Transferring wealth to successive generations is not an easy matter. One study found that it is something that 70% of wealthy families fail to do successfully. What are the 30% doing that everyone else is not?
Most wealthy people have or will have estate plans. These plans will carefully lay out how money and other assets should be distributed to succeeding generations. The plans will often include how any business operations should be handled.
The estate plans themselves are mostly solid. However, as cited in Denver Postarticletitled "About to inherit? Tips for avoiding family fights and tax trouble," a study conducted by U.S. Trust found that some 70% of estate plans created by wealthy families fail to function as intended.
The reason most plans fail is due to lack of communication.
Succeeding generations destined to inherit the family wealth and business interests need to know what to expect and what to do when the time comes. Just as important, they also need to have plans of their own regarding the action they will take when the wealthy family member passes away. When they do not know what to expect and what to do, family feuds tend to erupt.
It is not enough to just have an estate plan. That plan needs to be communicated to those who will inherit through the estate plan. A good way to start the communication is to speak with your elder care or estate planning attorney about exactly what needs to be told to whom and when.
A good rule of thumb is to communicate early and often.
Reference: Denver Post (October 26, 2014) "About to inherit? Tips for avoiding family fights and tax trouble"