The Great Wealth Transfer is underway, with nearly $85 trillion expected to be passed on to the next generation by 2045. If you plan to bequeath any assets to your family, the time to prepare them is now. Wealth transfer is more than just a financial handover. If you want to ensure your children will manage an influx of wealth and assets wisely, you’ll need to educate them about the financial skills and knowledge required to handle what’s coming.
Regular family meetings can play a crucial role in preparing your family for wealth transfer, providing a setting for open discussions about financial education, wealth management strategy, and shared family goals. By involving your children in these conversations, you help them grasp the importance of financial planning and the family legacy. This way, they’ll be well-prepared to take on the responsibility when the time comes. Here’s how to start the process.
1. Face your wealth transfer fears
There are many reasons parents avoid the conversation about inheritance with their children. Among the most common we hear is the fear that the expectation of a future inheritance might inadvertently encourage bad habits, hinder life skills, or even overshadow child’s personal accomplishments. Another is the fear of creating conflict between parents and children or among siblings. And many parents are simply uncomfortable with having conversations about money, especially when those conversations bring up thoughts of mortality.
While the reasons for avoiding open communication about inheritance are understandable, it’s crucial to consider the alternative. If you don’t talk to your family before they receive their inheritance, you may have your fears realized. Without your guidance, sibling squabbles may occur, money can be misspent, and the next generation will be stuck with the monumental task of sorting out your estate alone. If a family business is involved, the risk of a negative outcome is especially high.
Regular family meetings can help you work through concerns with your family and ensure your wishes are known. And better yet, starting proactively — well before you hope to pass on your wealth — also helps you gauge how well they’re building those necessary life and financial skills so you can make adjustments based on progress. You may find that additional safeguards are appropriate, or perhaps they’ll be ready for more responsibility sooner than you expect.
2. Know what works (and what doesn’t)
Over the years serving families, we’ve seen it all — and we have a good sense of what helps and what hurts. Drawing on the hundreds of family meetings we’ve advised and participated in, here’s what we recommend:
Do’s:
- Define and discuss your family values.
- Clarify roles and expectations for every meeting.
- Give advanced notice and transparency into the agenda and topics of conversation (but don’t feel like you need to offer specific numbers.)
- Actively participate in the meeting — this means speaking as well as listening.
- Meet regularly, even if only annually.
Don’t:
- Start with the numbers — there’s so much more to inheritance than a dollar amount.
- Have a family meeting over a holiday — keep the holidays fun, and the meetings focused.
- Try to do it all in just one family meeting — consistency is key.
- Expect your family to keep information from their spouses.
- Feel like you have to do everything yourself — ask your advisory team and for guidance.
3. Practice makes progress
For many families, frank discussions about inheritance are new, and getting it right requires practice. You need time to make sure your desires and wisdom are clearly communicated, and your heirs need time to let the message sink in and understand what is expected of them.
As your children will be making major financial decisions, they need both education and practice. Your job is to educate them on your goals, values, and financial skills as well as their roles and responsibilities within the family. Your children’s job is to ask questions, share feedback, explore their roles, and eventually start participating as appropriate in the “business” of the family.
Prepare your family to be great stewards of your legacy
Consider what you want and need to share with the next generation, and then start looking for opportunities to bring your family together to talk. Don’t let challenges like distance, age differences, or worries about in-laws get in the way — your legacy is too important, and the long-term benefits far outweigh the challenges and obstacles. Consistency and transparency pay dividends for future generations, so don’t wait to get started.
