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The Cycle of the Gift: Family Wealth and Wisdom

ISBN: 978-1-118-48759-4
192 pages
November 2012
The Cycle of the Gift: Family Wealth and Wisdom (1118487591) cover image

A comprehensive guide to giving well to family members

Giving is at the core of family life--and with current law allowing up to $5,120,000 in tax-free gifts, at least through December 2012, the ultra-affluent are faced with the task of giving at perhaps largest scale in history. Beyond the tax saving and wealth management implications, giving to family members opens up a slew of thorny questions, the biggest of which is, "How do I prepare recipients of such large gifts?" With that question and others in mind, Hughes, Massenzio, and Whitaker have written The Cycle of the Gift in three main parts: "The Who of Giving," "The How of Giving," and "The What and Why of Giving." The first part focuses on the people most deeply involved in family giving, especially the recipients and givers (parents, grandparents, spouses, trustees). The second part, "The How of Giving," addresses the delicate balance of givers who want to maintain some level of control and recipients who want some level of freedom in accepting and growing their gifts. The final part, "The What and Why of Giving" describes various types of gifts, from money to business interests to values and rituals. The authors also introduce their "family bank" concept as a model that combines loans, trusts, and outright gifts. It embodies a framework and set of practices for long-term family growth. Even families without great wealth--or those who have already made large gifts to their children and grandchilren--can benefit from the human wisdom and practical advice found in The Cycle of the Gift.

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Preface xv

Acknowledgments xix

Introduction xxv

Chapter 1 The Elephant in the Room 1

Grandparents’ Checks 2

When Giving Becomes an Opportunity 4

Chapter 2 The Spirit of the Gift 7

Where the Spirit Leads 11

The Who of Giving

Chapter 3 Becoming a Wise Giver 17

Know Thyself 18

How Much? 21

Guilt and Remorse 24

Nothing Too Much 26

Chapter 4 Receiving Wisely 29

A Bad Investment? 30

The Psychological Stages of Giving 32

Giving and the Work Ethic 36

Not Yet 39

Meteors and Resilience 41

Investing in Recipients 44

Chapter 5 Spouses 47

Learning from Yourselves and Each Other 47

Three-Step Process 48

Blended Families 50

Prenuptial Discussions 51

Fiscal Unequals 54

Chapter 6 Grandparents 57

Grandparents’ Great Opportunity 57

Involving Parents 58

Grandparents and Philanthropy 61

Chapter 7 Trustees 67

The Choice of Trustee 67

The Type of Trustee 69

The Relationship between Beneficiary and Trustee 69

A Regenerative Role 74

Chapter 8 Elders 77

Intergenerational Dynamics 78

Growing Elders 79

The Work of Elders 81

The How of Giving

Chapter 9 Control versus Freedom 87

The Myth of the Free Gift 87

Cui Bono? 88

The Giving of Accounts 90

Letting Be 92

Chapter 10 Fair versus Equal, Separate versus Together 97

The Balancing Act 98

Pot Shots 100

Flourishing 102

Promises 103

Chapter 11 Giving Outright, via Loans, or in Trust? 107

Options 108

Sharing the Spirit 108

Making Loans Work 109

Why Trusts? 110

The Family Bank 113

Form versus Function 115

The What and Why of Giving

Chapter 12 What Families Give 121

Homes 121

Business Interests 125

Values 131

Rituals 134

Reputation 136

Chapter 13 The Why of Giving 141

Why Not 142

The Family Tree 144

Giving Thanks 146

About the Authors 151

Index 155

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James E. Hughes Jr., Esq., is a resident of Aspen, Colorado, and a retired attorney. Jay is the author of Family Wealth: Keeping It in the Family, and of Family–The Compact Among Generations, and numerous articles on family governance and wealth preservation as well as a series of "Reflections" which can be found on the Articles section of his website jamesehughes.com. He was the founder of a law partnership in New York City and has spoken frequently at numerous international and domestic symposia. He is a member of various philanthropic boards and a member of the editorial boards of various professional journals.

Dr. Susan E. Massenzio is a psychologist and founding Associate of Wise Counsel Research Associates, a think-tank and consultancy. Susan has extensive experience consulting to senior executives, leadership teams of Fortune 500 companies, and heads of family businesses. Susan served for many years as the senior psychologist for John Hancock Financial Services, a senior vice president at Wells Fargo Family Wealth, and professor and program director at Northeastern University. Susan is a member of the Collaboration for Family Flourishing.

Dr. Keith Whitaker is an educator and founding Associate with Wise Counsel Research Associates, a think-tank and consultancy. Keith has many years' experience consulting with advisors to and leaders of enterprising families. Keith served as a managing director at Wells Fargo Family Wealth, where he founded the innovative Family Dynamics Practice. He has also served as a researcher at the Center on Wealth and Philanthropy, a private trustee, a director of a private foundation, and a philosophy professor at Boston College.

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