Especially in these turbulent economic times, families are worried about how they can preserve financial legacies for generations to come. In order to transcend the "shirtsleeves-to-shirtsleeves within 3 generations" phenomenon where the first generation earns the wealth, the second generation preserves it and the third generation squanders it, legacy planning must not only prepare assets for heirs, it must prepare heirs to receive assets.
Intergenerational success is based on its ability to navigate the complex dynamics of sustaining meaningful wealth and prosperity. To be truly worthy, wealthy and wise requires wise counsel, collaboration and engagement throughout the family system.
Traditional wealth management and estate planning tools focus only upon transferring financial assets, minimizing taxes and defining ownership and control. Building and improving intellectual and human capital are essential to the long-term preservation and growth of family wealth. Without comprehensive and holistic preparation of heirs, successful estate planning is only partially complete.
In a study by The Williams Group it was found that most parents weren't concerned necessarily about the size of their estate, but for the impact on their wealth if heirs are unprepared. The sad story is 70% of estates become unravelled after the estate transitions. Conflicts within family dynamics and advisory changes are only a few of the challenges that are often inherit in the transfer of wealth within a family.
More and more wealth managers and other estate advisors are recognizing 'soft-side' skills are needed to prepare parent and heirs for the transfer of wealth and responsibility. When parents aren't confident of heir ability and readiness to receive assets, complex multi-layered estate plans are constructed to control the future even beyond the grave.
The key cause of unprepared heirs was found to be a breakdown of trust and communication within the family system. Parents sometimes fear letting their kids know the real value of the estate. Often times parents fear their intentions in their decisions about distribution of the assets will be misunderstood or challenged.
"To successfully preserve wealth, a family must form a social contract among its individual members, reflecting its shared values, and each successive generation, as a generation, must reaffirm and readopt that social compact." - Jay Hughes, author of 'Family Wealth: Keeping it in the Family'
To be worthy, wealthy and wise for generations to come requires recognizing and dealing with critical issues, identifying and integrating family values into estate planning (as well as into the family dynamic). This involves enriching empowering human capital; the values, beliefs and principles of the individual members of the family and their relationships. It involves empowering intellectual capital; all of the skills and knowledge of the family members.
Preparing heirs considers generational differences in values and believes. Ideally a plan for preserving wealth will provide support for resolving family conflicts by identifying differences and similarities within individual family member values.
If a family values philanthropy as an exquisite medium within which to move from success to significance by making a meaningful difference in the world, planning much align the family's shared core values with their philanthropic goals and strategies. Developing and maintaining the vision and mission of the family philanthropic goals is essential. Understanding generational differences in these goals and types of beneficiaries must be part of the preparation process.
The more families place in the center the 'soft-side' of wealth management and estate planning the more the unfortunate adage of 'shirtsleeves-to-shirtsleeves in three generations' will be a thing of the past. The more financial and human assets are leveraged for the greater good of all (including the family) instead of squandered the more the world will become a better place within which to live and prosper.
Transition Specialist, Valery Satterwhite helps individuals and families transcend the unique emotional and practical challenges the come with wealth - the paradox of privilege - to help them define their worth from the inside out, reconnect with what they value most and invest their time, energy and financial resources in alignment with their personal and family mission so that they can leave a meaningful legacy that will last for generations to come. The life you lead is the legacy you leave. Shift from success to significance. Free whitepaper: http://www.WorthyWealthyWise.com
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