The Dilemmas of Family Wealth

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: Few families are able to pass along their wealth successfully to the next generation. The barriers to keeping money in the family are much more formidable than the barriers to making money in the first place. Why should this be? What pitfalls are most common? How can families and their advisers increase the odds of a successful intergenerational transfer of wealth? How can they preserve the family’s human and intellectual capital?

Judy Martel, provides insightful answers to these questions and dozens more in this richly detailed book. The Dilemmas of Family Wealth takes a fresh look at the communications barriers, misunderstandings, and generational conflicts that can pull families apart and scatter their wealth in far less time than it took to build it. Martel identifies the dilemmas that families are likely to face and offers wise counsel for overcoming the challenges they pose. Her book includes advice and perspectives from top experts in the field and frank first-person experiences related by family members with whom they have worked.

Excerpts:

Images of wealth planning typically conjure up the serious faces of outsiders—attorneys, accountants, and investment advisers all devising techniques to increase financial riches—resulting in complicated trusts and sophisticated investments that allow for the eventual purchase of the 36-room mansion or the 50-foot yacht.

What is most likely lacking in these grand visions is, ironically, the most important component of preserving and growing wealth for generations to come: a common understanding and mutual acceptance of a family’s values and an understanding of the dilemmas that are a hindrance to sustaining wealth. Sobering statistics point to the fact that when a family doesn’t pay attention to itself, individual family members squander the financial capital—often in a single generation.

Author and generational wealth consultant Roy Williams says that of the 3,250 wealthy families he has studied over a 10-year period, 70% failed to successfully transfer wealth from one generation to the next, and in only 3% of those cases was the cause poor investments or lack of estate planning. In most cases, it was a deficiency of trust and communication among family members, leading to poor preparation of heirs.