It is hard enough to talk about money. Talking about love and money raises the difficulty exponentially. This is the challenge faced by spouses within the context of significant wealth.
In this chapter, we will address this challenge with respect to several particularly difficult situations: dealing with fiscal inequality, clarifying wishes in estate planning or giving, and making choices in the context of a blended family. Later, in Chapter 14, we will address the use of prenuptial agreements.
In many marriages in the context of significant wealth, one partner comes to the marriage with—or creates during the marriage—much more financial capital than the other. Traditionally, this partner was usually the man. Thanks to demographic and social changes, that partner is now often the woman. In either case, the couple must manage the stresses caused by fiscal inequality.1
Usually, they must do so without much in the way of support. While there are many marriage counselors, few feel equipped to help couples deal with fiscal inequality. And it is a topic that is deeply difficult to address head on. That is because the person who has more financial capital often approaches the topic with a mixture of guilt and fear: guilt at having more, and fear of being taken advantage of.
What then can the couple do? There are two main keys to meet this challenge:
This is, of course, the basis for any relationship. To this end, sometimes respecting the taboo against talking about money early in relationships is a good thing. Not discussing money with prospective partners can allow relationships to grow and strengthen based on who you are rather than what you have or might have.
Along these same lines, it is also a good thing to start out life living on what you earn. This is a positive experience for individuals, to know that you can support yourself. It is also good for couples, as you learn to navigate choices about how you spend your time and navigate money choices together.
Most importantly, make sure to value all the contributions of both partners. The most important contributions are often not financial. In any situation of inequality, empathy is a key part of the response.
On this point, again, each member of the couple should go through the process we described in Chapter 4. The true basis for self-sufficiency is self-understanding and identification of your strengths through work, quality relationships, and communication. If you’re going to navigate relationships of fiscal inequality with others, the first thing is to clarify your own reality: not only what you have but who you are.
Each spouse should also feel reasonably knowledgeable about the family’s finances. This may mean doing some independent learning about investing, going to seminars, or joining the larger family’s business meetings. Both spouses should also feel that they can speak directly with the couple’s financial advisers. Having that relationship is important not only for each spouse’s sense of competence but also in case something should happen to one member of the couple, so that the other does not feel left in the dark.
Beyond these two keys some of the other practices that we have seen help couples deal with the challenge of fiscal inequality include:
One of the common consequences of fiscal inequality is that the partner with more financial capital may be asked by other family members with less to offer them loans or gifts or other forms of financial support. This can be deeply uncomfortable.
The first step in addressing the issue of offering financial support to family members with less is to talk together as a couple, to make sure that whatever you decide you are united in your decision. Next, if you are going to act financially, be clear about your motivations. Is it your own need—to be liked or to get along or to not make waves—rather than the other’s true need that is motivating you? Finally, be clear about the manner of your action and your goals. For example, are you making a gift or a loan? If it truly is a loan, make sure that the terms—how long it will take to be repaid, the interest charged if any—are set down in writing and both parties have a copy. Very often, however, family members will couch a gift as a loan to save face, since everyone knows that the so-called loan will never be repaid. That can be okay—as long as you do not later decide to renegotiate the unspoken terms and demand payment on this loan. Again, clarity before a commitment is made will save much grief down the road.
With this empathic stance, a couple can begin to formulate a shared vision regarding wealth in their family and the choices it brings. Often the choices couples face center around estate planning and giving. Based on his work with dozens of families, our colleague Charles Collier, former senior philanthropic adviser at Harvard University, recommends a three-step approach to these very important conversations.2
The first step is to clarify your individual values and dreams and the options that you see before you. Take this step individually. Spend some time with your laptop or paper and pencil and write down what you think is important. Don’t self-edit based on what your partner may think. Too often communication breaks down or never gets started because we are trying to respond to someone else’s views (or what we think are someone else’s views) rather than getting clear about our own beliefs. Managing wealth as a couple requires that each member of the team have that clarity.
Once you have done that individual work, turn to step two. The goal here is to share your clarity with each other. You may not agree on all points. The key is to identify your differences, discuss them, and respect them. You may find that there are differences where you thought there were none and points of agreement that you did not expect to find.
The key to this step, of course, is listening. It is a hard skill to learn. We encourage each member of the couple to speak, without interruption, while the other listens. Then the one listening can ask clarifying questions—but not object or make points of his or her own. Only when one member has finished should the other take his or her turn to speak.
Many times, couples find that step two leads back to step one. Talking about putting money in trust for children, for example, reinvesting funds in the business, or buying a new home becomes an iterative process of thinking, sharing, and thinking some more.
The third step is forward-focused. Once you have identified what you each believe, a path forward will likely start to emerge. That path may not have been what either one of you would have predicted. It may mean delaying a choice or moving ahead more quickly than anticipated. It may mean sharing information with your children or other family members or deciding to stay quiet and revisiting the topic at a future date. Whatever the choice of action or communication is, you will have come to it in a truly shared way.
Collier’s three-step process is a powerful tool. It is not an easy one to use. It takes time and patience. But if you stick with it, it can greatly strengthen your relationship as a couple and your relationships with other family members, too.
To again recall Bernard Shaw’s supposed quip, “The greatest enemy to communication is the illusion that it has taken place.” The three-step process provides a way to overcome that obstacle.
Earlier in this chapter we mentioned that it can be helpful to invite spouses to family meetings, so that both spouses feel reasonably informed about the larger family enterprise. This is particularly important if you have children, as choices made by their grandparents or extended family may impact them. Also, it is very hard for a spouse to be an effective partner in raising a child amid wealth if he or she has been excluded from learning about the family enterprise. You can’t teach what you don’t know.
For all these reasons, when families ask us, “Should we invite spouses to our family meetings?” we generally respond, “Of course.” That response comes with some caveats. First, if you are the mother or father who is organizing the family meeting, it is a good idea to ask your adult children if they would like their spouses to be present. This request shows them respect vis-à-vis their marriages, and it gives them and their spouses time to think and talk about the pros and cons of the spouses joining the meeting.
If the answer is, “Yes,” you don’t need to start by having spouses join the entire meeting right away. Perhaps there are sections that are more general or educational as distinct from board meetings or executive sessions where more sensitive issues are discussed. As is the case for any family member, spouses should demonstrate their seriousness about the meetings by doing required prep work, showing up on time, being present, and joining in the discussion.
If families take these steps, the inclusion of spouses can be an enormously powerful force. As we said in Chapter 2, families that succeed long-term look at themselves as connected not by blood but by affinity. Doing so allows them to integrate the learning, drive, empathy, and other strengths of their in-laws.
Nothing is easy about blending families after divorce or the death of a parent, and dealing with stepchildren and money is hard. To have effective conversations about family wealth within this context, we recommend tailoring the three-step process to the contours of a blended family. Using this process helps spouses tackle the core issues while also managing their emotions.
Again, start with yourselves as a couple and your principles. In this case, your conversation can focus on such matters as how you feel about sharing some of your wealth with your second spouse and his or her children, what you think such an inheritance is meant to accomplish, and what concerns you have if your children must wait for an inheritance because of your second marriage. These questions can be very challenging to answer, so try to be patient with yourself and your partner in these conversations.
Then, in the second step, solicit the input of your children and stepchildren. How you do so will depend on your family’s dynamics. Some parents invite all the children together in one conversation. Others proceed one child at a time. Still others invite each child to speak with his or her biological parent first and then with the couple together. Whichever way you proceed, the goal remains to listen to what the children want to say. Questions that our colleague Charles Collier recommends using to elicit their thoughts are: “What are your expectations for an inheritance? And, how do you view the purpose of an inheritance from your stepmom or stepdad?”
After becoming clear about your principles and plans as a couple, with input from your children, the goal of the third step is to communicate your plans. Again, how you do so—child by child or as a group—will depend on your family. The key is to make the process affirm them as respected members of the family and you as a loving couple.
We can’t stress enough the importance of empathy when dealing with a blended family, empathy for each other as spouses and empathy for your children from prior marriages.
We also recommend following the basic rule, if possible, of addressing questions about your plans and purposes while all parties are still alive. Use your documents and occasions when you are together as a family to make your wishes clear.