Talk Early and Often to Family Members About Wealth and Values

The surest way to make sure the wealth you’ve created never makes it past the next generation, is to keep it a secret, or fail to convey values of service and philanthropy to your children and grandchildren.

Creating wealth is one thing. Building a legacy that includes transferring wealth across generations, where each generation understands the privileges that wealth provides, as well as the responsibilities it brings, is a process that takes effort, according to CNN.com’s recent article, “How to plan for wealth that lasts for generations.” Family leaders and their trusted advisors should work together to teach children and grandchildren.

Investments and trusts frequently don’t last to the third generation, and in many instances, the main reason is a breakdown in trust and communication. Sometimes, it's due to a lack of preparedness in the younger generation, and the rest of the time is because the family's values and mission are unclear.

Discussing wealth with heirs can help mitigate pitfalls and prepare them to preserve and grow their inheritance for future generations. Parents may be worried that wealth will disincentivize adult children from their own pursuits and that siblings will fight over money or start to distrust each other.

A solution is to have family meetings to talk about the structure of the estate with everyone over the age of 16, including spouses. This will avoid misunderstandings or suspicions about expectations. It’s not necessary to set out specific amounts.  It is important, however, to state the overall strategy you want to have implemented.

In addition to getting everyone on the same page, it’s an opportunity to pass on lessons you've learned in developing long-term investment strategies. It's also important to discuss your priorities for the wealth, like paying for education, making investments, or funding family vacations. Don’t leave out philanthropy.

Making certain that heirs are prepared with financial know-how and life savvy skills is crucial to a successful transfer. You should tell them when they are well-established and emotionally ready. However, financial responsibility should be taught when they’re young.

It's critical to be clear about values that form your family legacy.

Have regular family meetings to update changes to the estate, family business and access to assets. Let family members talk about the charities they like and to present business ideas.

When three generations are bound not just by their name or their wealth, but by a shared sense of values and a desire to maintain and build on a family legacy, there is more likelihood of success.

Here at the Soto Law Firm we can help facilitate those discussions around a customized estate plan that can maximize your families capability of protecting wealth from one generation to the next.  Contact us today to get started with a free consultation

Reference: CNN.com (September 10, 2018) “How to plan for wealth that lasts for generations”