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Mark Weber
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June 27, 2017
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Passing and Protecting Family Wealth

Almost every seasoned parent knows that feeling – that exciting, heart-pounding rush when they slowly let go of their child’s bike seat and watch them pedal down the sidewalk all on their own. It’s a thrilling milestone.

passing-family-wealth

Parenting is filled with many teachable moments, some less exhilarating than the first successful bike ride without training wheels. It’s important for parents to think about and plan for all of life’s important lessons – especially financial ones.

For nearly 30 years, SilverStone Group’s wealth transfer professionals have worked with parents to strengthen their children’s financial futures by maximizing inheritances. Throughout changing tax environments and varying regulations, our experts have helped clients efficiently pass financial assets through tax planning strategies and the judicious use of custom-designed life insurance solutions. However, creating a tax-efficient inheritance might be the easy part. The more difficult undertaking might be teaching children how to effectively manage this money, and how to use it to become better citizens and contributing members of the community. If an inheritance is part of your children’s future, it’s time to put on your parenting cap and teach them how to preserve and protect family wealth.

Meeting of the Minds
There is little guidance available on teaching children how to wisely manage a significant financial inheritance. According to a report issued by U.S. Trust Company, Insights on Wealth and Worth, more than half of wealthy parents are not confident that their children will be prepared to handle a financial inheritance. The unfortunate reality is that large sums of money can “spoil” children and create family discord.

Many people feel that once they’ve updated their estate planning documents and / or purchased a life insurance policy, their estate planning is done. However, teaching children to be good stewards of money does not happen by accident, but rather by design. The key is communication. Families that have been successful in passing on their values and imparting financial literacy often use a structural process over an extended period of time using “family meetings.” Step by step, family meetings can teach children to be good stewards of their inheritance money.

Step 1: Set Goals
Before you decide to hold a family meeting, be clear on your goals. They should be unique to your family, in writing and prioritized. Once your goals are clear, communicate them to your children. For example, one family prioritized its goals as follows:

1. Build a forum where we might develop stronger, loving relationships with each other so we can work well together when we need to make difficult family decisions.

2. Pass on our personal values through stories and experiences.

3. Share some of our personal financial and estate planning decisions.

4. Provide the financial education our children need to be good stewards of the inheritance they will receive.

Step 2: Create the Meeting Format
To ensure a smooth meeting, prepare an agenda based on your goals and designate a facilitator ahead of time (if you want someone other than yourself to run the meeting). Set clear ground rules to keep discussions peaceful and productive. Also, consider any expenses that might be incurred as a result of the meeting (i.e., paying for your children to attend).

Step 3: Communicate with Your Children
Ask for your children’s preference on a meeting time, date and location. Individually invite them and ask for their help in making the meeting successful. Make an effort to accommodate everyone’s needs (i.e., if someone can’t be physically present, have them join via Skype, Facetime, etc.). Send the agenda to all participants in advance, and personally thank everyone for coming and participating.

Step 4: Improve Your Odds for Success
It’s important to be flexible and expect lengthy discussions that might veer off the agenda. You may not move through all of the agenda items, but as long as you’ve achieved some of your goals, you’ve succeeded! Just remember to be patient. It may take several meetings before your family is comfortable with the process. You should anticipate some disputes, as it is perfectly normal to verbalize disagreements within families. You can model the behavior you expect from your children and use a reminder of your goals to bring everyone back on track. To keep everyone involved in the process, share responsibilities and expect everyone to participate and assume leadership roles when requested.

Step 5: Meeting Tips
As you prepare for and enter into each family meeting, there are a few things you should consistently keep in mind:

  • Engage everyone. Ask open-ended questions to start the meetings, such as, “What is the best thing that happened to you since our last meeting?” or “What do you feel is the best attribute you bring to the family?”
  • Be consistent. Try to meet at least once per year at an agreed upon place and date.
  • Have fun. It’s all about the journey!

Pass It On
If you plan to pass a substantial sum of money on to your children, do so in a manner that empowers them to successfully manage a large inheritance and honor your family legacy. This takes thoughtful and persistent effort over a number of years. Well-run family meetings can be an effective way for you to transfer both your knowledge and personal values. The end result can prepare your children to be good stewards of your money and family values – and that’s a priceless lesson.

This article originally appeared in the 2017 | ISSUE ONE of the SilverLink magazine under the title “Lessons Learned”. To receive a complimentary subscription to the SilverLink magazine, sign up here.

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