Ninety percent of families do not keep their assets for more than two generations. Academic, legal, and financial communities have known this for some time. For the past twenty years, the problem has gained serious attention.
Looking at the way the ten percent who can sustain their wealth handle financial affairs is an obvious place to start. Teaching and transmitting those elements to future generations is a common thread. Strong family ties are important.
Sustaining family unity and wealth has less to do with money than its ability to make preparations and take intentional action. Families want to pass on more than assets. Experiences, traditions, life lessons, values, and stories are of just as much value to them. Multi-generational prosperity is a result of more than wise planning of financial matters or estates. The essential element that sets them apart is heritage planning.
4 Keys to Sustaining Your Wealth for Generations to Come
1) Build trust and foster communication between generations.
Vic Priesser and Roy Williams, respected advisors and authors, studied the issue. They asked more than 3,000 families that had lost family wealth, what the biggest contributing factor was. Sixty percent cited lack of trust and communication in the family. A quarter of those polled replied that heirs were unprepared. Less than three percent blamed poor investments and planning for the downfall. A gap exists between conventional wisdom and real life. Facilitation of communication and enhancement of trust are at the foundation of family success.
2) A vision for the present and future should be developed and regularly revisited.
A core characteristic of a successful family is to have a well-defined vision for the present and future sustainability. That vision should frequently be articulated. It is the inspirational source that directs inter-family planning. The family and assets are being strengthened and preserved from one generation to the next.
A united family is required for successful transfer of wealth. Holding family meetings is an excellent way for families to share common bonds and experience how success works. Meetings should be enjoyable with time carved out to discuss family business.
3) Have a balanced definition of wealth.
Ten people will give ten distinct answers to the question, “What does wealth mean?” Many answers will be financially related. Successful transfer of wealth happens when a family’s definition of wealth has four components.
Foundation wealth is a family’s attitudes, talents, backgrounds, and health. Wisdom wealth is comprised of life lessons, family stories, spiritual life, work ethic, and education. Community wealth is the culmination of volunteer work, philanthropy, and citizenship. Financial wealth is made up of the family’s personal property. Read also 9 Easy Ways to Stop Giving Your Money Away.
4) Consider money a tool to achieve things that matter.
The vision and values of a family determine what those things are.
Two kinds of inheritances are received and passed on. Money and other assets are one kind. The other is emotional inheritance. When emotional inheritance is not understood, the likelihood of wealth being passed beyond two generations is minute. Heirs must be prepared to receive both inheritances.
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