Beyond the money: Is your family as well prepared as your estate?

Most financial advisors focus solely on investment management and estate planning—growing and preparing the assets for the (eventual) transfer to the next generation.  At Edmonds Business Family Advisory Services, we go one step further.  We prepare the family.  Why is this important?

Many families do not realize that having a solid estate plan is only part of the equation necessary to ensure a successful transfer of wealth —a transfer that benefits those who receive it.  Wealth holders want their children and those they leave their estate to, to thrive.  Unfortunately, even the best financial strategy cannot shield a family (or its assets) from issues within the family, such as conflict among family members, that often escalate after the passing of wealth to those unprepared for all that inheritance encompasses.  Left unaddressed, issues of family dynamics, not technicalities in the estate plan documents, are more likely to wreak havoc on family harmony and erode the money successfully stewarded to the next generation.

What can a family do to prepare?  Families need a new conversation about wealth, beyond the money – a conversation that fosters a smooth and successful wealth transfer.  Families who communicate well, trust each other, share a vision of the purpose (and mission) of their wealth, and have clearly defined roles for the heirs are more likely to avoid the pitfalls experienced by unprepared families.  In short, it is not all about the money.  It is also about the family’s preparation.

How can a family begin a new conversation?  Conversations can begin informally, perhaps around the dinner table with all family members, including spouses, present.  Start with a topic of interest to everyone—the story behind the family wealth, for example.  Another great topic is family philanthropy.  Talk about opportunities to involve the younger family members in a giving program.  Philanthropy is a great way for children to learn financial responsibility.  Do not let family dynamics get in the way.  Disagreement among family members is natural and will occur.  Be sure to allow all voices to be heard without judgment or disruption. Listening is as important as speaking.  Over time, conversations will evolve and deepen as the family becomes more practiced, and comfortable, at open communication.  Further opportunities for family conversations may include the (upcoming) responsibilities as a trustee and/or beneficiary.

Through conversations beyond the money, channels of communication are opened, trust is strengthened, and families are better prepared for the responsibilities that come with inheriting wealth.