You Never Really Know Someone Until You Share an Inheritance with Them: The Human Side of Estate Planning

The ‘human side’ often is overlooked in the complex world of family estate and business succession planning. Yet, this element is a prerequisite for effective plans with the most agreeable solutions. Traditionally, people have thought of families as emotional and psychological units. Of the approximate 12 family systems theories, Bowen Family Systems Theory (Bowen) is the only science-based systems theory. 

Paving the way for revolutionary, psychologically conscious approaches to estate planning, Paul Hood stands as a national thought leader in this space. He co-authored a chapter in Psychological Aspects of Estate Planning published by Oxford University Press. Paul has conducted interdisciplinary research with psychiatrists, doctors, and professors, and he has written extensively on the human side of estate planning. One example being his 3-part article titled The Human Side of Estate Planning which is available on his website.

The science-based nature of Bowen attracted Paul Hood to begin studying and using it over 30 years ago. Using two of the eight Bowen concepts, innovator and estate planning thought leader Paul Hood provides valuable insight into the growing relevance of this theory, discussing the intersection between family, behavioral finance, and effective estate planning. 

In Bowen family system theory, the late psychiatrist Murray Bowen described the nuclear family dynamic as an emotionally connected unit of complex interactions. In Dr. Bowen’s opinion, people’s emotional and communication faculties can have a profound impact on familial relationships. Bowen informs planning professionals and illuminates their approach to many family-related services and the intricacies they may involve. The theory is expressed by a set of eight concepts.  

One of the eight Bowen concepts is the phenomenon of the 'triangle'. Dr. Bowen concluded that the most stable relationship is the triangle ‘A-B-C’, not the dyad ‘A-B’ dynamic. This is because, in the dyad, the only solution to a problem between A and B is cut off, which means either the temporary or permanent end of their relationship. The introduction of the triangle as a relationship concept changed psychology, and in Paul’s opinion, its importance cannot be understated.  

Unlike the A-B dyad, in an A-B-C triad, if a conflict arises between any two parties, either A or B can engage C, for many reasons, to relieve tension and anxiety around the A-B relationship. This could be to vent, to ask C to act as an intermediary, to recruit support, or simply be a nonjudgemental listening ear when needed.  

Paul underscores the relevance of triangles in estate planning and family business succession planning. In the real world, families often have ‘interlocking triangles.’ Often, as the triangle concept depicts, the value of a third party often has a remarkable impact on communication as it affects structured decision-making and future planning. Under Bowen, the triangle is more stable due to the ability to shift anxiety within the triad, which significantly reduces the possibility of cut-off, often at significant emotional and financial cost.  

Paul saw triangles routinely in his estate planning practice. Paul reflects, “A routine occurrence was when a husband and wife could not agree on which child should be the successor executor or trustee in their estate plan. Frustrated, one spouse would turn to me and invite me into the triangle by asking a loaded question, ‘Don’t you think (spouse) is being hard-headed?’” 

Paul further reflected, “In such cases, estate planners who understand family systems can act as the mediator and offer their expertise, often by asking the right questions. As Bowen theorized, this is something I regularly faced when I was in private practice, and it is fascinating to witness when supporting families transitioning their assets to the next generation.” 

Studies suggest that 56% of Americans believe estate planning is important. Despite this, only 33% of adults in the US have documented their end-of-year plans. Paul often writes and speaks on the myriad reasons why this is the case, highlighting the emotional burden of conversations surrounding the topic of mortality. He adds: “Not only is there an element of fear that arises when discussing these matters, but estate planners are as uncomfortable discussing the client’s future death, as the client, because it reminds them of their own.” 

In Paul’s opinion, estate planners also should be more familiar with the ‘human side’ of estate planning to facilitate the necessary conversations. The property transmission and tax minimization pieces of the estate planning process are easy, but proposing a plan that doesn’t harm relationships or split families is infinitely more challenging but equally more beneficial to families they serve.” 

Another reason many Americans avoid the estate-planning process is because of the heavy weight the decision can hold - impacting the status, wealth, and overall progression of any family. However, modern statistics reflect that 52% of Americans over the age of 55 say that dying without an estate plan would be “irresponsible.” Furthermore, 22% considered it “inconsiderate” and 14% said it would be “ignorant.” 

Another of the eight Bowen concepts is ‘differentiation’ (roughly “emotional intelligence”) and a key component in effective estate and business succession planning. By honing the ability to adapt based on changing circumstances - like new members entering the family through marriage or childbirth as well as changes in control- individuals are much better placed to make well-balanced choices. He continues: “Both individuals and families collectively can have either high or low differentiation. For example, I met many children who had PHDs and impressive IQ qualifications but had low personal differentiation. These people often are the most sensitive to conflict or change.” 

While many advisors do not feel confident to engage in the complexities of intimate family relationships, Paul helps planners facilitate meaningful conversations that lead to effective estate and business succession plans. Through an extensive understanding of the ‘human side’ of the process, he continues to provide client-centric solutions while remaining cognizant of people’s emotions and individual needs. Paul highlights the importance of innovating the estate-planning process, leading the way through his literature, novel approach, and proactive forward-thinking mindset.