Family Wealth Management: Tips for a Successful Transition Between Generations

Key Takeaways:

• Generational wealth planning is useful to families because it helps them prepare for the future by developing a thoughtful strategy about how wealth will be preserved and transferred across generations.

• Successful family wealth planning and transition involve more than transferring assets; they also involve passing on values, goals, expectations, and responsibilities.

• Open communication is an important part of family legacy planning. It helps family members understand financial goals, responsibilities, and plans.

• Thoughtful wealth succession planning, with the help of a financial planner, can help address potential challenges and provide greater clarity around how assets should be managed and transferred.

Passing on wealth isn’t just about leaving financial assets to future generations. It’s also about passing on what you value and avoiding damage to your children's relationships with each other.

Unfortunately, research shows that for many families, the process goes awry.

However, with Fero Financial’s Generational Wealth Planning, you can take steps to try to avoid common costly mistakes while increasing the likelihood that your estate transfers successfully and lasts through another generation.

Why You Need Family Wealth Planning

Family legacy and wealth planning basically helps you avoid this unfortunate, but common inheritance situation:

Picture this: The parents pass away and leave the family home to the children, Joe, Bill, and Marie. Joe wants to keep the house and live in it to preserve the homestead for generations. Bill is fine with that as long as Joe can buy out Bill's share. Marie insists they sell the home because the market is hot and there is a good profit to be made. And so the fighting begins.

Certainly, no family likes to think that the parents' legacy will turn into a tussle over assets. Yet it happens all too often when wealth is passed on to the next generation.

Understand Why Most Transfers Fail

While wealth transfers fail for many reasons, the top explanation is simple: a lack of communication.

Most parents are uncomfortable discussing money with their children. Perhaps we fear such talks will reveal our children's greed, or that talking about inheritance will make them less motivated to strive in life. Or maybe parents believe the discussion will be all about trusts, tax strategies, and insurance policies.

While your financial advisor or investment professional might use wealth succession planning tools to achieve your wealth transfer goals, the real purpose of generational wealth planning is to talk with your heirs ahead of time to express the impact you hope the assets will have on your family and community, both now and after you’re gone.

Simply put, pointed communication of what you would like to accomplish with the assets can help preserve family wealth and ensure your legacy endures for generations.

Plan to Avoid Mistakes

Before you talk with family members about your legacy, it is critical to fully consider all potential beneficiaries by creating a comprehensive generational wealth plan.

Map out and identify all your immediate and extended family members so you have a clear picture of whom you and your financial advisor or investment professional may want to plan for.

Perhaps you have a child who requires custodial care when you are gone. Or you may have elderly parents whom you hope to support financially if you predecease them.

Before you talk with your heirs, take time to document specific details, including names, addresses, and contact numbers, and then use a family wealth planning map as the basis for a planning conversation with your attorney, tax professional, financial advisor, or investment professional.

Shape the Conversation Appropriately

A thorough discussion of your family’s legacy plan may be confusing to underage heirs. Minor children should probably be kept on a need-to-know basis and given information increments as they mature.

Older heirs, however, may benefit from knowing what they will inherit so they can plan future assets that fit their life choices and plans. This is especially true when passing on the family business. A clear understanding of your generational wealth plan may affect an heir's decisions about college or other opportunities that strengthen the business.

On the other hand, if an heir does not want the business, it is best to know that when the heir is a young adult, so you can make alternative succession plans.

Let Fero Financial Help You Come Up With a Solid Family Wealth Plan

Leaving a family financial legacy for future generations is about more than handing out assets; it’s about building a lasting foundation that helps those who come after you stay financially stable and prosperous.

Fero Financial can help you navigate generational wealth and legacy planning by guiding you to come up with a thoughtful strategy for managing and preserving your wealth so you can eventually pass it on, transferring your wealth in line with your goals and values. Whether you’re just starting to put your trust and estate plan together or reviewing your current strategy, our team can provide useful guidance.

We’re a financial planning firm that specializes in helping women approaching or in retirement and their families navigate life transitions smoothly through a comprehensive financial planning approach. Call to start your financial planning journey today. Start here.

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