planning process involves uncustomary
ideas and those ideas are expressed by specific words, you must
know something about those words in order to communicate (and be
communicated with) effectively.
3. The Choices. You must display an ability to make choices.
This is really the nub of the entire planning process --- making
choices. Quite a number of them will be "either/or"
choices, in which you simply choose one path or the other. In
other cases, however, there will be multiple choices, and you
will be forced to choose among several competing alternatives.
Except in the simplest cases, there could be quite a complex
"decision tree" for you to climb, and you may find it
helpful to sketch out (literally) the various points of decision,
choices available, major plusses and minuses of each potential
choice, etc.
4. The Trade-offs. You must develop an ability to weigh various
factors and to decide which elements of the equation are more
important than others.
Much of this process, in day to day life, is done subconsciously,
but you will find that, because the estate or business planning
process is somewhat unfamiliar to you, the weighing and balancing
will have to be undertaken more consciously.
Further, I must warn you that you will have to be willing to make
trade-offs between one goal and another. Seldom, if ever, can
a particular desirable result be achieved without incurring some
less desirable corollary consequence.
The old saying about not being able to "have your cake and
eat it too" was never more aptly noted than in the planning
context. The client who insists on having everything winds up
having nothing.
5. Strengths and Weaknesses. You must be conscious of your
personal strengths and weaknesses. It is a commonplace, and needs
no elaboration, that some people are more adept and comfortable
with words than with numbers, and others vice versa. There is
no reason for you to have any shame or embarrassment about this;
you must simply resolve to put more time and effort into
understanding those aspects of the project that come less easily
to you.
Ask your advisors for special help if necessary; that is one of
their central functions and you should not hesitate to invoke it.
6. Dealing With Gray. You must realize that while a part of
the planning process is computational, and therefore rather black
and white, another part is judgmental, which of course suggests
all shades of gray.
Experience teaches that clients who are extraordinarily literal-minded
(engineers and scientists especially) quite often have difficulty
with the judgmental (e.g. human) aspects of the process. They seem
to be particularly uncomfortable with the notion of uncertainly of
result, which at some level is present in all planning activities,
and the vagaries of human nature (other peoples, not their own!) are
often a source of worry and irritation to them.
7. Matters Beyond You. You must accept that there are a couple
of characteristics of this subject that present particular problems
for the unusually self-confident client.
One problem is that much of the necessary knowledge is non-intuitive;
that is, it is not so because it makes good, practical common-sense
for it to be so, but because some legislative body, court, or
administrative agency says it is so. In a word, the law in this
area is arbitrary (probably also capricious and unreasonable,
but that is another story) and simply cannot reliably be guessed at
on the basis of normal human experience.
The other problem is that
a great deal of the outcome of any particular course of action is
fact-sensitive, by which I mean to say that the existence (or
non-existence) of certain facts, which to a lay person might appear
irrelevant or at best tangential, may be crucially important to,
perhaps even determinative of, the success or failure of that action.
These two problems are not ones with which a lay person can
effectively deal, and are, between them, responsible for a large
portion of the failed "do-it-yourself" planning attempts
that sooner or later find their way into every professional
planner's repertoire of war stories.
8. Informing Others. You must remain aware, and act in light
of the fact that, others will be affected (possibly profoundly) by
your decisions. It is generally desirable, and may in some
cases be necessary, to educate and inform those others during
the planning process, so they will understand what is being done
and the reasons therefor.
I am aware that there are circumstances in which this would be
inadvisable, even counter-productive, but this step should always
be actively considered and only rejected for good cause.
All this may sound difficult, even a bit hopeless, to some of you,
but on the basis of my long experience, I can promise you that
effort is at least as important, and probably more important, in
these matters than aptitude. Any client who demonstrates an
appropriate degree of resolve can get through the process with
competence, if not distinction, and will gain in the process
the satisfaction of being an active and informed participant in
shaping his family's educational, emotional and economic destiny.
At this point (if you haven't already written me off as a
choleric crank and decided to ignore all of this) you must be
wondering how much time you may have to invest in following these
suggestions.
The answer, as you already intuitively know, is variable; somewhere
between ten hours and a hundred hours should catch about 99% of
cases. One's speed and thoroughness of comprehension is an
important ingredient, as is the complexity of one's family and
financial situation.
I feel safe in suggesting that, in addition to the one hour or so
which it may take you to review this site, another thirty hours
or so should about do it for most people. In relation to the
time it took you to accumulate and nurture your worldly wealth,
this is but an eye-blink.
I predict that your thirty (or
whatever) hour investment in this project will have greater
positive economic consequences for your family than any one
year's labor during your lifetime. Quite simply, you will never
in your life spend so few hours to such great benefit and advantage.
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Centreville, Maryland, USA
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