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Learn about successful transfer of wealth and family values centered on family meetings, philanthropy and the creation of a family mission statement
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What is Trust?Your Estate Plan is in Place…
But is Your Family Prepared?
Largest wealth transfer in history has begun
Boston College, “Study on Wealth & Philanthropy”, Paul Schervish, Barclay’s Wealth, Volume 3, 2007
$41 trillion transfer
of intergenerationa
lwealth
Over 120,000 estates
transition each year
valued at over $1 million
41 Trillion Dollar Wealth Transfer
Professional and Family Reports
of Wealth Transfer Outcomes
• “70% do not survive the second generation.”
Sloan Management Review
• “only 1/3 of businesses successfully make the transition.” The Economist
• “30% transition success in heir families.”
The Williams Group
A Challenge in Any Language
“Shirtsleeves to shirtsleeves in three generations”
is how Americans describe the high failure rate of wealth transfers – a phenomenon noted in many
cultures.
• Brazil “Pai rico, fiho nobre, neto pobre”: − Rich father, noble son, poor grandson
• China “Fu bu guo san dai”: − Wealth never survives three generations
• Italy “Dalle stalle alle stelle alle stalle”: − From the stables to the stars and back to the stables
65% “Too much emphasis on material things”55% “Naïve about the value of money”52% “Spend beyond their means”50% “Initiative could be ruined by affluence”49% “Won’t do as well financially”42% “Hard time taking financial responsibility
U.S. Trust Survey of Affluent Americans,
XIX
Parents Worry Primarily About the
Impact of Money on Their Children
Family dynamics play a much greater role
in successful estate transfers than previously understood
Step 1 – Awareness of the Challenges Historically, the vast majority of families lose their assets and
family unityfollowing the transition of their estate.
Step 2 – Assessment of MY Family’s Opportunities
Utilize the tools newly available to evaluate YOUR readiness to transition.
Step 3 – Actions that MY Family Can TakeAddress issues of trust and communication among family members, identify roles of the heirs, prepare a Family Wealth Mission Statement, and document a post-transition estate strategy.
Today’s Objectives
AwarenessWhat are the Challenges Faced by ALL
Families?
Three Major Challenges Stem from Family Dynamics
Based on field research with families by The Williams Group
1.Trust and communication issues within the
family
2.Beneficiaries being unprepared for the
wealth
3.Lack of family consensus on a wealth plan
Education… motivation…
declaring a mission objective
all at once
This may be “traditional”, but it is not
effective
Strengthen the Foundationof “Traditional” Estate
Planning
Est
ate
Pla
nn
ing
Inve
stm
ent
Man
age
me
nt
Ta
x P
lan
nin
g
Ph
ilant
hro
pic
Pla
nn
ingThe Traditional
Pillars of
Estate Planning
…Now You Can Help Prepare Your Heirs
for Assets. Trust & CommunicationRoles for HeirsFamily Mission
AssessmentStarting the Conversation…
What are the Opportunities for Your Family?
• Have potential roles been defined?
• Do heirs know about their opportunities?
• Have heirs had a chance to “practice” in those roles?
Opportunity to Prepare Heirs
• Are mentors assigned to help prepare them for their roles?
ActionsWhat Actions Can MY Family Take
Now?
Why Not Begin by Calling
a Family Meeting?
Communication holds families together
• They promote communication and trust building among family “team” members
• Provides a forum for family members to contribute to and share in support of the family missions
• Discussing “giving” teaches values & financial responsibility to heirs
• Family values become clarified
• A sense of “Teamwork” emerges
Why Families Meetings Workto Keep Families Together
• Achieve financial family education• Develop a family wealth mission statement• Define roles for heirs• Establish a family philanthropy
The Most Productive Family MeetingsUsually …
6
Philanthropy − A Hidden Pathway to Heir Success?
Family Giving is an Easy First Topic
• Start hard work with small steps
• Giving lets one “test the waters”
• Provides first forum for learning how to work together
• Microcosm of future requirement to make decisions in a structured way
Giving is fun!
Philanthropy causes donor heirs to reflect on
Family Values:
Philanthropy Reinforces
Family Values
•Are our family values reflected throughout the donee organization?
•Do those values guide their long-term plans?
What is a Family Mission Statement?
• Represents common values and agreement on purpose and direction for family wealth
• Provides guidance to all estate advisors
• Saves time, costs and misunderstandings
• Avoids post-transition litigation
• Enables the family to see progress or lack of progress towards their mission
What is a Family Wealth Mission
Statement?
“We are committed to family bonding,
community outreach and fun. We grow the
family assets and provide for the family’s
education, growth and security.”
Actual Family Mission Statement
•Set aside a time to meet the family’s professional advisors
•Develop financial education for all family members
•Review investment policies•Involve heirs in charitable/philanthropic
giving•Foster development of further philanthropic
capacities
Examples of Actions a Family Can
Take Now
What is Trust?
Thank You!