Creating Generational Wealth That Actually Lasts.
Thanksgiving welcomes the holiday season into our midst. This time of gathering is a great opportunity to have an important—but difficult—conversation about what happens to the family estate after you are gone. Preparing your children to inherit the wealth you are creating is vital to protecting it—and them. If they don’t know what to do, how do you expect them to be effective at managing their inheritance?
You may fear this conversation. You may fear hurt feelings, or long-simmering family issues that could rise up and spoil the evening. Many families hope their estate plan will handle the conversation for them. But teaching your family about managing money is a critical part of creating generational wealth that lasts.
Unprepared heirs, in a family which doesn’t discuss these topics, and a lack of emphasis on financial literacy: these are the main reasons why the transfer of wealth can fail. Your heirs can be confused about what is expected of them in the future. They grew up feeling abundant, and simply expect this to continue.
But it won’t, if nobody is managing it. It’s like strapping someone into the driver’s seat of a car and sending them out onto a busy highway without any training. You know there’s a crash coming. But it’s entirely avoidable with some straight talk and financial education.
So, have that conversation. Talk about the unique skills each of your family has and their level of interest in financial management. Share your vision for the family legacy. Have a frank conversation about how they see it impacting their lives in the future.
Discuss with them if they would want to donate money, and who the prospective recipient might be. Talk to them about family harmony and the need to work together as a team. Asking good questions, and doing a lot of listening, will help them understand your interest and will shift the focus from individual members onto collective goals.
You are all in it together. Teaching your family how to manage their wealth, giving them a good financial education, will set them up for life. And showing them that the family unit is supporting them—financially, but also emotionally—will give them security, stability and purpose.
This is the true meaning of wealth, and it is how most wealthy families continue to pass that money down through the generations: by supporting and valuing the family, together, over the assets they share.
If you are not comfortable having this conversation, an alternative approach could be to invite your financial advisor to the meeting to moderate the meeting. This will ensure the meeting stays more professional and they can answer any more technical questions about your estate that arise.