10 Tips to Prepare Your Heirs: Family Money Conversations

Marie, art collector, businesswoman, and philanthropist, passionately supports entrepreneurship of underrated women artists. Her splendid collection represents 15% of her total wealth, but more importantly, reflects her personal conviction.

Addressing the range of collector skills, conversations turned to holistic wealth management and next generation transfers. Marie whispered, “as hard as this is, I’m not ready to talk to my family about my money”. Prepared or not, this can be a difficult conversation.

Let’s shift this paradigm to “my relationship with my money”. Updated intentional dialogue guides the affluent to prepare heirs and communicates their individual and family’s interconnected success.

Family dynamics are complicated. Does lack of money clarity split families? In “Prepare Your Heirs – Why it is so important for families to work together as a Team”, California-based Williams Group’s* shared 60% of the time, generational wealth drawdowns are due to trust and communication breakdown amongst family members. “Family relationships are built on trust — trust that each individual will be heard, trust that they can speak up for themselves and others will listen, and trust that other family members will “have their back.” That does not mean anyone has to give up control. It means they will have to learn to listen, be explicit about how and why decisions are made and communicate openly and honestly. Open and honest communication is the hallmark of trust. That happens only if the family team builds, implements and manages a communication process that cultivates trust.” When trust is not nurtured, relationships disintegrate.

Organizing this initial meeting process may be daunting. Here are some basics:

• What do family “heads” want to communicate? How do they wish to convey their goals, values, and concerns?

Trained advisors recognize the obstacles of many common, unspoken, emotional, or financial reasons behind conflicting values. Laura Choolijian, Senior Wealth Strategist for UBS Advanced Planning Group**, shares in “Family Meetings”

• “We value establishing and abiding by budgets to manage spending, savings and sharing.”
• “We value transparency and will strive to make available information and instruction to promote a clear understanding of our financial position among age-appropriate family members.”
• “We value formal education as a foundation for emotional and educational maturity.”
• “We value philanthropic endeavors – financial support as well as active participation.”
• Invite immediate family to communicate together outside holiday and celebratory gatherings. Avoid required attendance. Understand not all will come.
• Select a date, time, and place. Consider a rented home, public place, Country Club, or a resort. Keep it neutral. Sidestep family homes or businesses (emotional undertones; distractions).
• Begin gathering information. Inquire how family current issues will be addressed to the group. What are the educational needs? Who prepares the agenda and written materials for this meeting? Time + Effort = Investment over generations.
• Emphasize Ground Rules. Give your full attention. Listen. Be open and honest with your views. Be respectful. Stay focused on the subject being addressed. Cell phones off.
• Establish Family Governance and Mission Statements. Allow for joint decision-making based on shared values and a common purpose. Like family councils, which oversees the collective family vision or a successful family business’s use for succession planning, provide a forum for constructive discussion, promote family action accountability, and prepare the next generations’ leadership.
• Create a written chronical/ agenda/ list of goals with prioritized values for this first meeting. Ultimately, this leads to electing or formulating appointed family committees focused on specific family interests.
• Commit to “Next” Meetings. They often re-introduce the family meetings concept. The objective is to build trust. Develop buy-ins. Avoid dictating. Promote a disciplined structure around objectives. Provide supportive dialogue, follow-up, and family unit next steps. Next meetings define the benefits and challenges of wealth.
• Elect a dedicated, committed family council or delegate. Newly created family committees require time and preparation for recurring issues and new subjects. Eventually include spouses, successive generations, and professional advisors.
• Educate with topic variety. Wealth Management. Debt. Tax efficiency. Security. Technology. Property Ownership. Philanthropies. Investments. Family Traditions.

Ultimately, Mary conceded and engaged her legacy with renewed family ties. Yes, some wealthy families continue to carry their wealth and vision over multiple generations while, unfortunately, others do not.

* Prepare Your Heirs: Why it’s so important for families to work together as a team © 2019 – The Williams Group   
** Family Money, Laura Chooljian Original Publication December 2013