Ancient Wisdom, Modern Prudence, And Family Meetings

King Solomon lived and ruled Israel as its third king in the 10th century BC, after the death of his father King David.  He is best known for his wisdom, which, according to the Hebrew Bible and Old Testament, was granted to him by God when he was asked in a dream what he desired.

Why wisdom?

Wisdom was well defined centuries later, in the 5th century BC, when Plato first put forth his four cardinal Platonic virtues of wisdom, courage, moderation and justice.  Wisdom is said to be the rudder, the guiding virtue of the other three virtues.  As a profoundly wise sage, King Solomon was truly a great man!

Wisdom, also known as prudence, was later defined more completely by Plato’s disciple Aristotle, another Greek, whose four virtue ethics comprised prudence, temperance, courage and justice.  Aristotle more thoroughly defined — and I’m simplifying here — prudence as having two parts:  right reason and right purpose.

Why this dissertation on prudence?

Well, as it turns out, when we have enough money to do what we want, when we want, and in a manner we want, money takes on a deeper dimension.  Prudent money decisions take on an even more critical role than when we didn’t have any money.

When we began our adult life, we were focused on paying our bills, on saving for buying a home, a car, furniture and appliances.  A myriad of other things occupied our attention in setting up our “house.”

Fortunately, we were able to save money in 401(k)s and other investment vehicles so that one day in the future we would be able to live comfortably on what we’d accumulated.

“Right reason” for making smart money decisions was paramount to someday having enough money to no longer need employment income.  “Right purpose” was not regarded as that important.

Our attention and intention was on living.  For many of us, that involved raising a family.

We as young adults.  The proper purpose for our future savings?  If pressed to address this question, we no doubt would have tried gazing through a dream-like hazy lens — our individual responses affected by our individual desires involving future play and relaxation.  Just starting out in life, it’s hard to shift one’s mindset to something much bigger than one’s insular self.

The American psychologist Maslow’s Hierarchy of Needs describes the life journey we take from first meeting our basic human needs of food, water and shelter and then moving toward a personal transformation that matches up with our right reason in alignment with our right purpose.

And this is where money enters the fray.

Prudent money decisions require attention to the science of investment management, asset allocation, risk tolerance, cash flow, taxes and the balance sheet in concert with the art of goals, family, community, do-gooding, gratitude and other-centeredness.

This is not an easy combination of personal variables to align with smart money management.

Often we have conversations with our clients about how to deal with extended family money issues involving spending, saving, lifestyle choices, in-laws, divorce, death, grandchildren, and much more.  Those persons who are less fortunate, living paycheck to paycheck, don’t have the opportunity to use money to assist in helping resolve these money-related issues.

For comedians, it’s the classic “good news, bad news” joke:

The good news, I’m here (the family member) to support you in your time of need, but the bad news is I don’t have the money to help you solve your problem or crisis (“Phew! Dodged that bullet!”)

Here is where prudence involving money surfaces.  If you have enough money to help.

Most of our client conversations involve walking through the right reason and right purpose – the science around their money.  If we give your family member X and family member Y specified amounts of money, will they be okay and will they appropriately use these monies to meet their current needs?

Recently, I had a conversation with a father who was helping his children who had fallen on bad times.  One, with a major health crisis, required costly  experimental, non-covered treatments.  The other was dealing with a very difficult circumstance surrounding a lawsuit that required an excessive amount of legal fees.  These crises were not of their making.  Bad things happen to good people.

The father, at the same time, had loaned money to other children to help purchase homes that were appropriate to their lifestyle.  The loans enabled the children to buy sooner rather than later in nice locations with excellent schools.

Here’s the question:  When he dies, how does he treat these various situations in splitting up the estate among his children?

This is where money prudence appears.

The father decided, regarding the health and legal action, that his children’s sudden difficulties were not of their doing.  He could afford to pay the bills and did not look at them as an “advancement” on his estate.

How about the loans for purchasing homes?

In his view, an entirely different situation.  These were “advancements” on their respective inheritances and, therefore, would be considered part of the estate upon his passing.

Is he acting prudently or not?

Well, that depends.  You or I may take an entirely different approach around these money-related issues.  What is prudent for one family may not be prudent for another.

It’s the thinking we do that matters!  It’s the wise, thoughtful discernment we consider in making the decisions that best match our respective right reason and purpose.

Money decisions can be very nuanced and tricky.

Are we making decisions to exert control or power over another, especially a family member?  Decisions that might damage family dynamics that could permanently ruin important personal relationships?

On our death bed, we won’t spend two seconds regretting not piling up more money or not buying Amazon or selling Apple or paying too much in estate taxes.  We will want, at that moment, more time with our family and loved ones.  The loving embrace of people we care deeply about – to enjoy their company with the knowledge that we have proactively deployed our money to make their lives more tolerable, enjoyable, worthwhile and meaningful.

Returning to Aristotle’s virtuous universe:  It’s the “right purpose” we did or did not fulfill that may haunt us around our money.

In my experience and those of many of you, very crucial money decisions – especially around family matters – can take days, months, even years.

Several years back, a client couple came into our office for their regular review.  Sadly, since then, they’ve both passed on.  In that memorable meeting, they were just entering their 80s.  We had been working with them for over 20 years.  At our meeting’s outset, they said they were struggling on whether to let their children know the size of their estate.

As with many of us, they feared their children might become “trust fund babies.”  Or at least start to request, then possibly demand, money to spend frivolously.  Perhaps no longer work hard toward fulfilling their own visions of their future.  Ultimately deplete the money rapidly by spending it emotionally and destructively on expensive cars and other luxury items.

You get the point.

We’d just begun our meeting as usual.  We’d just asked how life was treating them and if there was any specific thing on their mind.  Immediately there was a perceptible moment of angst, then a pregnant pause followed by, “How do we tell our children about our money?”

This question, this issue, this money-centered “right purpose” has been discussed with our clients many, many times.  We listened.  They revealed.  We commented.  They discerned.  Gradually they gained clarity.  Finally, they were ready.  Together we decided to schedule a family meeting with their children to review their estate.

The discussion and decision on this one topic took over an hour.  When they were finished, they apologized for not going over the meeting’s prepared agenda.  Yet, they also felt it was the best meeting they’d ever had in their life.

You see, with this couple, it took 20 years for them to discern with prudence that it was the right time to raise the curtain on their money and reveal their purpose for it.

The right reason and right purpose had synchronized.  Before they passed, a family meeting conveyed the parents’ vision and intent.  Their children were not blindsided and surprised.  To be sure, once both parents died, the children received the money whether or not they were really ready for it, or had the right purpose for it in mind.  But, at least by then, the children had been alerted and informed about how their lives would change with their inheritance – with all of the good and bad that a large amount of money can bring with it.

When studying ethics and terribly difficult ethical situations, one often is placed in a position to make a decision between two choices, neither of which is optimally desirable.

During my four years at West Point, we cadets were continually placed in these knotty, perplexing circumstances.  Why?  Because eventually, soldiers’ lives would hang in the balance when we led them in battle.

Passing on an estate and other money issues, although not life-or-death matters, can cause a major upheaval in the lives of others in ways one fervently hopes never occur.

But we can only go so far and then we have to let go.  Because inevitably, our human biology reverts to the mean.  One’s tooth decay begats crowns begats root canals begats implants and dentures.  Even anti-aging creams, seances and cryogenics cannot cheat Father Time.

But before our own demise, let’s please realize that life’s ethics lessons also involve a choice.  A choice between a right and a “higher right.”  That higher right is situational.  As an observer from the sidelines, we are simply unable to prudently judge the decision someone else is making.  Only those in the thick of things have what it takes to choose their higher right at that moment in time.

It took 20 years for our client couple to discern with prudence — and then accept their own observer status as their children subsequently step up to also discern and choose their own higher right.

The Greek philosophers spent centuries discussing all these deep issues.  They did so in a Greek city-state during a time when the concepts of political freedom and personal liberty were being defined.

No one, according to historical records, had spent that much time deeply probing the essence of mind, heart and spirit.

And it wasn’t until Aristotle that prudent decision-making was thoroughly discussed and exercised, standing on the intellectual shoulders of Socrates, Plato and others.

My point in mentioning:  We want to make prudent decisions around our money because, deep down, we know how destructive money can be in the wrong hands.

We know it’s not just a head game based on factual criteria that points to an optimal decision.  We know it’s not just a heart game based on our feelings, emotions and our “gut” about the most appropriate decision.

Actually, it’s a combination of these two parts that makes the whole true.

Wise and wealthy Solomon was best known for his astute decision-making skills.  When two women both claimed to be the mother of a baby, he suggested they divide the baby in half – discerning that the true mother would beg him to reconsider or give the baby to the other woman.  As this ancient story unfolds, Solomon promptly awarded the baby to the pleading mother, realizing the boundless love she had for her child.  She’d rather have her infant live out its life with a stranger than see its life extinguished.

Gratefully, we are not asked to make such diabolical life-or-death decisions about our money.  We simply want to employ a bit of Solomon’s all-wise prudence when it comes to the shekels, bekahs, chariots and goblets we’ve managed to accumulate.

Gary

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