Family Wealth: How to Keep “It” in the Family

Over the last few weeks, I have drawn lessons from my brother’s death to urge everyone to do an estate plan check-up. As I emphasized last week, in reviewing your estate plan, I recommend you do so not only with an eye for how it performs financially, but to consider how it performs in all five of the capitals: Human, Intellectual, Social, Spiritual, and Financial.

To describe the five capitals, I will draw from the teachings of my hero Jay Hughes in his most recent book, Complete Family Wealth. Hughes explains that in the title of his earlier book, Family Wealth: Keeping It in the Family, the word “it” is not money. “It is the family’s qualitative wealth—its human, intellectual, social, and spiritual capital—in addition to its quantitative, financial capital.” Financial is only one-fifth of the wealth package. He quotes a grandmother who recognized the distinction when she said, “Our family has always been rich, and we’ve sometimes had money.”

To help you assess how your estate plan measures up on all five components of wealth, here’s how Jay Hughes defines them:

  • Human Capital: Each family member’s physical and emotional well-being, including each one’s ability to find meaningful work.
  • Intellectual Capital: The knowledge gained through life experiences, whether learned from academic, career, or artistic achievements, including an understanding of family finances.
  • Social Capital: The relationships family members have with each other and with their communities, including giving of your time, talent, and treasure to society.
  • Spiritual Capital: Understanding that as a family, we share an intention (or shared dream) that transcends our individual interests, whereby we embrace humility, gratitude, traditions, as well as whatever a family’s religious beliefs may be.
  • Financial Capital: A family’s money and property, different from the other capitals, yet important in helping a family cultivate those other four qualitative capitals.

As you review your estate plan, ask if it reflects the family’s mission. Does it include elements to cultivate all five of the capitals? Consider ways to beef it up, if necessary, to foster mentoring of heirs, education experiences, philanthropy, preserving a family’s values and dreams (perhaps as expressed in an “Ethical Will” or Legacy Letter to your heirs).

My wife Laurie has a beautiful, innate understanding of the distinction between financial wealth and qualitative aspects of wealth, reminding me that “money’s not the right way to keep score in life.” I’m a lucky fellow to share life with someone who gets “it.” Dennis Lee Simon got “it” too. My friend John Hodge carries with him Dennis Lee Simon’s obituary, which I’m sharing here. When you read Simon’s obituary, you’ll see that in his short 34-years, he discovered that success in life isn’t about money, but about family, relationships, and faith. As he put it, “Nothing else makes much sense.”

I’ll close with one more story of a friend of mine who also got “it.” In paying a farewell visit to say goodbye to my dear friend Ray, he unwittingly shared the concept of wealth being both quantitative and qualitative. Ray’s final words to me: “Can you believe I amassed a $15,000 IRA? I never thought I’d have that kind of money. I’m also grateful that my entire family gathers here every Fourth of July. I hear some families don’t get along with each other and do things like that.” Such simple words, yet so much wisdom is packed into them.

The Blum Firm would be honored to help you create an estate plan that keeps “it” in the family.

Marvin E. Blum