Doomsday
I ran a global private banking business for six years and one of the big specialties was the whole trust and estates practice. In those days we were one of the three big trust banks in the U.S. and we had partnered with the prestigious “white shoe” law firm of White & Case for all of our trust and estates work like the drafting of wills and all the more complex elements of putting in place trust and estate plans for the whole wealth transfer process. I have never been a big fan of inherited wealth, but its hard to admit that while you are running a business based around wealth accumulation, preservation and transfer. I will also say that however many reservations I had about the whole inheritance issue before I ran the private banking business, it only increased when I saw all the screwed up kids and other descendants and beneficiaries of these wealthy families that we served. It all served to reinforce my fundamental belief that happiness does not flow from wealth, but from the accomplishment that creates wealth. I won’t deny that the moments of great monetization in one’s career are exciting and pleasing times, but I somehow feel that there is a perversion of that sensation when the money is gifted through inheritance rather than earned through any effort. Nonetheless, we served that wealth transfer process and that business only grew bigger and bigger as the Baby Boom generation accumulated. The current numbers suggest that $73 Trillion or almost 20% of global , will be transferred to the next generation over the next twenty or so years.
As you might imagine, one of the questions that always comes up with people when doing an estate plan is what the process is like when the moment of truth eventually occurs. What we did was create a book that we told our clients to keep in a well-understood place in the home such that the surviving spouse or descendants can easily find it and then it will guide them through the next few days and weeks of settling the affairs of the estate of the deceased. The book would have all the important information including the most important servicing agents including lawyers, accountants, bankers, etc., as well as their contract information. It would also have a recital of the important steps in the settlement process as well as how the beneficiaries can get at the various assets being transferred to them so that they can pick up where the deceased left off. When you think about it, survivors need access to liquidity for both normal expenses and, of course, the extraordinary expenses associated with the client’s demise. For lack of a better term, we called this book the Doomsday Book and a copy of it was given to the client as well has stored in the trust department so that the beneficiaries and the bank would be on the same page when things needed resolution.
While I am eternal optimist, I am very realistic that I am unlikely to live forever. I am also the dominant breadwinner in my family and have a number of people who rely on me to one extent or another. That does not make me so very different to someone sitting in the same chair in every family. Compared to many people of greater wealth, I do not have a particularly complex financial situation. In fact, I have made it a point to try to simplify my finances, mostly for my own purposes, but also for the benefit of whomever (presumably Kim) who will have to sort through my affairs when I “hit the wall”. I have always wondered why people would leave their affairs in such disarray that assets might get hidden and the probate courts would have to get involved. It all seems so irresponsible and somewhat uncaring of one’s loved ones.
I have had a proper will for almost forty years, or I should say, a series of proper wills over that period of time. When Kim and I got married eighteen years ago, I made a point of taking her to my trust and estates lawyer and walking through the process of rewriting my will and getting her one at the same time. I wanted this to be a very open-book process and cannot imagine people who keep such things a big dark secret. I suppose it is all tied up with fears of death or with the paranoia that others want to get at their wealth. When one decides to make plans for the passing along of one’s wealth, I would hope that the chosen beneficiaries are not only trustworthy, but that there would be no basis for concern about telling them what’s in store when the inevitable happens. At very least, there should be one principal beneficiary or executor who can be entrusted with the most important information that would be contained in a Doomsday Book. I feel very confident that Kim will act in that capacity and thereby represent my interests appropriately when the time comes, which we all like to agree will not come to pass for many years yet.
Today I was out taking a motorcycle ride, which I haven’t done for any length of time for a few weeks. I am a very careful rider and I haven’t had an accident for over fifty , but for some reason I started thinking about all the financial maneuvering I tend to do at this time of year. Given that the end of the tax year is reason enough to do some financial moves, this year is even more complicated for very specific personal reasons. I have several investments making distributions and several others that might choose to do so at any minute. I also have a regular monthly flow of expert witness fees. All of that was on my mind as I wound my way through the country roads here in the North County. So, I found myself thinking about what Kim might face if she didn’t have me here to guide her through the financial two-step I find myself going through. I decided then and there that I should put together a somewhat simplified Doomsday Book for Kim.
When I got home I sat down and put all the most important information down in a memo appropriately titled Doomsday Instructions. I see every day how people put off things like this just to leave it all in disarray for their heirs. I have written about the Scandinavian Death Cleanse concept that suggests that we should all prepare our affairs for the benefit of our heirs. I’m sure some people think I am crazy for cathecting on such things, but I think it is crazy to not do it. I found it was much easier to do than I had thought. To begin with, the categories that made most sense were Accounts, Investments, Life Insurance, Taxes and Will & Estate. When it comes down to it, those are the important things to get across on a timely basis. While I spent a moment explaining a few governing principles to my way of managing our finances. At the top of that list was the simplification approach I have chosen to take with Kim’s concurrence. A perfect example is that we currently have only one home and that’s the way I like it. I have had as many as four or five homes at other times in my life and got very tired of that process and very consciously whittled that down to one home, not so much for wealth transfer purposes, but with that as a decided added advantage. The other thing I realized was that for each category except Life Insurance, I have a trusted advisor or partner for all of my major asset categories. I used to have that for Life Insurance, but the way that works is that it is usually an older person selling insurance to a younger person. Bottom line, they are all dead and gone now, so for that she will have to have to main info to contact those insurers directly. For all the other areas, I could just remind her who to call (including the contact info for her ease) and trust that she would get the help she needed on a personal level. There were none of those people that she has not met or heard of. Some are as much her friends as mine. So, I came away from the exercise feeling very confident that it would all go relatively smoothly for Kim when the time comes.
I’ve now told Kim where to find the memo and what it will do for her, and guess what? I think my Doomsday Instructions were as much a good thing for me and my peace of mind as it will be for Kim when she needs it most.