Most estate planning virtually guarantees your family wealth will be destroyed before it can transit to the third generation of your family. The familiar adage “shirtsleeves to shirtsleeves in three generations” is as true for intergenerational family wealth transfer as it is for business families. The first generation creates wealth, the second stewards it and the third squanders it with frequently sad outcomes for the loved ones.
The causes of wealth destruction are deeply rooted in how we view our family’s true sources of wealth, the amount of effort we exert and methodology we use to plan our estates and the communication practices within our families. We also plan only with the short-term in mind and ignore the powerful, dynamic intergenerational forces that are fundamental to long-term wealth succession.
Understanding that financial wealth is a servant of other sources of family wealth is critical to developing strategic plans that will ensure family wealth survives across many generations.
The other sources of family wealth wealth include a family’s intellectual, social and human capital. Once these are identified they can be invested in and grown from one generation to the next. This purposeful investment of financial capital creates a virtuous circle of family wealth stewardship, entrepreneurship and legacy
What do we mean by intellectual, social and human capital?
It takes effort to identify these sources of family wealth is a ket step in strategic intergenerational wealth planning.
The Naked Opus: Growing Your Family Wealth for the Long Term suggests a five step process for growing family wealth for the long term. It’s a flexible model that can be manipulated and retooled to fit the authentic planning needs of every family.
It starts with communication and values, builds towards alignment around mission and features The Abundant Estate with the SMRT strategic engine for family wealth decision making.
Chris Delaney, B.A., LL.B., B.Ed., TEP, FEA is the Author of “The Naked Opus: Growing Your Family Wealth for the Long Term”. He is a Professional Speaker, Lawyer and Family Wealth Strategist focussing on helping families and their advisors grow true family wealth for the long term.
He can be reached on twitter @FEAdvisor and @NakedOpus. Please also visit www.nakedopus.com for additional contact information