Understandably this subject can be heavy but for those with business empires that need to be maintained the conversation should be essential. Despite this, a recent survey conducted by Merrill Lynch Private Wealth Management revealed that 64% of wealthy individuals have never approached the subject or discussed with family members how they intend to pass on/gift their wealth.
48% claim they believe their family already know their wishes or that they do intend to speak to them at a later date, whereas 10% consider their business and wealth a private matter that they never intend to discuss with relatives.
The survey also revealed that only 33% have informed their family about lifetime gifts that have already been made or committed.
A director in the Merrill Centre for Family Wealth commented on the matter “Families often-times don’t know how to talk about these issues with their children—to begin to address the broader questions that are in play—unless they’re in some sort of coached or facilitated environment.”
Although tough subjects such as estate planning and taxes should be tackled, other tough aspects do actually include family dynamics, communication, trust and preparation. Making the process of discussing wealth a tricky field to navigate.
“We were noticing in working with families with multigenerational wealth, that most of them don’t have readily accessible models for how to navigate the complexity that wealth brings,” adding “Some of these decisions they are making have really long-term consequences—it’s impacting generations to come.”
What needs to be discussed?
The figures from the survey have shed light on how many need assistance and guidance in approaching these matters. Some key areas to consider when discussing these subjects are
Preservation – wealth passed via trusts and assets to reduce tax and manage the flow of wealth to the next generation
Division – Deciding on how the wealth is divided and who it goes to
Growth – direct ownership of the business is passed, active management of wealth through structured tax frames with plans to grow business and income.
Although the majority of people have the dominant concern of taxes and how to protect wealth when passing from generation to generation further analysis of what is the aim of accomplishment for the whole estate needs to be decided. It is also very important to have conversations around preparation, goals, family culture and decision making.