Minneapolis - St Paul Star Tribune

August 14, 2005

 

On business: Legacy more than just about money

By Neal St. Anthony

A few weeks before he died of cancer, Howard Zesbaugh had a talk with his youngest child that essentially summarized what was important to him about their relationship, his life and a nagging concern.

"I know that you will take care of your mother if she needs anything," Zesbaugh, a retired systems analyst, told his son Mark, then a 31-year-old financial executive.

A decade later, Mark Zesbaugh recalls that the conversation had little to do with money. The Zesbaughs were middle-class, without a big financial legacy for their kids. But the discussion was very satisfying in terms of understanding his father's intentions and concerns and what Howard hoped his children had taken from their relationship with him.

Mark Zesbaugh, now chief executive of Golden Valley-based Allianz Life Insurance of North America, remembers the conversation with a renewed poignancy lately. The memory arises in the wake of results of a national survey his company and demographic expert Ken Dychtwald commissioned this spring of nearly 2,700 baby boomers (ages 40 to 59) and folks 65 and older by Harris, the polling firm.

The upshot: At a time when America's elderly are in the process of transferring a staggering $25 trillion to their children and grandchildren in the biggest such wealth distribution in history, the survey respondents said it's about a lot more than just the cash.

And you thought those greedy, debt-burdened boomers were just after the wealth accumulated by their thrifty parents, who managed to make do with one car and one TV set.

"We're not just talking about the money and new ways for dividing it and escaping taxes," said Dychtwald, president of Age Wave, a research and marketing firm. "Only 30 percent have talked about it. People are craving this exchange with their parents."

In fact, more than two-thirds of the respondents -- boomers and parents -- said they feel confident discussing key elements of inheritance and legacy planning, yet only 29 percent of boomers and 31 percent of elders have had these important discussions.

Moreover, nonmonetary "leave-behinds" -- such as ethics, morality, faith and religion -- are 10 times more important to boomers and elders than the financial inheritance.

Dychtwald acknowledged that some boomers might have answered that question more the way they thought they should than the way they feel.

Still, he said, "This national survey found that for the overwhelming majority, legacy transfer has to do with deeper, more emotional issues. An inheritance focuses primarily on the money, but a true legacy also includes memories, lessons and values you teach to your children over a lifetime."

Indeed, some of the saddest stories I've heard are from money managers who work with whiney trust-fund babies who can't manage to make ends meet on $20,000 a month for their consumptive lifestyles and, sometimes, bad habits. It's a disgusting form of poverty.

Conversely, some of the neatest folks I've met are young and affluent, in large part because of an inheritance, but working hard on their own independent careers or in charity -- knowing that much of their parents' wealth will be passed on to organizations that benefit the less fortunate.

My kids don't get everything they want. And they see our family participating in charity and volunteering. Maybe that's where the conversation starts. And I hope one day to be able to tell them that I'm going to help them get a start in their adult lives, but they're in charge of the middle and the finish.

Dychtwald and Zesbaugh said participants in the study's focus groups clammed up when asked about "inheritance," because they didn't want to appear greedy. But it was much easier to talk about money when it was part of a broader "legacy" discussion about their parents' wishes and values.

Kathy Longo, past president of the Minnesota Financial Planning Association and a family adviser at Accredited Investors, said she has seen family divisions over "sentimental things" as well as division of money.

She often encourages clients who suggest that they expect inheritances to tell their parents that they are trying to be responsible by doing their own planning and want to have those discussions and learn their parents' wishes. Otherwise, there might be hard feelings among siblings or surprises after the parents' deaths.

"I don't see that much open communication between the baby boomers and their parents," Longo said. "You see it when something happens, when the mom needs somebody to care for her ... and that can be a tough time.

"We say, 'Why don't you bring up the topic with the parents. ... Sometimes it's important to have a facilitator, and we end up doing that quite often, with family meetings."

Zesbaugh said he concluded from the study that many families aren't having a full-legacy discussion that includes lessons to be passed on, parental wishes to be fulfilled, disposition of personal possessions of emotional value and financial inheritances.

"This study is not only a call-to-action for American families to have important conversations about their family legacy today but provides a helpful template for doing so," he said.

More information about the survey is available at www.allianz.com/azcom/dp/cda/0,,862314-44,00.html.