As “Wealth Creators” look at the estate planning process, the focus is typically driven by the tax-efficient transfer to the next generation. But this is just one half of a successful wealth transition plan. It is critical to not just prepare “the money” for the transition of wealth to the next generation, but also to prepare “the heirs” to be responsible owners and stewards of the family’s wealth. 

Most of us have a few simple goals for the younger generations. We want them to be independent so they can stand on their own two feet. We want them to be good critical thinkers so they can find their way through tough times that seem to come to all of us. We want them to be prudent financially, live within their means, make solid investments and position themselves to help others. 

Families that incorporate three components into their planning will increase the odds of meeting their goals and ensuring a successful transfer. 

Wealth allows for wonderful educational opportunities, travel, broadening experiences and access to enriching people and choices. However, it also creates the possibility of entitlement, overindulgence, lack of motivation, and focus on materialism. 

Wealth creators get so caught up in preserving and passing to the next generation efficiently, that sometimes the values that allowed them to build this wealth is lost to future generations. Clarifying your personal values is the starting point for understanding what you want your legacy to be. 

Values are the compass that each of us uses to direct our behavior, often unconsciously. Shared values help a family navigate the emotional landscape between generations. 

Being purposeful around values and being a good role model establishes the roadmap and direction for the family. For instance, some families may have particular religious, cultural, or philanthropic values that should guide their wealth planning. 

It is easier to pass on money than values unless you have a plan and attend to it with the same thoughtfulness as you attend to financial wealth management. 

Create a “Family Value Statement” that clarifies the values that are important to you and how you managed your wealth. Writing down the values forces us to intentionally think about what those values are. 

The written value statement should be seen as a living document that can be built upon and adapted in the future; it lays out fundamental information to help younger family members better understand the importance of preserving the family’s wealth. 

Shared Family Values are typically made up of either financial or personal development components. For example, financial values could be related to Spending, Saving, Debt, Investing, and Philanthropy. Personal development values could be related to Spirituality, Education, Career, Entrepreneurialism, Health, Work Ethic, Integrity, Responsibility, Discipline, Community Service and Civic Engagement. 

An example of a family value statement: 

Communicate these values consistently through actions, family meetings, informal discussions around the dinner table, videos, and stories. Be intentional about sharing these values with the next generation. Start early and consistently communicate over the years to ensure they will be good stewards of funds they may one day inherit. Don’t just tell them a value, tell them why you think it is important.

 

The most effective way to instill values is by living and modeling those values for our heirs to see. Words and actions must be consistent. Our values are on display every day in so many ways, for our friends, family and community to observe. We demonstrate our values most clearly in the ways we choose to spend our time, our money, and our energy. 

If you have an issue with living those values, then share with them why you wish you were better and ask for their help. Tell them about someone you admire and why.