We're all familiar with the cliché, “You get an owner's manual with a toaster, but you don't get one when you have a child.” I've always found that to be true and insightful, but it never stared me in the face quite as clearly as on my father's death. So I've expanded the cliché to add: “You don't get an owner's manual with a family of wealth either.”

But you should! In the book Cycle of the Gift, the authors analogize the sudden transfer of great wealth to a meteor strike. I suggest that is equally true of the sudden need for knowledge and information at the illness, incapacity, or death of a member of the family's elder generation.

Too often, we talk about succession planning in the context of a person or role—who will take over, what are the qualifications they need, etc. To our detriment, we often don't consider the succession of information. How can I identify my informational and planning blind spots? How can I communicate with, and educate my family and advisors about, various matters as part of my stewardship of my wealth? How will my partner, heirs, or advisors know what they need to know in the event of my absence?

These are not abstract questions—unfortunately, despite our best efforts, illness, incapacity, or death is coming for us all! Families of wealth spend enormous amounts of time and money on planning, communication, education, and governance. Yet at each generational transition, families spend more time and money than should be necessary on things that fall under the heading, “I wish I knew that.”

As my father's death approached, we thought we were prepared. He was a world-renowned trust and estate lawyer turned venture capitalist. Our structure was complex. We were litigating a 30-year tax controversy matter. We were filing nearly 750 tax returns per year. I was a nearly captive employee and had all the requisite training—a law degree that included taking my father's class (big mistake), a career as a transactional lawyer with an outside firm, time running one of our portfolio companies, and 18 months at his side before he succumbed to cancer.

What came next, and hasn't stopped for 20 years, was the “I wish I knew that” phase. In an effort to stop history from repeating itself, the Family Owner's Manual (FOM) was born, a single-source document that would dramatically expand on the traditional “emergency file.” The document would not only tell the family where to look, but what to look for, why to look for it, and what to do when they found it.

The FOM is something I recommend to families I work with and, frankly, to all families of wealth. It is a tool that, if used with care, will improve a family's current planning, can provide an educational roadmap for family members and advisors, and will help preserve the legacy that the family has worked to create.

There are many ways to embark on the creation of your own FOM. You might reach out to your estate lawyer, investment advisor, or multifamily office to ask for a checklist. A number of books are available on the subject of “preparation.” Whatever your preferred method of getting started, however, the real value in the process is to get beyond the “what and where” to the “how and why.” Think about it—a checklist of the parts in your toaster might be nice, but it's the instructions that tell you how to use the thing!

And so it is with the concept of the FOM—we need to think not just about the parts, but the transfer of knowledge about important history, rationale, and priorities that will need to be considered when making timely and strategic financial and nonfinancial decisions. Failing to do so can too often result in unnecessary expenses, time, lost opportunities, and more. In a typical FOM process, we want people to think about categories, roughly as follows:

• Demographics. Who are your family members? Who is in your “sphere of responsibility”? Think broadly. Maybe you're paying a nephew's rent. Maybe you want to provide for a long-term household employee. Who are the people that might not be in your formal planning but play an important part in your life? Consider at least these categories:
  • Family Members
  • Pets
  • Advisors
  • Friends, Mentors, and Confidants

And these questions:

• • How do you know, and how are you involved with, these people?
  • In the case of your advisors, what are their specialties and for what purposes should your family call on them?
  • Do you have family trees, documentation of family history, accounts such as Ancestry.com?

• Personal Information. Explore things like your medical information, and your wishes in case of your illness, incapacity, or death. Collect information about your clubs, programs, and digital assets. What does everyone need to know about your personal properties, whether that is your primary residence or your waterfront or ski-in, ski-out family vacation home. Consider at least these categories:
  • Medical information, including providers and records
  • Information about your incapacity or death
  • Information about your travel and leisure programs and accounts
  • Your noninvestment properties, including information about associated liabilities, vendors, and accounts
  • Your digital accounts, including the location of all password or other access information

And these questions:

• • Have you prepared any letters of wishes for your family, trustees, or advisors?
  • Have you considered the inheritability of any of these assets or accounts?
  • Have you thought about the ownership or governance structures surrounding any legacy assets?

• Estate, Tax, and Insurance. Press yourself to think beyond the basics—explain not only what was done, but why it was done. After all, a good deal of this will only matter when it's too late for you to explain it all. Consider at least these categories:
  • Your basic estate documents
  • Your identification and other important documents
  • Your tax information
  • Your insurance information

And these questions:

• • When was your last insurance or estate review?
  • Have your children reached important age milestones for legal or insurance purposes?
  • Have you explained the purpose of any trusts created or to be created by your estate?
  • Do your beneficiaries have effective relationships with your current and successor trustees?
  • Are you maximizing the use of your annual exclusions and lifetime/generation-skipping estate tax exemptions?
  • Do you anticipate a taxable estate?
  • Have you considered the family dynamics and governance that your planning will cause or require?

• Financial and Investment. What kinds of accounts do you have? What kinds of investments do you have? How are your investments structured? What does that mean to your expectations for the investments? For their ultimate liquidation? Will your family know to liquidate this before that, why, and with whom, to maximize value? Will they know how to meet an estate liability? Consider at least these categories:
  • Bank, brokerage, retirement, and related financial accounts
  • Investment assets
  • Appraisals and valuations
  • Guaranties and liabilities
  • Philanthropic structures

And these questions:

• • Do you sit on boards? Have stock options or the like?
  • Have you thought “beyond the numbers”? What does my family, and do my advisors, need to know? Who are my partners? Why were these investments made? How can they or should they be liquidated or unwound?
  • Have you outlined your enterprise structure and why it was structured in that way?
  • Have you provided for your philanthropic wishes?
  • Have you reviewed your beneficiary designations? Named successor donor advisors?

Because our lives are ever-changing, your FOM should be continually evolving and updated.

Every family that creates their own FOM will undoubtedly learn something new and will discover a solution—a gift, if you will—that will benefit every member of the family. Such a gift is more than an organizational tool, though it can certainly provide that function.

A FOM is unique to your family. As such, it is impossible to pinpoint where you will find the most value, but here are just a few examples of things typically uncovered by this process:

• A client retained personal ownership of two personal residences, thus assuring an unnecessary visit to probate court. In two states.
• A client was encouraged to provide a detailed explanation of a complex second-to-die insurance structure so the beneficiaries would know how the transaction was structured, why, and importantly, how to unwind it after the matriarch and patriarch were gone.
• A client discovered the strict conditions of inheritability of a valuable vacation club membership.
• A client modified an insurance program to meet their philanthropic goals, while more efficiently addressing their taxable estate, resulting in an increase in the benefit being left to the next generation and philanthropic recipients, while reducing the amount being paid to the IRS.

In similar fashion, we recently worked with a client who was a retired senior executive with a real estate investment and development firm in the Midwest. He was well organized but hadn't connected the dots between the paper records and information in his head. Through our process, he highlighted his most important contacts, how he knew them, and when they should be called on to help the family.

In reviewing his investment portfolio, and the myriad investment partnerships with different sponsors, time horizons, and expectations, he was able to impart more information about these deals so his family would know more about where to turn in the event of his absence and would have a better roadmap to think about future values, liquidation priorities and expectations. This client has a close relationship with his four adult, well-launched children, but he had never imparted this level of knowledge to any of them. After doing so in a family meeting, the children were “wowed,” and everyone realized what a gift he had given to the family by embarking on this process.

We all know that each passing year seems to add complexity to our lives. When complexity and wealth are combined, the need for, and benefit of, such a process grows exponentially. This process is valuable for every family enterprise or family of wealth. This is equally true for the single young professional, the successful nuclear family unit, and even the family enterprise that has grown significantly enough to justify a single family office.

Whether you get started with a call to your estate lawyer, investment advisor, a bookstore visit, give your family this gift: Get started. Once you're started, we hope that adding and updating your information will become second nature, but if not, consider setting yourself a schedule to review your manual quarterly or annually to consider what has changed, what should be added, and what should be deleted.

Additional Resources

1. www.leafplanner.com.
2. Visit www.leafplanner.com/wealthofwisdom for special resources for Wealth of Wisdom readers.
3. Chanel Reynolds, What Matters Most: The Get Your Shit Together Guide to Wills, Money, Insurance and Life’s “What-Ifs,” HarperWave, 2021.
4. Free Checklists: https://www.fidsafe.com/resources/checklists-organizers/.

Biography

Through Josh Kanter Wealth Advisory Services, Josh provides thoughtful, personalized multigenerational family wealth advisory services to his clients, including family meeting facilitation, structuring, governance, trust, estate and tax planning, “blind spot” review, philanthropy, and more. Josh founded leafplanner, to offer families a tool to develop a personalized family owner's manual. leafplanner brings the deliberateness of a family office to a family's organization, education, communication, and decision-making.

Josh is involved with numerous nonprofit organizations and is a frequent speaker on family, family office, political, economic, and philanthropic topics.

Josh received his JD from the University of Chicago in 1987.