It isn't about the money.

A colleague of mine was trying to explain to a group of CPAs that successful planning doesn’t begin or end with a focus on the money. Every one of the conference speakers who presented to the group ahead of him talked about financial thresholds: if you have a taxable estate you need a credit shelter trust; if you have more than $xxxx you need a family limited partnership; and if you have more than $xxx you need a family foundation. The need for these tools were all based on numbers, of course, with no consideration for the values that were most important to family members.

In order to prove that that numbers were not the real key to the development of a successful plan, he divided the room into three groups. He gave each group the same financial statement: it was for a 55 year old man with three children, and a $10 million dollar estate - $5 million of which was the family business, which was a beer brewery. What he didn’t tell them was that he was giving each of the three groups a very different story about the family members themselves.

The story for the first group of CPAs was that the client had built the business from scratch, and had worked 80-100 hours per week. He loved the business more than his family, and because of that, his sons hated the business. They did not want to have anything to do with the business when he died.

The story for the second group of advisors was that the client had just inherited the brewery from his own father. The client had worked there all of his life, and his uncle, aunt, cousins, siblings, etc., all worked in the business. This was a true family business that was holding the family together – and everyone in the family loved this business!

The story for the third group was that the client had just inherited the business from his father. He had never worked there, and knew nothing about the business. In fact, he was a converted Mormon missionary, so, of course, what was the last thing he wanted to own? A brewery!

Each of the three CPA groups was given time to study the situation and offer a plan. Group Three, who were told the new owner was a Morman missionary, offered their plan first. Their spokesperson said: obviously, the first thing we are going to do is sell the family business. Group One, who understood the owner had sacrificed his family in order to build the business, got up and said: we can see selling the business when he dies, but why would you sell this business now?? Then, Group Two, who had been told the whole extended family loved the business, piped in: Why would you EVER sell this business?!?!?

My colleague stepped to the front of the group and said, “You see… it really isn’t about the numbers. You all had exactly the same financial facts, but came up with three very different plans because the values of the people in each of three versions were different.”