February 15, 2019
By Amy Castoro, CEO & President, The Williams Group
The son of a wealthy matriarch came to us and asked if we could help bring his siblings back into a more cohesive relationship with one another. The youngest of four, he could feel their relationships slipping away. Holidays were no longer happening with the entire family. Family members were calling each other less, and the idea of spending time together at the vacation home was met with eye rolls and “Do we have to?”
Five years earlier the eldest son was made executor. As mom aged, she thought it would be important to have a family member keeping an eye on things, and the oldest had a keen interest in finance. Over time the eldest son’s role as executor became more visible. Mom’s health declined, and decisions had to be made regarding her care, how the finances were managed, and how the businesses were structured. Changes were made to the trust documents resulting in tax consequences that cut deep. Since the eldest son had little skill or desire to engage his siblings in conversations before making decisions that impacted everyone, the siblings began to form two camps—one in support of the older brother and the other deeply distrustful.
During our assessment phase, it became clear we were too late. The eldest brother did not care to come back into a relationship. He was fortifying his position with his “camp” and had very little interest in speaking to the others. The relationship gap was becoming cavernous.
Even the best estate plan can’t keep the family together
In our decades of experience with families, the majority of the time, when a family loses control of their assets and the family relationship declines, it is due to a lack of trust and communication. There is an extensive gap between the intention of estate planning to protect the assets and the impact it has on the family. In reality, the estate plan is in place to protect assets, not the family. Most of the time estate plans are drafted with very little concern for what the family’s shared values and beliefs are. The same skills that built the wealth are not the same skills necessary to talk about the wealth. So, the heads of families continue to do what they do best – grow and protect wealth. In doing so, they become blind to the biggest risk to their fortune - the family itself. Their strategy of hoping the family “figures it out after I’m gone” of how to work together inside of an estate structure designed to protect assets, exposes the family to the heart of the “shirtsleeves to shirtsleeves” adage.
Quantifying the relationship gaps
In our 20-year field study of 2,500 families, we discovered why 70% of families fail to transfer their wealth and remain united. The largest gap, 60% of the time, stems from a lack of skill to have the missing conversations about wealth, resulting in disruption over time. 25% of the time the next generation is not prepared for wealth. The gap here is that a lot of time, resources, and energy are spent on growing the wealth for the next generation with the intention that they will have a better life. Very little effort is spent on teaching the family how to have a healthy relationship to wealth, so the family is driving the wealth and the wealth is not driving them.
The relationship gap appears in the belief that family values are understood. The notion of working hard, paying their own way, taking care of each other is expected. This gap is the most important as it represents the bridge between the values that built the wealth and the inheriting generation. Yet a family’s core values are often assumed and accepted without discussion.
Three steps you can take now to bridge the relationship gap in your family before it becomes impossible:
Let us help start a conversation in your family about how to bridge the relationship gaps so your estate plan and values endure across generations.
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