A successful business owner was becoming forgetful, but he wouldn’t admit it. He was making uncharacteristic decisions and becoming paranoid. Family conversations were contentious, and conflicting approaches were emerging.
His wife knew little about their financials or how he wanted the estate to affect the family. Ultimately the wife had to figure out how to “keep the peace” while unprepared for her children’s reactions. They did not trust her decisions because of her self-proclaimed lack of competence.
Ultimately, they landed in litigation, breaking the family relationships and their mother’s heart.
Consider these two steps to avoid discord:
- Broach the subject by saying, “We are working on our estate plan and want to hear your perspective,” and bring in a third party to help manage the conversations.
- Learn the skills to manage trust. Focus on building trust and put relationships first, then a peaceful outcome can emerge.
When Do We Tell Our Family About the Wealth?
The question stems from the historical system of estate planning that says there is a certain age when kids are ready.
The inevitable and dangerous intersection of wealth and heir readiness is not an age; it is a conversation.
The question in most affluent families of “how much and when” is essentially about trust—as a measure of competence. Do they have the competence to manage the family fortune responsibly? This question is disguised as expressions of judgment and disapproval.
Have a conversation with your heirs and invite them to co-design the standards of readiness, expectations, and qualifications to manage wealth successfully.
As a family leader, make a list of all that you do to manage the family wealth and identify the roles that will have to be managed when you no longer can. Then co-design the performance standards and qualifications that demonstrate the level of competence required for everyone on the family team to feel confident in their roles and each other.
Is Your Family Ready For Wealth Transfer?
Take this quiz.
If you score less than four “yes” answers, a successful transfer of wealth is unlikely.
- Does your family have a mission statement to define the purpose of your wealth?
- Does the entire family participate in important decisions such as defining a mission for your wealth?
- Do all heirs have the option of participating in the management of the family assets?
- Do heirs understand their future roles, and have “bought into” those roles?
- Have the heirs reviewed the family’s estate plans?
- Do your wills & trusts make most asset distributions based on family member readiness rather than their age?
- Does your family mission create incentives and opportunities for heirs?
- Are younger children encouraged to participate in philanthropic grant-making decisions?
- Does your family consider family unity to be just as important as family financial strength?
- Does your family communicate well and meet regularly to discuss issues and changes?
4 Foundations of a Successful Wealth Transition
What is the difference between successful and unsuccessful transition planning? Successful transitions mean the family remains intact and in control of their assets.
Successful transitions include:
- Total family involvement (including spouses and children over the age of 16)
- A process that integrates what the family members learn so they can co-design their future together
- A structure that supports learning skills for trust and communication, accountability, openness, team building while engaging in vital conversations
- Creating shared values and a common mission
Families that are proactive and intentional about maintaining family harmony are significantly more likely to maintain harmony and enjoy a long, prosperous legacy.
In short, there needs to be a proven process that keeps everyone on target and aligned.
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Joining the Family Wealth Library means access to the information the legacy builders need to navigate family dynamics and protect our wealth. We can keep what is ours by managing familial challenges and building trust and transparency.