Make Succession a Success
It's not just money that your family and loved ones receive when wealth passes from one generation to the next. There is also a set values and principles to help guide children, grandchildren and other family members toward living meaningful and rewarding lives. Wealth does not define a family—but, it can solidify a foundation on which a family's legacy can grow and flourish.
Often, people are faced with concerns about how inheritances will be spent, if large sums of money may encourage poor work ethic or if disputes might erupt among family members when it is time to divide an estate.
Perhaps the biggest concern affluent individuals have about transferring their wealth is seeing it vanish in successive generations. This is a common thread in many rags-to-riches-to-rags-again stories—of people who come up from nothing and work hard to build wealth, only to watch their children or grandchildren squander it on the way back down.
WHERE'S THE WORK ETHIC?
The worry is real for many wealthy individuals and families. Many fear spoiling younger children with a lifestyle that discourages work and stifles effort—the very qualities that made wealth possible in the first place. Others don't want success to come too easily for their adult children. Many have doubts or reservations about spendthrift children or family members inheriting part of their wealth. Few people want to see the money they worked hard to save wasted on needless extravagances and frivolous purchases.
Another common worry among people planning for the distribution of their wealth is conflict among heirs and family members. Too often, an inheritance will uncover long-buried resentments and arguments among children or family members. Certain people may feel entitled to a greater share of wealth, or slighted when they aren't equally represented in a will or trust. Among the possible outcomes are a family that splinters, siblings who don't speak for years, or adult children who go their separate ways.
You don't need to attach "strings" or other conditions to an inheritance. But you should be clear in your intentions behind your wealth transfer decisions and set expectations about how financial inheritances should be used. Fostering communication among your beneficiaries creates an environment where family members can share feelings, diffuse tensions, and lower the potential for future arguments. Try to strike a balance between providing financial assistance, accompanied by guidance and direction, and giving your heirs the freedom to find their own way and add their own chapter to the family story.
Your family's inheritance plan—should be tailored around your wishes and intentions. If done well, your wealth transfer plan can serve as a living legacy to future generations, establishing guiding principles they can follow for using wealth to continue that legacy and establish traditions for generations to come.