Leave a Legacy, Not a Mess With Sandy Pollack
In this insightful episode of the Women's Wealth Canada Podcast, host Glory Gray sits down with Sandy Pollack, an esteemed estate planner and family business advisor, to discuss the vital importance of leaving a legacy that benefits future generations rather than creating a burden. Sandy, author of "Don't Leave a Mess: How to Disaster Proof Your Family Legacy," shares her expertise on navigating the complexities of managing family wealth and preparing for one of the largest generational wealth transfers in history.
You will gain valuable insights into the distinctions between building and managing wealth, and the necessity of fostering clear family conversations to intentionally create generational wealth. Sandy delves into her experiences with multi-generational family-owned businesses, highlighting the significance of understanding family dynamics and the often-overlooked role of women as the "chief emotional officers" in these enterprises.
Throughout the episode, Glory and Sandy explore various topics including the importance of involving spouses in financial planning, the intricacies of succession planning, and the challenges of preparing the next generation to handle family wealth responsibly. Sandy's practical advice and thoughtful anecdotes provide a comprehensive guide for business owners seeking to ensure their legacy is a source of strength and unity for their families.
Join Glory and Sandy for an engaging conversation that emphasizes the critical steps needed to leave a legacy that is well-organized, intentional, and reflective of your family's values.
Noteable Quote
"Strong families make strong businesses, not the other way around...
Table of Contents
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If you're a business owner, you've dedicated a lot of time and money, to building something you can be proud of. Maybe you're thinking about your legacy now.
The question is, “Is your family prepared for the legacy they will receive or are you leaving them a mess?”
My guest today is estate planner and family business advisor, Sandy Pollock. Sandy is the author of "Don't Leave a Mess: How to Disaster Proof Your Family Legacy." It's available in audiobook, print, and ebook. I'll leave a link to it in the show notes.
In the book, Sandy draws on her experience advocating for family business enterprises. She explains that building wealth and managing wealth are not the same thing.
We're in the middle of one of the largest generational wealth transfers in history. To build generational wealth intentionally, there needs to be more clarity around our family conversations.
If you own a family business, you're gonna love this. Join me today as I talk with Sandy about leaving a legacy, not a mess.
We've done some slight editing to the transcript below to make it a bit easier to read. The conversation always seems to ebb and flow.
Glory:
Our listeners may not know this, but only 15 % of financial advisors in Canada are women. We are woefully underrepresented.
It was a challenge for me to start my firm and I love to talk to other female founders of financial advisory firms because they get it.
So, tell me about your firm. What do you do and whom do you serve?
Overview of Sandy’s Firm
Sandy:
My firm, which is called Trimaran Advisory Group, serves a divided market.
75% of our clients are family-owned businesses, usually multiple generations, and we try to help them make wise choices to protect, control, and transition what they've worked so hard to build.
Then there's this small little sliver, which is 25 % of self-employed professionals like doctors, lawyers, and accountants, particularly in the physician area. we believe that we try to help them care for their wealth as well as they care for their patients. The reason why that sliver is there is because my husband is a physician.
My practice started in Montreal and then we moved to Ottawa. It was an accountant who had referred me to a number of his clients and that's how I got my start with doctors. When I moved to Ottawa, I made an intentional effort not to work with doctors, but my husband insisted because he said, “They need you. You cannot just ignore them because they need help. They need guidance.” So, I kept it that way.
Family Business Dynamics and Planning
But really where my heart of hearts is, is with family businesses and family business enterprises. Because they have so much complexity that no one is really sitting beside them at the planning table to discuss issues that are beyond balance sheets, that are beyond numbers and profits. It has to do more with the family side of wealth, the interpersonal and communication side, that a lot of people don't understand.
And then, there's family dynamics. I think that as a woman, being a mother myself, there are family dynamics at play. Every family has a system. It's understanding that system so that when it comes time to make a decision with clarity and confidence, you actually understand the playing field. There are various components, which are the human side, the financial side, and the leadership side. Women are able to make decisions with discernment so that they don't hurt other people or destroy relationships. That's not easy to do.
That's pretty much our practice, and we love our business families because they are the engine of any strong economy. I think Canada owes a lot of its success to the grit and courage of family business enterprises. I feel very proud to be alongside them to help them connect those dots.
Multi-Generational Meetings and Their Impact
Glory:
Do you get a chance to sit down with multiple generations at one time?
Sandy:
Yes, I do. That's probably the most fulfilling part of the work that we do.
First individually, because we have a process when we work with family business enterprises. It’s a Discovery Process where we sit down and we meet with each family member one-on-one. Sometimes we're meeting with a CFO or a CEO to really understand the landscape of the true family business enterprise.
And then when you bring them all together in a room, and you facilitate a family meeting, it is magic. It's magical because suddenly, people are actually present.
That's very hard to do when you're running a business. That's really hard when you're at the family table and you're about to rush off to a soccer pitch or a baseball field or a business meeting. When families take the time to have a family meeting to discuss, the business of family or the family business, it creates better communication. It starts to build trust.
We all have different perspectives. You know, you can see a car accident, if you ask three people “What happened?”, they're each going to give you a different version.
Think about that in multi-generational families. It's the same thing. It's not that one person is right or one person is wrong. It's understanding that everyone has a different and a very unique lens. The more that we can understand that, the better we can help the family or the families make decisions that will transcend generations, that will be reflective of their family values. It will provide guidance for those other generations so that they can make decisions with clarity, confidence, and discernment.
Glory:
And it must be exciting to see the children and the grandchildren get that *aha moment*. They may not have had a chance to talk to the business owner about their big *why*. They may not know why they do what they do.
Do you find it exciting to see those children get that *aha moment* about how the past and the future is connected and how they are connected to it?
Sandy:
Yes and no.
Glory:
Okay. Interesting.
Sandy:
It's because initially when someone starts a business, it's because they think that they can do something better than someone else. They can provide a better service or a product.
Often, their initial goal is to put food on the table. Then it starts to grow. And suddenly, it isn't so much why they started the business.
But it's the stories that led along that journey of success that are so interesting. There were many bumps and there were many failures and I think that what really tends to bind and tie families together - the stories.
It's not the wealth, it's those moments of doubt. It's those moments of failure where maybe they had to choose. They had to make a choice to shut a business down or sell a business and start anew. What factors contributed to that very difficult and anguishing decision and how did they have the tenacity to move forward?
When you've got a third generation that's feeling that they're under this shadow of success and wealth, and they're trying to find their way, it reassures them that it's okay to fail.
We have three of our own children, and I always say “Fail forward.” They look at me confused, and I say “Because if you don't try something, you don’t grow. You'll learn more from things that don't work than from things that do work. You will find your way.”
I think that there is a misunderstanding of what failure is.
Failure is learning.
We must embrace that idea of taking risks and falling forward and failing-forward to really learn and grow.
When you have a third generation with a first-generation business or family enterprise and they hear these stories, it humanizes the wealth. It humanizes the business because this person (or persons) can be an icon in the community and you're just you. You didn't ask to be born into this.
There is not enough empathy and understanding of the multi-generational challenges as well as opportunities to really give them an opportunity to flourish as a human being.
Glory:
Amazing, I love that.
Role of Women in Family Business and Financial Planning
Let's talk about women in families of wealth or wives of business owners.
How do they become part of the conversation? When should they insist on having a seat at the table?
Sandy:
Yesterday. How about, yesterday?!
How about when the owner decided to mortgage his home and she had to co-sign, to borrow money from the bank to start the business?
I deal with a lot of family businesses and the majority of them are founded by men, but they will not step foot in our office unless I have his partner present, his life partner.
And the reason is … I don't know if you watched the movie, My Big Fat Greek Wedding. There was that scene where they said, "He may be the head, but I'm the neck."
I bring that into our meetings because women play such an important role in the family. They are the CEO - the chief emotional officer. They are the glue that holds the family together.
Families can be sometimes messy, that's normal. Women are so integral. If their partner is working those extra hours, that woman is picking up the pieces and making sure that the family stays together.
However, we can forget that the financial part, and when you're thinking of, financial planning, it's a few components. There's investment, there's risk, there is legal, and there is tax. Those are the four.
Financial planning is not difficult, but when you deep dive into those four areas, it can seem a little daunting.
And unless you start with having both partners, both spouses, at the table, you can’t unpack what's important to them about money. What money means to them? How they grew up with or without it? Did their parents talk about it?
You know, a lot of families do not talk about money. They would rather give their children the talk about the birds and the bees than talk about money, which I do not understand. I think that the woman sitting at the table has a clearer perspective on the family dynamics, which can impact your planning on looking at the softer aspects of money instead of looking at it from a tax planning and income-splitting lens.
Men tend to just jump at strategies to save taxes. You know, sometimes your kids are not tax deductions? And are you going to give your eight-year-old the car keys to your Lamborghini?
Quite often you'll have these trusts and all these legal types of strategies that push wealth to children who aren't prepared. And they're not prepared because the families have not taken the time to provide a basis of financial fluency.
So where do women come into play?
Well, first, they need to be prepared and they need to be supported on their journey to understand.
I would say that just as the founder of a business begins to learn more about tax planning or estate planning or investing as the business continues to grow, it is so important that his spouse or her spouse be at the table as well to learn and acquire that knowledge as they journey through life together. Instead of being invited to sign here, sign here, sign here, sign here, which is a disaster waiting to happen.
That is why you have so many families broken because of wealth and it's unnecessary. It's because they haven't invited everyone in.
Strong families make strong businesses, not the other way around.
Succession Planning and Spouse Involvement
Glory:
I've had some business owners and I'm sure you have too, who may be early on in their journey and you're helping them to set up. There might be two men as business partners. And they have their wives there for the signing of the corporate papers and they kind of look at each other and realize - you know if one of us passes, this is your new partner (the spouse) sitting next to you. Is that something that she wants to do? Have you even thought about it?
Are you often dealing with that where your clients are not thinking about succession planning and how the spouse could end up being the new partner?
Sandy:
That is a great question, Glory.
Where you have to start is by having the partners paint me a picture. I usually ask partners to paint me a picture of what happens if your partner dies. Do you want to be partners with their wives? Right? And 9.9 times out of 10, they say no.
So then we'll recommend things like a shareholder agreement and they'll say, “Well, what is that?” And I'll say, “The shareholder agreement is right now you guys are chummy -chummy together, but there might be a point where you don't get along. A shareholder agreement just helps protect your rights, but also clearly notes what your obligations and what expectations are. So not assumptions, but expectations. So that if you die, would you like to know that there's enough money in the business so that you will be able to buy those shares, and that way the spouse gets a check instead of the headaches?”
By asking questions or being curious, I would say that's the big thing. We discuss risk and mitigating risk. For example, what about if you disagree? How are you going to manage that? Putting those answers out on the table before those forms are signed right so that everybody's in consensus and the spouses understand too is critical. Otherwise, they'll sign an agreement, and they haven't even discussed it with their spouse.
I think these discussions will alleviate a lot of misunderstandings, a lot of litigation, a lot of lawyer’s fees, and a lot of money that could be used much better - for financial security, independence, and opportunity.
So yes, that does happen, and we talk about it, and that goes back to those four pillars of there being legal, tax, risk, and investment.
Executor Roles and Final Thoughts
And when we do planning for our clients, particularly our business families, we look at those four pillars. When we notice that there are gaps, for example, the number of wills that I've read that just don't really reflect what they want for their families, we'll point certain things out.
The number of very successful business people who don't have wills or powers of attorney is surprising. That might be a recommendation as well.
A big issue that I've seen is where they say, “Okay. When my child's 21, they get all the money.”
You know, who you are at 21 is not the same person you are at 31.
Glory:
Thank goodness
Sandy:
Thank goodness, exactly.
But wouldn't it be nice to know that you can actually organize your affairs in a way that if your children in their 20s made lots of mistakes, learn from them, and they would have a second chance at 30 or maybe 35?
More often we see that no one's actually talked to them about that. Or talked to them about who has been chosen as the executor and what's the role of an executor.
An executor is one of the most thankless jobs you could ever ask for. It's got a list of tasks that's a mile long. You've got beneficiaries that are waiting for their money. You have all the liability and responsibility to make sure that this is okay with Revenue Canada. You need your clearance certificate before you can hand out anything to anyone. You must have good communication skills. You have to be very organized. You must understand tax. You must be able to work with other advisors.
A lot of people when they write their wills don't know that.
It's the same thing for trustees. What does it take to be a good trustee?
And, it's the same thing when you're looking at guardians. What if you appoint your sister to be a guardian? Have you ever thought of adding a letter to that as to how you would like your children brought up? To talk about what's important? Is it education? Is it making sure that they get a job? It's just, okay, you're my guardian and that's that. So now, the guardian has to imagine what were they thinking. Because these are children they are now responsible for.
I find it very intriguing when you start having those conversations about the what-ifs. People say, "Oh my God, I've never thought of that. " And then you have people that think, "Well, if I don't get my will done, I won't die.” I mean, there are people that have those serious beliefs.
And when we're sitting in a meeting, I will never say to them, "I guarantee you'll get 5 % on your money or your estate tax will be this.” I can promise you all these financial plans are based on a lot of assumptions that may not happen. That's when I tell them, “But I will guarantee you with 100% certainty that you will die. I don't know when, but you will.”
And once we get that off the table, the choices are clear. Either you do nothing, which creates a lot of angst when you've just told me family was important to you and this may destroy your family financially, personally, and emotionally. Or you get this done to the best of your ability, and you share the contents of your wills with the executor, with the trustee. The number of people who become surprise executors because they didn't even know that they were chosen, it astounds me.
That's just one element of true planning that really needs to be taken with a little more time, a little more caution, and a little more introspection. And unless you have an advisor who's curious to ask the questions, you don't know what you don't know.
Glory:
That's been an interesting finding for me, where many of my clients will have a will and they haven't told their children or haven't shared what's in the will. There are some interesting dynamics on why that is.
What's been your experience for why they might not have shared the contents of their will with their children or whoever the executor is?
Sandy:
The first one is fear.
They think that if they share the contents of their wills, their children will be lazy. They're going to be expecting money then maybe they won't get it.
People are uncertain as to how to even discuss this topic with children, and I do think that there's an appropriate age. I mean, you're not going to tell your 10-year-old, “By the way, here are the contents of my will,” right? That is definitely not appropriate.
What's important is, initially when you have a family, and even if you don't have a family, if you have a business, to speak to your executor and to share your will and why you have organized it in that way. Then as you journey through life, there's going to be times where you explain what's in there. You don't have to give them the will if you don't think they're ready, but you can certainly talk about it.
We had this situation with our children where we decided to have a lawyer as a co-executor and two of our three children as co-executors.
Now we have three children. So, one of our children said, “Well, why am I not an executor? Is that because I was always the one who, you know, was the troubling one and who always broke the rules?”
We were able to have a meeting and I looked our daughter straight in the eye and I said “No it's because you live in England and now you're planning to move to the States. In order to be an executor and be compliant with the tax laws, we need to have someone who resides in Canada and until you have decided to have permanent residency in Canada from a tax point of view we can't appoint you.”
The pressure in the room went way down. The answer was, “Well, that makes total sense” versus waiting until we both walked out of life a little too early and having her question, “Why did Mom and Dad not appoint me?”
So having those conversations we were able to say, “Listen, we set it up in a way that we've added a third party to help because it's a complex estate, there's trusts, there's, companies involved. This person specializes in tax and legal, so he will be alongside you to help you. The other thing we've done is we've put things in buckets called trusts. These trusts are there so that you each have your own little bucket if we go, and you can manage it in any way that you want.”
And through all those topics, it didn't have to deal with numbers. But at least they understood why. They also understood that we worked really hard for what we have and we hope to enjoy it, but if there's anything left over, we will be able to make sure that it is distributed in a way that is fair. That has a lot of thought put into it.
But most importantly, they understand that it reflected our values and our of family harmony, living life to the best but not spending frivolously and being grounded. We shared the contents of the will and the kids also knew that they would have three separate buckets so that they wouldn't be glued together, which may be an opportunity for more family conflict.
We didn't have to give them the exact figures. We didn't have to tell them what the value of these pieces was, because we might end up spending it all. But it was just that at this moment if something happened to us, that was how we organized our affairs.
And we told them where the wills were located, where the papers were, so that they weren't rummaging through the house trying to figure out, who's our lawyer, where are the wills, where’s this – all at a time when you're consumed with grief.
That's just one element of planning.
The other side is taxes. It’s important to make sure that what you have is not forced to be sold because of capital gains taxes or estate taxes. That’s another element. That is something that is more on a strategy basis. It’s how you harmonize, the values, vision, and goals of the individual with the strategies, tactics, and tools that may have to align with those.
And if you rush towards strategies and you rush towards tactics, I can assure you that that creates more conflict and more confusion, because that's leading to your financial and planning decisions instead of having your values.
This all goes back, to where's the role of the woman. Where's the role of that partner? Giving them an opportunity to unpack all their thoughts, giving them an opportunity to share their money journey will give them the confidence to make the right decisions with discernment and clarity.
We cannot overlook that we all have money scripts based on how we grew up, and how our parents talked or did not talk about money. Once we realize that some money scripts are healthy, and some are not, we can figure out how we improve the ones that aren't so healthy.
A good advisor can be a coach to help initiate those conversations and help you gain clarity so that you can say, “Oh, that is why I always do that. That's always why we wash the milk bags because my mother did that.” All of a sudden, you're connecting certain actions and certain decisions - some of them are great and some of them are not so great.
We can figure out how to modify, based on your goals, not on the advisor's goals. The advisor is there to walk alongside you, not to pull you and not to push you, but to really walk alongside you and help you so that you can make those right decisions for yourself and your family.
Glory:
I'm going to go ahead and with that because I don't think we can make it any more perfect.
Thank you so much for being on the Women's Wealth Canada podcast today, Sandy.
Sandy:
It has been a true delight, Glory, and I want to thank you for inviting me to all your women listeners out there.
I will just say one additional thing, which is it's never too late to begin the journey of learning and there are many good advisors like yourself that are there to help them.
Thank you and I wish you continued success in your practice and in helping your clients.
Glory:
Thank you so much, Sandy.
Sandy Pollack, CFP, CLU, TEP, FEA, MFA-P is the founder of Trimaran Advisory Group Ltd., a financial advisory firm that goes beyond traditional business and estate planning. Sandy and her team recognize the unique family dynamics, as well as personal and economic complexities, that entrepreneurs and self-employed professionals face.
She has built an advisory firm based on the understanding that each family business has its own unique set of values and issues. Her priority is to take the time to appreciate the qualitative aspects of your family and business before taking quantitative factors into consideration. This commitment to understanding “what” you want and “why” has been the basis of creating deep relationships that extend well beyond generations.
Serving as both principal and Lead Financial Advisor, Sandy is an advocate for values-based legacy planning—believing that building wealth and managing wealth are not the same thing. Sandy is certified as a Family Enterprise Advisor, Certified Financial Planner, Chartered Life Underwriter, and Trust and Estate Practitioner. She lives in Ottawa, Canada, with her husband, Steven, their three children, and their family dog, Mia.
I have some good news to tell you. Our office is accepting new clients this year. So, if you live in Canada and want to get serious about getting your financial house in order, go to GloryGray.com and get in touch with me.
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