ELITE ADVISOR BEST PRACTICES

Discussing Trust Intentions with Beneficiaries - Part Two

Don’t let your loved ones be blindsided by the “inheritance meteor”

By Gary Shunk

Key Takeaways:

  • The impact of sudden wealth can upend the recipient’s environment.
  • A trust is both a legal and an emotional document. The trustee/beneficiary relationship has both quantitative and qualitative elements.
  • It’s important to understand the three types of listening: First we listen passively, then we listen with ego and finally we listen with empathy.
  • Combining empathy with technical data will take the trust dialogue in a good direction and prevent many types of misunderstandings.


For the past few years, my colleagues and I in the Family Business Center at Loyola University in Chicago have been presenting a program titled “Difficult Conversations.” Parts of this workshop are based on the book by the same name by authors Stone, Patton and Heen, which originated in the Harvard Negotiation Project. Our participants—family members and family advisors—have found this to be a deeply useful and practical experience. The value of this program lies in the dynamic reality of emotions present during all financial and business conversations. In this presentation I share a statistic (which I made up) to illustrate a point: I say, “90 percent of every money conversation is emotional”—usually every head in the audience is nodding. The emotion I’m referring to is anxiety.

Uncomfortable money topics

What makes conversations difficult is the anxiety associated with the topic being addressed. I have found money—even more than sex—to be the most emotionally laden topic. Anxiety rises when we move beyond our comfort zone and begin to feel a loss of control. Here is a brief list of “touchy” topics that can trigger anxiety:

  • Inheritance amounts
  • Annual distribution amounts
  • Vacation time at family property
  • Investment decisions
  • Next-generation leadership responsibilities
  • Family philanthropy decisions

A few years ago, three colleagues and I hosted a group of inheritors for a weekend of conversation on what it’s like to be an heir. Like any group sharing a common link, the gathering was filled with stories of joy, sorrow and similarity.

One story touched me deeply. Carol (pseudonym) told us about the day she first met her trustee. Years earlier, as a college student, Carol received a letter on her 19th birthday from her parents’ bank. The letter simply stated an appointment had been made for her the following Tuesday at 3pm. She was to meet with Mr. Smith at the bank to discuss her trust. Having no history with the bank, or with Mr. Smith, Carol called her mother and asked about the meeting. Her mother offered little, other than the meeting was about her inheritance, and she would learn more from Mr. Smith.

Dutifully, Carol arrived for her meeting at the given time and met Mr. Smith, who introduced himself to Carol as her “trustee.” She did not know what “trustee” meant, and when she asked, Mr. Smith quietly placed himself behind his large mahogany desk, put on his reading glasses, looked down at a small pile of papers and proceeded to read aloud for the next 30 minutes. Still, no answer to her question.

Carol described her first experience with inheritance as a blur with periodic wonderings about the meaning of the legal gibberish she was hearing. Then Mr. Smith looked up at Carol from his desk and said, “Now that you have reached your 19th birthday, you will begin receiving distributions from your trust, which amounts to just over $20 million dollars.”

Preparing heirs for the “inheritance meteor”

From that point on, Carol had a vague recollection of signing documents and being told a distribution would be made to her in the next few days. She returned to her college campus but didn’t have a clear sense how she got there. She said, “I was in a haze until my roommate asked me how the meeting went. I didn’t know how to answer her, but strangely, I felt embarrassed.”

My colleagues, Jay Hughes, Susan Massenzio and Keith Whitaker, have written a deeply insightful and practical book: The Cycle of the Gift: Family Wealth and Wisdom. In the book they might describe Carol’s experience as a “meteor” that “flies from the giver to the recipient, often appearing on the recipient’s horizon with no warning.” As the authors argue, the impact of sudden wealth can “upend the recipient’s environment.” Likewise, I consider a trust to be a legal document, but it is also an emotional document. The trustee/beneficiary relationship is composed of a parallel relationship of “quantitative” and “qualitative” elements. Carol had no technical preparation, let alone any emotional preparation. As I have learned in my work with trustees and beneficiaries, this can often be the rule rather than the exception. However, it is important to note that a trust is also an emotional document designed with care and love in mind. It is an instrument intended to assist in the development, maturity and freedom of the beneficiary.

My personal story

When I was 16 years old, I had a teacher who challenged me to look at myself. He wanted me to consider why I was so unhappy—and, then, to do something about it. His confrontation shook me to my roots—I felt exposed. I knew he was right: I was shy and afraid much of the time. I thought, what could I do, this is just the way I am? However, I also thought, maybe I could feel different. I certainly wanted to. My bold teacher said, “Gary, you should get some therapy.” I had no idea what he meant. However, he helped me figure that out, and I found a therapist.

Her name was Jean. She was earthy and ageless. When I sat down in her office, I had no idea what to do. Sensing my discomfort, Jean smiled and said, “Why don’t you tell me why you’re here.” I began to talk and Jean listened. I lost track of time. The next thing I knew she said, “Well, we need to stop now, our time is up.” Startled, I looked at the clock, an hour had evaporated. She asked me if I wanted to come back, and we made another appointment. As I walked out of Jean’s office, I noticed I felt lighter, happier and utterly baffled that an hour had flashed by so quickly. I couldn’t wait to see her again.

Three types of listening

Years later, what happened in that session with Jean became clear to me in a college course I took called “Empathy Lab.” In Empathy Lab, we learned how to listen and that most of us listen in one of three ways:

  1. First, we listen passively. In other words, information comes in, we hear it and we file it.
  2. Next we listen from our sense of ego. I listen to you, and then I tell you what I think about what you just said.
  3. Finally, there is listening with empathy.
Empathy vs. sympathy

Let me make a distinction between empathy and sympathy. Typically we express sympathy when someone we know has lost a loved one, we feel “for” them. We know they are suffering grief, so we hold them in our thoughts and prayers and convey our concerns. Sympathy is a passive expression. There is a distance when we feel “for” someone.

By contrast, empathy is active. Empathy requires involvement, commitment and at some level risk. Risk, because it brings the listener closer to the speaker. The listener enters the speaker’s emotional world and feels “with” the speaker. When empathy is properly expressed, the one being listened to experiences a sense of calm in both the mind and body. Empathy is acceptance without judgment. Imagine what Carol’s experience would have been, if Mr. Smith practiced empathy in their meeting.

We all know when someone is authentically interested in what we are saying. They may ask clarifying questions, or they may ask us to describe our thoughts, feelings and experiences. When someone listens to us in this manner, we naturally open up. We open up because we trust. I believe empathy is the core skill in the trust creator/trustee/beneficiary dynamic. What empathy facilitates is being “known,” and it helps all parties to know.

Conclusion

Many trusts are received with little or no preparation—like being hit by a “meteor.” The coupling of empathy with technical data can carry the trust dialogue in a good and orderly direction, avoiding many unnecessary problems and misunderstandings. In the next installment of this article series, we’ll explore how to prepare heirs for their new life state and to foster intelligent conversations between trust creators, trustees and beneficiaries that can increase family harmony.


About the Author

Gary Shunk is Business Relationship Coach at Working Partnerships, which helps firms and companies improve working relationships that are absolutely essential to achieving their annual results both inside and outside of their firms. He can be reached at 312-810-0011 or by emailing shunk@working-partnerships.com