Generational Wealth Transfer: 5 Tips to Follow A family’s fortune can be made and lost within a few generations. Challenges in wealth transfer may arise due to a lack of trust, unprepared heirs, and miscommunication among family members. If you too want to secure your family’s wealth over time, make sure you plan a strategy to prepare your heirs and protect your assets. In this post, we discuss five tips to help manage and transfer your wealth to your heirs. 1. Plan a Mentoring System Transferring generational wealth is important, however, making your future generations learn about family values, traditions and stories is even more important. Most of the wealth transfer failures take place due to a lack of family values and unprepared heirs. However, proper mentoring can fix this issue. The problem can be resolved by investing your time in your future generations to prepare them for the basic economic concepts. 2. Set up a Plan for Conflict Resolution Setting up a plan for conflict management is important to resolve issues related to wealth transfer. Most families skip this part, as they assume that there will be no conflict in their family, which shouldn’t be the case. However, if there are predetermined protocols for conflict management, it is easier to handle financial disputes that might take place in future. You don’t need to worry about your financial assets, as you can always speak
with a private wealth management expert to guide the way. 3. Meet your Family for Family Governance Family governance refers to making decisions as a family. Conduct informal meetings with your family members as it provides a platform for everyone to express their thoughts which helps you to understand their views. To avoid conflicts, you must know how to make important choices. Give responsibilities to your future generations so that they know how to make important decisions and if they face any issues, previous generation is still there to help them. 4. Select Reliable Trustees Trustee is a person who is responsible to manage the money of the trust to its beneficiaries. A trustee must understand the grantor’s intention in creating a trust, who are benefited, and how to monitor the investments. Most people want to make their family member or friends as a trustee, however, it’s not necessary that they are capable of handling their responsibilities efficiently. You have other options as well such as corporate trustee, private trust company or trusted advisor. Whether you choose a family member or an experience outsider, make sure you choose a responsible trustee. 5. Choose the Beneficiary(s) It’s important to choose beneficiaries beforehand, to determine who will best fit for the leadership. Make sure each beneficiary knows their role and responsibilities, and how to sustain long-term family goals. However, their role may differ in achieving these goals.
The Bottom Line A wealth management plan is important for a seamless transfer of wealth to future generations. It needs to be flexible as there can be natural or unforeseen circumstances that might occur and affect the wealth transfer. One of the best ways to avoid the guesswork and confusion involved in wealth transfer is to hire a dedicated wealth planner who can guide you throughout the process and help you manage your handle your wealth.