Bridging The Generations: What families need to know before transferring wealth to heirs

January 21, 2016

Over a 20-year period, we interviewed 2,500 successful families who had transitioned wealth to their heirs. Overwhelmingly, they told us that their values were the most important gift they could pass on to loved ones.  We learned that values determined actions taken, or not taken; actions determined impacts and results; and impacts and results determined a family’s future.

While money and "things" are transitory, the values your family hold are paramount.  Consider the purpose (or mission) of your family wealth. Is that purpose based upon family's values?  Have all family members and their spouses, including grandchildren over 16, sat down and discussed and articulated the common values held as a family?  Does your family have a written statement for the purpose (or mission) of its wealth based upon those values and agreed to by all family members?  All of this must be based upon trust. How do you know if you trust someone?  Is trust based upon character issues, or is trust something that can be learned and practiced? 

 

How do you begin to address the breakdown of trust, and how does this breakdown impact communication? What happens to trust when family gossip is prevalent? How do you address "cordial hypocrisy" in your family if you do not have the tools to communicate and build trust with one another?  

 

Our research showed that 60% of the breakdown in transferring wealth was due to issues with trust and communication; 25% was weighted to heirs being unprepared to be accountable and responsible for being good stewards, and 10% was due to no purpose (mission) for the family's wealth.  Even the definition of wealth was unclear. Some believed it referred to cash, stock, bonds, real estate, and business interests. Very few added the importance of background, experience, education, and networking capacity of the heirs, their spouses, and grandchildren. 

 

Our experience, aided by our research, indicates that without common values, a common mission, and authentic trust, few families stay together, long term. 

 

Addressing trust and communication, preparing heirs, as well as developing a written family mission, requires a great deal of experience and understanding in order to address cordial hypocrisy and other breakdowns, which occur in many families.


Our 10-question Wealth Transition Quiz is a helpful tool for your family to discern where future problems may lie. Take the quiz  and then give us a call to see how we can help your family. We're here to help.