Talk Early and Often
You may think you are encouraging hard work by not disclosing wealth to your kids, but that really just fosters ignorance. If you have just never talked about money, get over it and give your kids a crash course in financial literacy. Many financial institutions offer specialized learning materials and courses to get heirs up to speed. That goes for grandkids, too. Instill smart money lessons in them, and you have pushed family wealth forward another 30 or 40 years.
Discuss the Hard StuffIf you are ready for true transparency, take it up a notch and bring up the elephant in the room: the will. “Parents and grandparents should communicate the whats and whys of their will in a group setting, with all their children present, long before the will is read,” says David Mullins, a planner in Richlands, Virginia. That way you can hash out any issues as a family beforehand. It is better than after the fact, when the patriarch or matriarch is not around to explain to make adjustments, and things devolve into an all-out legal war. “Trust me, siblings will find out who got what,” says Mullins. “Without proper communication, this can destroy families.”
Create a Pathway with a Mission Statement and ExperienceAlmost one-quarter of baby boomers think their kids will not be able to handle wealth properly until the ripe old age of 40. And almost half of wealthy individuals over 70 agree.
T A family does not have to disclose all financial details, or give up control of all the assets in order to begin this process. Kids can practice making decisions with $10,000, not $10 million. Also, in order for a family to remain healthy and productive for generations, each family member must be allowed to develop and live out their own life path. They can’t be required to continue in the footsteps of the matriarch or patriarch. The Importance of Mentorship
A successful solution is to prepare heirs in advance with mentorship and sample experiences so that they can build the necessary capabilities and parents can observe the progress. Common projects include putting a sum of money into a Family Bank. Adult children work together to identify an entity to hold the money, work with advisors to manage Ultimately, parents can observe growth in their children’s self-confidence for being future wealth owners. Children may become more engaged in conversation around the opportunities and responsibilities of wealth. Parents may also observe different strengths in different children, thereby laying out the distinct and important role each can lay in the preservation of family wealth. |