Here is an interview Dr Richard Orlando, founder and CEO of Legacy Capitals, about his new book, Legacy: The Hidden Keys to Optimizing Your Family Wealth Decisions, which will be released this month.

Here is an exclusive interview with Dr Richard Orlando, founder and CEO of independent firm Legacy Capitals, about his new book, Legacy: The Hidden Keys to Optimizing Your Family Wealth Decisions, which will be released officially this month.

In the book, Dr Orlando explores what he sees as the five most important family wealth decisions that impact individuals and their families.

Preparing the next generation for their inheritances is top of mind for parents. What does Legacy say about this important topic?

Research shows that one of the primary reasons why families are not able to successfully transfer wealth across the generations is because the next generation is not prepared. All too often, most planning focuses on preparing the assets for the family, instead of preparing the family for the assets. We believe that preparing the next generation is not only about how the parents prepare their children, but how the children prepare themselves as they begin to move into young adulthood. 

In the book I talk about the vital importance of raising the next generation’s life IQ, not just their financial IQ.  In addition, it is very important that we answer the question “what are we preparing them for?”  Depending on how we answer this question will have an enormous influence on the preparation.  For example, if I am preparing my son or daughter to be a doctor this would require a very different path than if I were preparing my son or daughter to directly manage my family’s assets one day.

In the book, you say “your legacy is how you live, not just what you leave.” What do you mean by that?

Early on in the book I reference the legacy story of Steve Jobs. Jobs is a great example of someone who has a powerful and far-reaching legacy. The impact of his legacy began decades before his death and created ripples around the world, and not only in the technology sector.  Whether you find Jobs’ example inspiring or intimidating, because he set the bar so high, the point is that he didn’t know his ultimate legacy when he began his career and experienced his setbacks.

He lived his life step by step, decision by decision, just as the rest of us do, guided by his talents and interests. In the process of living, he made his mark. Like Jobs, all of us are creating legacies for ourselves, whether or not these are intentionally planned for, or will be captured retrospectively someday in a book, magazine article, or movie. Our legacy doesn’t begin at death, it becomes cemented at death.  Therefore it is important that we consider what we want our legacies to be and then live each day toward fulfilling that life vision by the decisions we make and the actions we take.

The research shows that most wealth and family businesses do not successfully last beyond three generations.  Why is this and how do your methods of legacy planning provide families better strategies so they don't become another statistic?

This is a very important question and there are a number of dimensions to the answer, however, I would summarize it by saying that too many families do not focus on what I refer to in the book as the business of the family. 

Blood and marriage are important, but they do not ensure the wealth or family business will successfully be transferred through the generations.  In chapter seven of the book I list the essential skills required by family members to successfully manage any relevant shared asset, including a family business. 

In addition, “how do I transfer my wealth to my children?” is by far one of the top questions that keep parents up at night.  Behind this very important question lie the following questions: "How much do I transfer?", "when do I transfer?" and, "if I don't equally transfer my assets to each of my heirs, will they think it is unfair?" 

In chapter four we help parents answer these question using a five-step non-technical process.  What we mean by non-technical is that we don't help parents answer this larger question from a tax minimization or asset protection perspective (as vital as these planning aspects are in the wealth transfer process), instead from what is the best solution(s) given the values, goals, and wishes of the family and the readiness of the next generation.

What is spiritual capital and how does that differ from values and religion? How is it an essential part of legacy planning?

Let me start by stating spiritual capital is not about - nor synonymous with - religion.  Legacy planning is spiritual in nature because it ultimately starts with intentions and wishes that transcend the tangible world and are imprinted on the lives of others.

Having said this, tangible assets that allow for outcomes such as the creation of a vaccine to cure a disease, the purchase of a home for loved ones to dwell in, or providing water and food for the impoverished are manifestations of an intended legacy to positively impact the lives of others.  Spiritual capital is about the very important intangibles in our lives.  For example, the concepts of love, passion and faith are intangible yet they are the fuel to our relationships, lives and work.  In essence, our spiritual capital is the “why” for our lives and acts as our personal GPS as we answer the five most important family wealth decisions that impact on our legacy.

Philanthropy is an important part of one's legacy planning.  Legacy seems to offer a different understanding of this topic. Please explain.

The giving and sharing of our resources - or what we refer to as our capitals - with others is one of the core attributes that define a happy and fulfilled life. However, we believe there is an over-emphasis on giving and sharing of one’s financial capital, which suggests that, unless one has an abundance of financial capital, they are not able to be philanthropic.

Some of the most generous people I have met have little financial assets.  The true meaning of philanthropy is the love and welfare of others. We believe that giving and sharing via intentional random acts of kindness, for example, happens more often through our other capitals: intellectual, social, human and spiritual.

This perspective allows everyone the potential to be a great philanthropist.  Bill Gates, one of the first billionaires to make the “giving pledge”, at one time reportedly said, “is the rich world aware of how four billion of the six billion live? If we were aware, we would want to help out, we’d want to get involved.”

The understanding of philanthropy I propose in the book can transform our philanthropic acts, so instead of thinking of giving and sharing like Bill Gates did, “is the rich world aware of how four billion of the six billion live?” we could say, “potentially, there are six billion philanthropists in this world.”

You have a chapter on the “pursuit of happiness.” What does this have to do with one’s Legacy?

Whether I am working with a matriarch and patriarch, next generation millennial, or a professional athlete, everyone wants to be happy.  Maybe Aristotle was correct when he said, "happiness is the meaning and the purpose of life, the whole aim and end of human existence.”

This begs the question. "What is happiness?" and "How is it achieved?"  There is now a lot of research that has identified those attributes and skills that contribute to lasting happiness.

One’s level of happiness and fulfillment in their lives will have a direct impact on their legacy’s via their relationships, community and even their estate planning.  More specifically, parents commonly say to me that they want their children to be happy, yet unintentionally they create the opposite affect by overplaying their family’s financial capital; by taking care of most or all of their children’s wants and needs, money becomes directly associated with approval or disapproval, and the accumulation of assets is portrayed as the way to be happy, when it is impossible for money to ever to fulfill this need.  Therefore it is essential that we design our lives and legacies based on those attributes and skills that contribute to lasting happiness and well-being.