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Transitioning Family Wealth

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Updated May 1, 2022

Trust Point

We are proud of Trust Point’s century of service reputation of excellence. But, our approach and purpose has always been focused on the future. Not just our own company’s future - but, more importantly, our client’s futures.

Developing future generations as good stewards of family business and wealth.

How many times have we been told the key to success is a good education? Usually, it was a discussion with our parents or grandparents telling us that it is both the journey and the success of learning that will get us where we want to go. The same message holds true for families of wealth and their succession planning with the next generation.

When communicating your plan, it is important to include education, whether formal or experiential, to help prepare the next generation to support them- selves and become good stewards of family wealth and often the business that generated it. Many families may have thought about education, but are not sure where and when to start the process. Here are some simple steps to follow:

Have a Family Meeting 

Just as you would plan a vacation, it is important to begin early and communicate plans for your wealth and share your values as well as your story with the next generation.

Your estate plan might be your first step and that plan will help you direct your education program. When wealth is generated by an existing business, primary questions include whether the business will continue and will the next generation be involved either in the day-to-day management or at a board or ownership level. These decisions can be difficult if the current owner(s) have always been involved in daily operations and might not yet have a plan for when ownership will transfer to the next generation.

Once a plan is established, organize a family meeting with your advisors to communicate your individual plan to your family.

Get to Know Your Successors 

Next, there is a need to engage the younger generation in the succession plan and ensure an appropriate understanding of the family business—if continuing— or of the related wealth.

Family members might have shared concerns about the ability of the next generation to manage the wealth. While the current generation has knowledge of its children and grandchildren, it can be difficult to see them as adults and be objective about their preparedness. This is where family meetings and advisors can offer assistance.

When families begin to consider whether the next generation will act on a family board or work in the business, the process can begin with a simple assessment using a formal personality test. The most common is the Myers-Briggs Type Indicator (MBTI), and another option used more in business and professional development is the CliftonStrengths assessment.

These and similar tests help a family identify and understand an individual’s strengths, tendencies, and readiness for future responsibilities.

Engaging family advisors to communicate topics and subject matter with the next generation creates another opportunity to determine abilities.

Develop an Education Plan

In some cases, a more developed curriculum for the next generation is appropriate, as there might be a larger group that needs to work together as a board to develop its understanding of the business or family philanthropy.

The education program can have individual elements with one-on-one learning like the basics of investing and personal finance, or group sessions on the role of family philanthropy, and responsibilities of trustees and beneficiaries. All education should incorporate group discussions and activities supporting communication and decision making.

Successful families should also incorporate fun events with multi-generational sharing and learning as part of the education program, as those times will build relationships and develop lasting memories. An education program for families with generational wealth is as much about the business and finance as it is about family values and heritage.

If you’re ready to start a conversation about transitioning family wealth, we’d be happy to chat. Call us at 800-658-9474.

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Trust Point

We are proud of Trust Point’s century of service reputation of excellence. But, our approach and purpose has always been focused on the future. Not just our own company’s future - but, more importantly, our client’s futures.