A cautionary tale.

You know how much hard work you had to exert to earn and accumulate your family’s wealth. How much information do you “share” with your following generations and do you control how they spend; what you do share with them?

You do not wish to turn your following generations into entitled and unambitious inheritors? Do you?

Storytime, with the moral of the story to be measured and thoughtful when sharing information with your family.  A family with some significant wealth had kept much of this accumulated wealth out of the view of their children, other than their demonstrated hard work.  The three children were raised modestly and the family lived in their original small family home.  A health scare arose for the father and he read that the best practice for effective estate planning is to be transparent and forthcoming with their beneficiaries on what was to pass to the children should the parents pass away.  So Sunday dinner came.  Before dinner started, the parents opened the discussion with their organization chart and financial statements, literally threw those into the middle of the table, creating a plethora of outcries and worries.  The children were confused, and overwhelmed and super concerned about their parents’ health, not about what they would be inheriting.  The parents were surprised and never raised the subject again for 2 years thereafter because of the unexpected reaction of their children.

How to avoid this surprised reaction and possible entitlement risk?

Here are a few strategies to consider:

  • take a measured approach:  this complex subject may take a number of family meetings to review.  Rarely is this complex topic a one and done episode.
  • share your story; this will illustrate how how you did work, not to make you seem superhuman so sharing some of the struggles that you overcame maybe better stories illustrative of your journey
  • outline your values (often is that with wealth comes responsibility); try not to be too preachey in how you share this information. You would want to let them know what is important to you, and why
  • start them young; learning about the management of money and that wealth has responsibility can take time. No need to wait until they reach adulthood
  • leave room for questions:  should be a two way communication so you have clarity of understanding

I hope you think about this because one day with or without your input your following generations will inherit (some or all) of your wealth.

More here: Succession today blog

Learn, think, apply!!