As more baby boomers approach retirement, they’ll start thinking about transferring wealth. Many plan to leave generous inheritances, but that’s not always as easy as it sounds. In fact, approximately 70% of family wealth disappears when distributed across multiple generations.
A common reason is many families lack the ability to make joint decisions or can’t implement a system that works with multiple stakeholders. To increase your odds, bring everyone together and create the strongest family unit possible. The goal is for each succeeding generation to preserve wealth for the good of the family and the world around them. The question is how to achieve it.
Start the process early: Talk with your children and grandchildren as soon as possible and make sure they understand their responsibilities when it comes to being good stewards of wealth.
Share the plan: At the right time, share your wishes for the future in detail. Introduce your kids to your professional advisors, who can help answer any questions.
Don’t divulge everything at once: The promise of sudden wealth may inspire your children to rest on your laurels, so to speak. Encourage them to make a financial life of their own.
Educate: Share how your wealth was built in the first place and how you view money’s purpose. This will help heirs recognize the importance of diligence, delayed gratification and good stewardship.
Make strategic joint decisions: While you may not always agree with your kids, give them a say in how the family wealth should be used. This strengthens the family bond and gives you a better chance of success.
Reduce bailouts: The more children face and conquer obstacles on their own, the more tools and resilience they will develop for later.
While these guidelines might not fit every family, they should provide a great starting point as you plan your legacy and family’s future.
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