Heirs Not Worth your Net Worth?
(originally published 3/1/2016 on my personal LinkedIn page)
“You don’t have to be dead to leave a legacy.”
You’ve passed away and your next generation has inherited your wealth. On average, they will buy a new car in about 19 days, according to an article in Money. It gets worse. A Williams Group study shows that 70% of extremely affluent families lose their wealth by the second generation, and 90% lose theirs by the third.
This shouldn’t be a surprise to many, since a U.S. Trust survey revealed that 78% of individuals with over $3 million in assets responded that the next generation was NOT financially responsible enough to handle their eventual inheritance.
In my professional realm, we go to great lengths to ensure that your hard-earned legacy can serve your families and causes for generations to come. This can involve a wide array of estate planning tools, as well as the services of a good attorney. Today, I am addressing a different approach to protecting your legacy.
How likely would your heirs be to let your fortune evaporate, if they had experienced what you did in order to build it? What if inheriting your core values was a prerequisite to obtaining your valuables?
My first suggestion in achieving this goal is to hold a family meeting. I realize that this may seem like an imposing task. Using my own family was an example; we have members as far spread as New England, Florida, and Pacific Northwest. Thankfully, we live in an age where technology allows us to bridge the geographical distance rather easily with video conferencing technology or a group phone call.
This type of conversation can provide a perfect opportunity to discuss what values guide the actions of each generation of the family. Perhaps it will uncover some opportunities to work together to support common charities or causes. Discuss what you wish your family name to be known for. These types of conversations often lead to an increased sense of family unity, shared ethics and pride. (Let me know if you need an agenda for your first meeting. I am happy to send a sample). Remember that this generational transfer of knowledge is not an event. It is an ongoing process that should continue into the indefinite future.
Whether during these meetings, or in a record (be it written, audio, or video), older generations should begin a conscious effort to share their most influential life’s lessons and values with younger generations. Be sure to mention the mistakes you would advise them to avoid, as well as the treasured experiences that you hope they will have in their lives. Tell your family your regrets as well as your hopes for their future.
While wills and trusts are both critical estate planning tools, let’s save those topics for another day. Today, let’s focus on preserving the timeless legacy of your character and your convictions. Don’t be surprised if passing on the family principles results in protecting your family’s property.