If passing your assets to your heirs is important to you, I recommend that you consider reading the book Preparing Heirs:  Five Steps to a Successful Transition of Wealth and Values”, by Roy Williams and Vic Priesser.  I had the pleasure of reading it recently and found the book to be a very interesting study of the factors that determined the success or failure of 3,250 different family wealth transfer plans from across the globe.  The authors spent significant time interviewing each of the families about their planning and defined plan success as the ability to keep the family wealth under the control of future generations?  I was surprised to learn that only 30% of these wealth transfer plans were successful and that this rate did not vary between geographic regions of the world.  Interestingly, success was almost always traced back to a well-executed plan to prepare the heirs for the assets, rather than a plan to prepare the assets for the heirs.

This is not to say that good estate planning designed to address the issues of taxation, wealth preservation and governance is not important.  It certainly is.  However, the authors learned that only 3% of all plans failed due to poor planning in these areas.  It seems that the professional community has become very proficient at executing their craft and that most families understand the importance of seeking this guidance.

Unfortunately, it does not appear that most families are doing nearly enough to address the issues of trust and communication within the family in the context of wealth transition planning.  The authors discovered that in those plans that failed, a lack of open and honest communication resulted in an inability to develop a family consensus regarding the mission and management of family assets.  Therefore, each heir developed their own goals for the family wealth and the competing goals perpetuated feeling of mistrust and friction.  This division among the family results in missed opportunity, static assets and ultimate plan failure.

The 30% of families who avoided the above described fate typically pursued a wealth transition plan that included all family members in the process from a very early age.  The Patriarch/Matriarch did not plan in a vacuum, thereby dictating to the heirs what would happen to them financially in the future.  Each heir was encouraged to participate in the planning at whatever level they could and within the areas that were most meaningful to them.  Family philanthropy was often used to engage the younger generations and for educational purposes.  As you might expect, open and honest communication among the entire family was a key to success.

The authors provide various tools and resources available to families who need guidance in the process that are beyond the scope of this blog post.  However, I would encourage you to seek out the book and its resources if the above is of concern to you.  I believe you will find the information interesting and may even find it applicable to your family.  The staff at Legacy Trust would be happy to share our insights on this topic if it would be of assistance.