Guiding Your Children To Grow Through Failure — A Gift That Keeps On Giving

Laws and rules are created within organized societies to regulate interaction and protect citizens. A classic example is the American system of traffic laws, designed to promote consistent traffic flow while reducing accidents. When everyone understands how a four-way stop works, expectations follow. We learn how to conduct ourselves properly and to anticipate how others will behave.

Likewise, the public school curriculum nurtures expectations—expectations regarding skills which are culturally valued. Our schools promote a model of success in our society. Our students are taught how to succeed, not how to fail, learn from their mistakes, grow and evolve.

Intentionally or not, our institutions do little to prepare us to make it through failure with grace. Particularly in the middle and upper strata of our society, we are not taught how to deal with failure. There is such a focus on success that many of us have developed aversions to crisis and conflict.

So how can we prepare for adversity? Since our culture is built around success and we are largely taught to avoid failure, how do we learn to overcome it?

This is where your conscious awareness comes in.

As a parent, it’s your number one job to get highly aware about what you are passing on to your kids and how you are doing that, especially when it comes to models of success and failure.

Most parents simply don’t consider what they are handing down to the next generation, beyond thinking about how much money they’ll leave behind.

We hope to support you to be among the minority of parents who understand there’s a much bigger consideration here.

Maybe you can remember back to a time in your childhood when you thought to yourself “I’ll never be like that when I’m a parent”, only to find yourself now repeating those exact same patterns.

Yes, this is how it happens.

But, now that you’ve noticed it, you can begin to do something different. It won’t necessarily be easy, many of these patterns especially around success and failure are highly deeply ingrained. You can shift them though with consciousness. I’ll be writing more about this in future articles.

The first step is for you to just notice where you are repeating the patterns of thought and action around success and failure that your parents passed on, that you hated as a kid, and that you want to change for future generations.

We think that this is the most important part of parenting. It’s why we don’t just focus on passing on your money through estate planning, but have a process of passing on your whole Family Wealth (intellectual, spiritual and human assets in addition to money) into the legal life planning process. Through doing so, we help you consciously pass on what you really want.

How To Raise Responsible Kids – Part 2

Welcome back to the second article in our series on How to Raise Responsible Kids. You can read part 1, where we defined what responsibility means here.

In short, responsibility means your children are, “able to be trusted to do what is right.”
So let’s look at what that looks like in several different contexts and how you can support your kids becoming truly responsible.

Let’s begin with money because that’s the realm where I find most parents are most interested in raising responsible kids.
What does it mean to be responsible with money? What does it mean to be trusted to do what is right with money?
To begin with, it means that you are confident your children know how to make good use of the resources that come to them, regardless of how it comes.

Before you can ensure your children become responsible in this area, you must look at whether and how you are taking responsibility. Can you be trusted to make good use of the resources that come to you?

In my experience, most people do not feel confident in this area. That lack of confidence may show up as an over-focus on money, an unnecessary stinginess, or as an unwillingness to make the time to really look at what you have.

If you find yourself in any of these situations, supporting your children to become responsible with money needs to begin with you.

You can take responsibility by getting clear on what you have and what you need to provide a life of comfort and connection with the ones you love. You can show your children what responsibility looks like by creating a Family Wealth Plan that engages your children in planning for their own futures.

When you bring your children into the Family Wealth Planning process, in a well thought out manner, you are preparing them for a life of financial responsibility.

I’ve seen far too many situations where parents come to us for planning to leave inheritances to their kids, only to have them come back years later wanting to protect their assets from their kids. This doesn’t have to be the case for your family though.

Whether you have young kids or adult kids, it’s not too late or too early to start this process of taking full responsibility for your money and leading your kids by example.

Next week, we’ll look at relationships. And be sure to send me any specific topics you want me to be sure are covered in this “How to Raise Responsible Kids” series.

How To Raise Responsible Kids – Part 1

My guess is that if we did a poll of every parent we know and asked them what they most want for their kids, what we would find at the core is that we all want to raise responsible kids.

We may each have a different definition of what responsible means, but after working with many families to plan for the children’s future, I can say with confidence that raising a responsible child is a hallmark of success for most parents.
Once your child becomes seen and known as responsible, your level of freedom and ease increases substantially.

In service to that, I will be sharing with you a series of articles on How to Raise Responsible Kids, starting with this one.
The first step in raising responsible kids, means truly understanding the meaning of the word “responsible”, so we’ll start there.

The classic dictionary definition of responsible is not what I am speaking of here, though many parents do get that confused. So let’s untangle any confusion there.

One dictionary definition of responsible is:

“having an obligation to do something, or having control over or care for someone, as part of one’s job or role.”

Many parents have confused the kind of responsibility that provides real peace and true security, which I’ll speak to in a moment, with this kind of responsibility, which is more of obligation or duty than responsibility.

Responsibility based on obligation or duty, especially for the up and coming generations, is no longer a sustainable paradigm. The Millennials and Gen-Y’ers I know are rarely motivated by obligation or duty for any length of time, often preferring to go without rather than to take action from anything other than inspiration.

The Boomer (and even Gen-X) generations are slowly waking up to the possibility of responsibility based on inspiration rather than obligation, but for many it’s still a foreign concept. If it is for you, perhaps consider a shift in perspective that will make it far more likely your children will be the responsible members of society you hope they will be.

What women need to know about estate planning

Women outlive men, make less during their careers and have less in savings due to pay discrepancies and time taken out of the workforce to raise their families.

These are just a few reasons why it is important for you to know the following about estate planning:

Minor children can be legally protected with a Kids Protection Plan®, which provides parents with important legal tools to name short- and long-term guardians, provide instructions and guidelines for those guardians and execute medical powers of attorney that allow you to dictate medical care for your minor children in case they are injured and you are not with them.

A will and a living trust are both essential estate planning tools, and although both can be used to transfer assets upon death, they serve separate purposes. A living trust can take effect while you are alive or after death. It allows you to hold assets for your benefit during your life, which may prove useful if you become incapacitated in the future. A living will can also be beneficial if you own real estate in another state. A will only takes effect upon death, and is used to appoint guardians for minor children, cover assets that are not part of a living trust and create trusts that kick in after death.

Women need to execute financial and healthcare durable powers of attorney and consider choosing a member of the family if that person is willing to assume the responsibility of making financial and/or medical decisions on your behalf in case of incapacity. And, if you are married or partnered, make sure your spouse or partner does the same because you’ll be the one who is handling things if anything happens to your spouse/partner and you want it to be as easy as possible.

Make sure your partner/spouse has life insurance to support you for as long as you will need support and that there’s enough to last your whole lifetime, unless you will have your own savings.

Don’t own your own life insurance policy as the proceeds will be subject to estate tax after you die. Instead, if your life insurance is designed to pay estate taxes, designate a spouse or other family member as owner or set up an irrevocable life insurance trust (ILIT), which buys the policy and holds the proceeds for beneficiaries. And again, if you have a taxable estate, make sure the same is set up for your spouse’s life insurance.

Keep beneficiary forms for retirement accounts (IRAs, 401(k)s, etc.) up to date, as they determine who receives the assets of each one of your accounts.

Make sure there is enough cash held in a joint account to handle any immediate expenses if your spouse dies suddenly. You may not be able to access a deceased spouse’s separate bank account right away.
Surviving spouses are allowed to add the unused portion of a deceased spouse’s estate tax exclusion to their own — which means the surviving spouse can have an estate tax exclusion of up to $10.86 million in 2015. However, this exclusion transfer must be claimed by the deceased spouse’s executor filing an estate tax return. There’s other critical items that must happen when your spouse dies that can easily be overlooked. Contact an attorney within a few weeks of your spouse’s death whether you have a sizable estate or not.

Married couples can participate in “gift splitting” during life, which means they can share each other’s $5.43 million lifetime gift exclusion and can each make gifts each year and give more to their children now tax-free. We recommend you transfer as much as possible during life for many reasons. Ask us about it.

The best way to learn about protecting yourself and your family is to talk with us about a Family Wealth Planning Session, where we can identify the best strategies for you to provide for and protect the financial security of your loved ones.

A Plan For Protecting Your Most Valuable Asset: Your Children

If you have young children, chances are that your summer activities include some careful planning to keep them safe from harm. Unfortunately, even with proper precautions in place, accidents do happen and not just to children. Have you planned for what will happen to your children if you are the one involved in a tragic accident?
If you don’t put the proper legal protections in place and the unthinkable happens to you, any number of things could happen to your children, and none of them are good:

  • Your children could be put in the care of Child Protective Services, even temporarily. You never want strangers determining your children’s fate.
  • Your children could be put in the custody of someone you would never want to have them by a judge who does not know you or your family dynamics.
  • Your family could get into a fight about the custody of your children.
  • Your estate can be thrown into probate, with a portion of your assets going to court costs and fees — money that your children could use in the future.
  • If you have significant assets, those could go to your children once they turn 18 in one lump sum that they will likely not be prepared to handle properly.

Since there are so many bad things that can happen to your children should something bad happen to you, we have developed the Kids Protection Plan® for families with young children. This plan includes a comprehensive set of instructions and legal documents that will ensure your kids will be raised by someone you choose and that your assets are protected for their well-being.

The 4 key life skills your children to have before they inherit

Inherited wealth need not be “an albatross around the neck of the children” as Sting so succinctly put it recently when asked if he was leaving his wealth to his children.
His children will not see much of his millions, but not all wealthy parents feel the way he does. Many a great family fortune has been built by successive generations of the same family — and many lost as well. The difference is that successful families develop skills in the next generation for respecting, protecting and growing inherited wealth.
Covie Edwards-Pitt, the author of a book called Raised Healthy, Wealthy & Wise, says there are four critical skills children must develop before they receive an inheritance from parents or a trust. She interviewed scores of successful inheritors to identify theses four skills, which are:

The ability to earn their own money and live off what they make.
Children raised with wealth feel they are the most successful when they earn enough on their own to support themselves without the family money.

The ability to set and pursue their own work goals.
Children of wealth who are encouraged to find work they enjoy are much more likely to find satisfaction in that work if they are taught that it takes time and perseverance to reach this goal and that they should focus on learning from every job and give it their best.

The ability to develop self-worth that is separate from family wealth.
Children who develop a core identity based on their own accomplishments and the choices they make in life are much happier and more successful.

The ability to be resilient and bounce back from adversity.
Family wealth can cushion many blows, but the most successful inheritors are those who were allowed to experience and navigate failure on their own.

If you don’t trust your kids with money, you need a trust

While most parents have the best intentions when it comes to teaching their children about handling finances wisely, sometimes the lessons don’t take. In addition to concerns about spendthrift behavior, some children experience problems with substance abuse or have mental issues that make giving them access to wealth a problem. This is where a trust can be a parent’s best friend.
Trusts allow you to put controls on the distribution of your wealth. For example, you could elect to make partial distributions at predetermined ages throughout a child’s life, or select a trustee who will make the decisions on regular intervals of asset distribution. A trustee may also be a good choice to manage the assets and make investment decisions that are better suited for those with the professional capacity to do so.
Trusts can also protect your heirs from a divorcing spouse or creditors. In the case of a special needs child, a trust can be set up to provide supplemental financial support that doesn’t disqualify them for important government benefits.
One of the most commonly used trusts is a revocable living trust, where you transfer assets into a trust that you control while you are still living.
After your death, those assets pass to your heirs outside of probate (an unnecessary, expensive and totally public court process). This helps your heirs avoid the hassle and cost of going to Court and doesn’t tie up the assets, which are generally frozen during the probate process unless protected by a trust.
Since trust laws are changing all the time, it is best to get professional legal advice for the help you need in ensuring your assets are protected for the future benefit of all your heirs.