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5 Types of “Capital”
You are a limited being, including your resources. As the Sun rises on another day, however, will you manage those resources with prudence, or possibly see them fade away?
Mike Breen and Ben Sternke unpack in their book, Oikonomics, a helpful way to understand the five different types of resources, or “capital,” everyone must learn to manage.1 As the word oikonomics can be translated from Greek as “household management,” the question becomes how to successfully manage the five interwoven capitals in your life:
- Spiritual capital
- Physical capital
- Relational capital
- Intellectual capital
- Financial capital
Business coach Jay Hidalgo has analyzed the five capitals and helpfully noted how financial capital sits on the foundation of the other four:
“[Financial capital is] ranked fifth in priority because, if the other four are maximized, this one seems to take care of itself.”2
You Are an Integrated Being
Take a moment to consider how each of the five capitals overlaps with one another. It is possible in theory to analyze each separately, but in practice they are inseparable. Try, for example, isolating your spiritual capital (the center of your will and desires) from your financial capital. Financial capital directly reflects one’s desires, which surely affects your relationships, the way you think, and the way you feel.
Touching one aspect of your being inevitably affects the rest. To muse on this idea for your life generally would be wise, but let’s pull back to our original thought of managing resources with prudence. How do you manage your financial capital? A proper starting place is your house and the necessity of putting it into a trust.
What Is a Property Trust?
Experienced local attorneys with Cauthen & Burns, P.A. highlight the utility of wills and trusts as “the principal legal instruments attorneys use to help clients transfer assets to their heirs.”3 One important point, however, is that trusts may be a better way to transfer assets than a will. Noting their flexibility for real estate, Cauthen & Burns accentuates the benefits of seven different types of trusts they help create:
“Trusts, legal entities you create to hold and transfer your property, can shield your wealth from losses due to liability and taxation, so your heirs can keep more of what you bequeath to them.”4
The main issue, therefore, lies in the consequences of not putting your house in a trust:
- Losses from liability or taxation
- Entering a lengthy probate process, subject to various fees and legal expenses
- An unnecessary burden on your loved ones
What a Trust Says About You
As mentioned above, financial decisions are not made in a vacuum; the way you handle money mirrors your heart, for better or worse. Creating a trust displays intellectual maturity, embracing one’s finitude. It displays relational maturity, communicating love to your beneficiaries. There is a beauty in considering others as more important than yourself. This self-sacrifice of time, energy, and money by putting a house in a trust is a tangible display of prudence with your financial capital.
Your house is likely one of the largest portions of the financial capital in your care. If that house is not secure, you may be anxious until it is settled. But rest assured: the Sun has risen on another day, and the Central Florida sunshine may feel even warmer once you check the box on this essential step in managing your household well.
Connect with Windermere Lakefront and local attorneys we trust:
- Cauthen & Burns, P.A.
- Law Office of Pamela G. Martini, PLLC
1. Mike Breen and Ben Sternke, Oikonomics (3dm International, 2015).
2. Jay Hidalgo, “What Are the Five Capitals? An Interview with Josh Leatherman,” last modified March 25, 2021, https://jayhidalgo.com/what-are-the-five-capitals/.
3. “Experienced FL Wills and Trusts Attorney Secures Your Legacy,” Cauthen & Burns, P.A., accessed January 18, 2024, https://www.cflegal.com/practice-areas/wills-trusts/.
4. Cauthen & Burns, P.A.
The Real Estate Collection, Windermere Lakefront | windermerelakefront.com | 407.656.7814 | 100 W Plant Street, Winter Garden, FL 34787
