Most of our financial decisions involve things we care about. I care about retiring comfortably, so I contribute to my 401(k) and review my investment portfolio regularly. I care about providing for my wife if I become incapacitated or die, so I ensure that my long-term care, disability and life insurance are all paid. I care that my daughters have an opportunity for financial independence, so I help them with college tuition. I care about my community, so I give to the local public safety complex, Special Olympics, and other organizations that help others.
My estate plan is also about caring; it is about leaving a legacy to help my daughters through rough times. I want to create a safety net so they are able to take a business risk, get pleasure through a vacation without worrying how to pay for it, or locate their home in a safe neighborhood without an unreasonable mortgage. I enjoy knowing that if they're good stewards, the assets my wife and I leave our children can also benefit
Professor Paul G. Schervish introduced me to this concept of 'the sphere of care.' Sometimes the sphere of caring and its relationship to our financial decisions can create stress. At times, my sphere of care is greater than my resources. Sometimes I only imagine that my sphere of care overtakes my resource base. Put another way, sometimes my propensity to give is greater than my capacity to give; other times I am capable of providing but do not believe that I am.
When contemplating these conflicts, we often feel stressed about our financial decisions. If I give to this organization, will I put my financial independence at risk? If I give to my children, will I have enough for retirement? If I give in my community, will I put my grandchildren's education at risk? As financial advisors, we can help our clients understand their sphere of caring and articulate their priorities around who and what they most care about. Clients learn to set financial goals to achieve specific objectives around their cares as opposed to creating meaningless numbers, such as increasing my wealth by 10 percent or having $5 million.
I find that some heirs develop stress over their inheritance because they're uncertain what the donor desired they do with the money. This lack of certainty interferes with their sphere of care. Is it okay to make a charitable donation with inherited money? Is it okay to give inherited money to someone outside the family? Is it okay to spend inherited money on something like a vacation, or a disposable like a car? These value judgments involve understanding the donor's sphere of care. When we leave an inheritance or trust with no instructions and no sense of our desire with regard to the beneficiary's use of the funds, we can create confusion in the beneficiary's mind.
Likewise, if we are uncertain how much we need to retire comfortably, uncertain what we want our family to do with the assets that we leave, or uncertain how money may impact particular care in our community, it is difficult to feel satisfaction about future plans. We may be torn or confused about philanthropic care or philanthropic giving. A colleague of mine, Kristin Leutz of the Community Foundation of Western MA, spends time directly working with donors to ensure their cares are met when setting up philanthropic donations or trusts. Simply giving a sum of money will not provide the same satisfaction as a carefully crafted plan to provide for those areas of the community that fit best in the philanthropist's sphere of caring.
As advisors, we can help our clients understand and articulate their sphere of care, prioritize their cares, set goals to achieve their most important cares and feel good about their capacity (as well as their propensity) to give to heirs and to their community. Failing to engage clients in this conversation can lead to a sense of detachment from their wealth, detachment from their enjoyment of wealth and detachment from those things that motivate clients to invest well, to earn and to spend well. A conversational tool can be useful, such as
Susan Turnbull's Life Legacy Cards, which provide thought-provoking questions to help families begin this process.
Few people have an opportunity to sit with an unbiased professional and discuss on a regular basis their changing sphere of care, and the way in which their wealth (whether meager, moderate or substantial) can help them impact the people and things they care about. Legacy Counsellors, P.C. has tools to help clients discover, articulate and act on their sphere of care. If you would like to discuss this subject further, please feel free to call or email me. When done properly, it is not only rewarding for our clients but it is rewarding for us. Few things will give a client greater peace of mind than knowing they are applying the benefits of a life's work in a way that will positively impact those things they care about. Give it some thought.