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Estate values

Money isn't the only thing you can hand down to heirs. There are many ways to structure your estate to reflect what's important to you.

By HELEN HUNTLEY, Times Staff Writer

© St. Petersburg Times
published April 20, 2003

Along with the family silver and the stock portfolio, can you bequeath your values to your heirs?

Some estate lawyers and their wealthy clients are giving it a try. While some of their methods are strictly for the ultrarich, others offer possibilities even for people of modest means. But be forewarned: The process can be time consuming and expensive, and the results are never guaranteed.

"What messages do you want your descendants to get from you?" Jon Gallo asked on a stop in St. Petersburg this month. "Do you want them to know something more than that you had a good tax lawyer? You can leave money to your children and grandchildren in a way that tells them something about what your values are."

Gallo, a Los Angeles lawyer, says there are many creative possibilities. If, for example, you're the self-made type who values entrepreneurship, you might set up a trust that would help your entrepreneurial heirs write business plans and provide startup funds for their new ventures.

If family togetherness is what you treasure, you might direct your trust to foot the bill for periodic reunions for the extended family. You cannot, of course, force your grandchildren to attend or keep them from fighting if they do.

All Children's Hospital Foundation and Bank of America recently brought Gallo and his wife, psychotherapist Eileen Gallo, to the Tampa Bay area to spread the message that estate plans can, and should, involve more than money.

This is not an entirely new idea. In fact, its roots go back for centuries to deathbed blessings and thoughtful letters to loved ones. Even if you plan to spend every dime before you die, you can leave your family and friends a letter sharing the important things you've learned from life, your treasured beliefs, your hopes for the future and your love for them.

Some estate planners now help their clients put together such a statement, calling it an "ethical will," although it is not actually a legal document.

However, you don't have to stop there. Your core values can be brought together in a mission statement around which your trust and will are constructed.

"It makes a great deal of sense to spend some time reflecting on what you're trying to achieve before you set out to achieve it," said Scott Fithian, founder of Legacy Advisory Associates in Boston and author of a book on values-based estate planning. "The more money you have, the more choices you have. The more choices you have, the more concerned you become with the character of the choices you make."

The first obstacle to making values the cornerstone of your estate plan is figuring out just what your values are. That's not as easy as it might seem.

"For some people, sitting down and contemplating their own mortality is extremely stressful, and they don't want to do it," Gallo said.

If you have the money, you can pay a lawyer or another professional to guide you through the process. Gallo said a true values-based plan costs two to three times as much as a traditional plan simply because it requires so much time.

Fithian said people who come to his group in Boston spend one to four months and about $15,000 developing their mission statements before the first legal document is drawn up. But he said many professionals provide help for far less.

The really cheap alternative is buying a book such as Barry Baines' Ethical Wills: Putting Your Values on Paper and following its advice.

Whether you do it yourself or hire professional help, the process of clarifying your values typically involves answering provocative questions and doing sentence completion exercises such as: If I had an extra million dollars I would. . . . I object to spending money on. . . . The best thing I ever bought was. . . .

One way to get started on the process is to write your life story, putting to paper the details of important experiences you have had and lessons you learned along the way from parents, co-workers and others.

It's also important to consider whether you want to treat each of your children equally or whether you want to leave them different amounts of money and perhaps different restrictions on spending it. If you are really rich, you have to consider whether you think providing a lavish lifestyle for your heirs is a good or a bad thing.

Ideally, the values at the center of your estate plan should bear some resemblance to those you espoused while your children were (or are) growing up.

"Some folks feel guilty and might be tempted to come up with a plan to pass on values that they never actively attempted to pass on as they were overseeing the upbringing of their kids, but then it's too late," Tampa lawyer William Lane Jr. said. "If they've enabled a certain type of behavior, to expect it to change after they die is a pipe dream."

When it comes to implementing a plan, there can be a fine line between conveying values and trying to control children from the grave. You can, for example, make trust fund distributions contingent on something you want to see happen, such as progress toward a college degree. Some trust funds match the income on a beneficiary's W2 form, creating an incentive to work.

However, Gallo said, parents have to be careful about the messages they send with trust restrictions.

"Do you want to send the message that the more money you make, the more valuable you are?" he asked. Gallo said such trust restrictions end up punishing the child who takes a lower-paying job, chooses volunteer work or stays home to care for children or elderly relatives.

If you are thinking of doing anything out of the ordinary, you might want to consider your beneficiaries' interests and values as well as your own.

St. Petersburg lawyer Louie Adcock Jr. said he had a client who wanted to set aside money to pay for a joint family vacation every other year.

"He then mentioned the idea to his family. They said 'Oh my God, Dad, don't do that.' "

The client dropped the idea.

More commonly, clients who have a vacation home want to leave it to their children as a place to continue family get-togethers.

"If one in a thousand works, I'd be surprised," Adcock said. He said he tells clients their children enjoy the vacation home now "because you are up there cooking your head off, buying groceries and keeping the boat in repair. When you're gone, the good fairy is not going to come and do that."

Paying for repairs and renovations and scheduling use of the vacation home can lead to conflict.

"I don't think it's fair to your children to try to tie them together in one harness," Adcock said.

Seminole lawyer Sandra Diamond said the clients she sees who are most interested in building estate plans around their values are those whose children are still minors. They are concerned not only with appointing a guardian and providing for the children financially, but also having a say in their upbringing.

"Sometimes the parents try to make sure the child continues to be exposed to the religion which is important to the parents or that they receive opportunities for certain types of schooling," she said. If one set of grandparents would become guardians, the trust may be directed to pay for the children to visit the other grandparents or for the grandparents to visit them.

Charitable giving is often part of a values-based estate plan. Some people make donations directly to the charities of their choice. Others structure the gifts to involve their children in the process of philanthropy.

"I've had a few situations where the creator of the trust encourages charitable giving by the beneficiaries by having the trustee match any charitable contributions that the beneficiaries did personally," Tampa lawyer Lane said.

The really wealthy can set up a private foundation and name their children or grandchildren to the board of directors. However, lawyers say that isn't realistic to consider unless you can put at least $1-million or $2-million into the foundation.

The low-budget alternative is to create a donor-advised fund within a charitable gift fund or a community foundation such as the Community Foundation of Tampa Bay in Tampa or the Pinellas County Community Foundation in Clearwater. Many large mutual fund companies and brokerage companies have donor-advised charitable gift funds.

Each sponsoring organization has its own procedures, but typically an account can be opened for as little as $10,000 to $25,000. The donor gets a tax deduction up front, and the foundation or gift fund distributes the money to the donor's chosen charities over an extended period.

"Donors use charitable foundations or charitable funds within other charities in part as a means of educating their kids on the social responsibility of giving back to society," Lane said.

Still another alternative is to make a charity one of the beneficiaries of your trust. However, St. Petersburg lawyer Adcock said that approach doesn't always work if one of the other beneficiaries of the trust is in charge of the money.

"I've seen a few instances where people have set up living trusts with a son or daughter as successor trustee, and they flat out haven't given the money to the charity," Adcock said. "The charity could bring an action for it, but most charities are reticent to sue family. By the time they find out, the money may already be divided up, or the charity may never know. If you really want something to happen, make sure that it does."

Some advisers suggest building flexibility into your estate plan. One way to do that is to give an independent trustee the power to change some trust provisions. Another way is to avoid being too restrictive in the first place.

"If you leave your heirs a well-developed set of values without any money, they'll do just fine in life," said Fithian at Legacy Advisory Associates. "If you leave children with really well developed values a lot of money, those are the ones who have the potential to change the world. It's only those who have underdeveloped values for whom money is a problem. The goal is to cultivate values to avoid those problems."

-Helen Huntley can be reached at or (727) 893-8230.

Serving up values

The process of handing down values to children and grandchildren starts when they are young. Here are some tips on teaching children from Eileen and Jon Gallo, authors of Silver Spoon Kids:

-- Look for "teachable moments" to bring up issues in conversation. Shopping trips and the family dinner table provide opportunities if children are living at home.

-- Teach by example. Your spending patterns, charitable giving, volunteer work and the way you treat others all make an impact. Talk with your children about why you do what you do.

-- Volunteer together. Give children hands-on experience helping in the local community or participating in vacations designed around volunteer work.

-- Encourage children to research charities you are considering and let them decide where some of the money goes.

-- When children badger you to buy something, don't say, "We can't afford it," when you can. Explain your spending priorities when you say, "No."

-- Give an appropriate allowance and don't bail your kids out when they run out of money.

-- Don't use money as a bribe, reward or punishment.

-- Teach your child how other people live.

-- Match your child's charitable contributions (appropriate at any age).

For more information

Interested in learning more about handing down your values to your children and grandchildren? Here are some resources you may find helpful:

* * *

Ethical Wills: Putting Your Values on Paper, by Barry K. Baines (Perseus Publishing, 2001). Web site:; workbook also available

* * *

Values-based Estate Planning: A Step-by-Step Approach to Wealth Transfer for Professional Advisors, by Scott C. Fithian (John Wiley & Sons, 2000)

* * *

Beyond the Grave: The Right Way and the Wrong Way of Leaving Money to Your Children (and Others), by Gerald M. Condon and Jeffrey L. Condon (Harper Business, 2001)

* * *

Best Intentions: Ensuring Your Estate Plan Delivers Both Wealth and Wisdom, by Colleen Barney and Victoria F. Collins (Dearborn Trade Publishing, 2002)

* * *

Silver Spoon Kids: How Successful Parents Raise Responsible Children, by Eileen Gallo and Jon Gallo (Contemporary Books, 2002)

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