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The Purpose of Wealth
U.S. Trust chief fiduciary executive Chris Heilmann said wealth often becomes a burden when a system of values has not passed from parents to children, preventing legacies from being created and carried on through multiple generations.
"Legacies are about more than finding tax efficient ways to pass along wealth," said Heilmann, featured speaker at a luncheon at the Aspen Ideas Festival on Friday. "It is about a legacy of values."
But creating a legacy of values can be complicated by wealth, he pointed out.
Using anecdotes from U.S. Trust's work with families in developing responsible and thoughtful ways of creating legacies, Heilmann spoke about four ways he believes people can do better to handle the transition of wealth through generations.
The first step is simply recognizing the importance of values in a family's legacy. Quoting Benjamin Franklin, Heilmann told the audience: "We cannot be too careful in choosing the value system that governs our thoughts and our actions. "
The second step is creating a "values statement" that can apply to the entire family, said Heilmann. "In establishing a family legacy, the values of those individuals who are passing along wealth are only as viable as their ability to communicate to the next generation and the one after that."
Heilmann related a story abut a family in the Pacific Northwest with assets of $75 million but with ambivalent feelings about the money's meaning and purpose. So they came together to create a values statement that clearly defined the role of money in their family.
It read: "Our family's wealth consists of our family members and their gifts. Our relationships, our capacity to be reasonable and thoughtful, our spiritual resources and the differences our family makes in the world. Our financial resources provide an opportunity to live our core values."
Heilmann pointed out that nowhere in the statement appeared the word "money," except in the last sentence.
Third, families should view philanthropy as a gateway to family values. "Philanthropy can serve as a foundational role in a family legacy," said Heilmann.
Last, the next generation needs to be engaged in the family legacy and be educated in wealth management. This education is so important that Heilmann said he believes it should start extremely young.
"The education can start as soon as you hear your children utter the word 'mine.'"