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Freedom From Wealth, Aging - Why Priorities Matter
Charles Lowenhaupt
8 October 2019
Time waits for no-one – including high net worth individuals. Aging brings its challenges – and its comforts and rewards. Managing how to deal with longer lifespans when considerable wealth is involved raises certain questions. Of course for the wealthy, their assets create options that those far less well-off do not have. Setting priorities
A familiar figure in the North American and international wealth management arena is Charles A Lowenhaupt, managing member of Lowenhaupt & Chasnoff. A published author and a speaker about industry issues, Charles explores managing wealth and planning for aging here. The editors are very pleased to share these observations and invite readers to respond. Email tom.burroughes@wealthbriefing.com and jackie.bennion@clearviewpublishing.com
Renowned psychologist Erik Erikson said that in looking back on life in old age, a person either feels pride in accomplishments or regret about what has not been accomplished. Erikson suggests that this is the stage in life in which people are relatively passive and almost entirely contemplative. It is a stage of satisfaction or depression.
Today, people are taking better care of themselves, are healthier and are more vibrant as they age. We have a president and at least two other candidates seeking the highest office in the land who are over 70 years old. The world is full of people we would consider elderly yet actively engaged in business, academia, politics and philanthropy. They are not sitting in rocking chairs contemplating the past; they are actively chasing dreams.
Yet, no one can stop the progression of aging. What individuals and families can prevent is being unprepared for it. In our experience, those who properly plan for older age are most likely to enjoy their golden years – to enjoy freedom from wealth on their own terms. This may be especially true for wealth creators who chased their dreams earlier in life, and still have dreams they want to pursue.
It all starts with planning
Almost everywhere I go these days the topic of aging is comes up. It’s always a difficult conversation for individuals and family office professionals. Quite often, everyone tiptoes around the issue because so much is at stake. At what point does the wealth creator relinquish control? What role does the family and/or advisors play during this last transition of life? Will the wealth inheritors stay with the parent’s wealth management firm?
The organizing principle for managing the situation is actually another question: How do active people continue chasing their dreams even as they age? Answer: They do it through thoughtful planning. They plan their lives and their dreams so that they can chase them even as their capabilities diminish.
Preparation starts with setting priorities. What is most important and what can be forsaken as frailties set in? As important, there must be contingency plans for when the individual may need to adjust their dreams to fit their capability. Priorities and contingency plans also need to be communicated to people who can help maintain them and execute the plans. Fundamentally, success in aging requires finding support not only in the day-to-day living of life, but also in adhering to and adjusting priorities.
So how do priorities get set?
The process begins with an analysis of what’s important and what isn’t to the wealth holder. What can be delegated and what cannot? What dreams does the aging wealth holder want to chase and which of those can be reasonably chased? Strategies must then be developed for implementing the priorities and delegating responsibilities and tasks. These cannot be confined to the legal documents such as living wills, durable powers of attorney, “declarations of desires” and the like.
How the analysis is performed may be almost as important as the priorities themselves. The process needs to be done in conjunction with trusted advisors who will help the wealth holder manage their priorities.
Building the team
Selecting the team is a substantial project in and of itself. The selection of team members should be based on their capability, not on how much the wealth holder may or may not love them. For example, if the delegation of financial affairs becomes a way to free up time and energy, it may be wise to choose an expert - perhaps someone who is not a family member.
When those priorities and strategies are developed, the team needs to be engaged. Those team members may be some or all family members; they may be investment professionals, lawyers, doctors, geriatric social workers, pastors, or friends. But importantly, it is the person planning for aging who needs to set the overall theme by defining the dreams to be chased.
That person planning for aging needs to provide guidance to team members by analyzing various scenarios which might occur. Critically, that team is not to be asked whether they endorse the priorities or whether they would meet challenges posed in the same way as the person planning would meet them. Rather, team members need to understand the priorities and confirm that the strategies can ultimately be implemented, even when the aging person cannot implement them. The team needs to prepare by understanding how the aging person would want them handled.
Defining priorities
Priorities are by nature quite general, but more discussion may be needed to understand their specific intent. We often hear “good health” is a priority. That can be difficult to interpret. Is “good health” a condition that allows one to do what he or she wants? What at age 35 would seem unbearable, like feeling sore and stiff when you wake up in the morning, by age 75 can be perfectly acceptable. I know many people who carry oxygen who would have “rather died than do that” when they were 40 years younger.
The discussion is best begun when individuals are young enough so that their thought process is not diminished, and their health is still good. What a 60-year-old can consider objectively may be impossible for a 90-year-old to contemplate.
Aging well, like living well, requires the freedom to passionately pursue self-actualization. A 20-year-old can chase every passion without running out of energy or time. A 70- year-old has to be more selective. Fortunately, the 70-year-old has had more time to see life and to decide on what is important.
About the author
Charles A. Lowenhaupt is Managing Member of Lowenhaupt & Chasnoff, LLC, a law firm founded in 1908 that develops wealth strategies and provides counseling to individuals and families of significant wealth. Lowenhaupt is also co-author of the book, Freedom From Wealth and author of The Wise Wealth Inheritor’s Guide to Freedom From Wealth.