TRANSFERRING AND TRANSITIONING WEALTH

We spend a lot of time preparing assets, not a lot of time preparing heirs to receive them.

In the financial world we are really talking about two separate and distinct areas—transferring wealth (traditional work) and transitioning wealth (true multigenerational planning to help family members become good stewards). Preparing both the money and the heirs produces a winning strategy.

For example, would you give your child keys to a brand new sports car the day that he or she gets a driver’s license? Leaving wealth without direction and education is essentially doing the same thing and has proven to be disastrous.

One of the most comprehensive studies on wealth transitions and preparing heirs was completed in 1994 by family coach and author Roy Williams and professor Michael Morris, PhD, of Syracuse University’s Whitman School of Business. They studied 3,250 affluent families between 1973 and 1994 and confirmed the 65-75 percent estate transition failure rate and isolated the following causes:

60 percent of the failures were due to breakdowns in trust and communication within the family unit. 25 percent of the failures were caused by inadequately prepared heirs. Approximately 12 percent of the failures were due to lack of a family mission or purpose that clearly defines the use of the family’s wealth. Less than 3 percent of the estate transition failures were caused by incompetent advisors, lawyers, and accountants.

The bottom-line is families who fail only focus on transferring wealth without planning for a successful transition.

Here are the subtle differences between Transfer and Transition

  - Transfer is a gift without purpose or meaning

  - Transition is done with purpose and meaning, with careful intent, education and guidance.


Transfer v. Transition

Transfer

Prepare the money

Legal documents

Gifting

Titling/Beneficiary designations

Discounts/Freeze techniques

Insurances

Investments

Taxes

Transition

Prepare the family

Establish and reinforce a legacy to perpetuate family wealth 

Addresses family capital

  • Human
  • Intellectual 
  • Social
  • Financial
  • Spiritual
 

PRESERVING YOUR LEGACY

Your legacy is the most powerful product of your life. A legacy plan preserves and grows the things money can’t buy: vision, values, principles, and ideals. It’s not something you leave behind, but it is what you pass along. It’s the life lessons that you’ve cultivated over the course of your unique life’s journey. It is shaped by your life experiences and friendships.

Some people mistake legacy for estate or inheritance planning.  It’s natural to think about the financial capital that you’ll leave through your estate at the end of your life. But, what is your Legacy Plan?  What is your plan to ensure that those around you, beginning with your family, are able to gain these items of tremendous value? 

If you fail to manage your legacy, the odds are that it’ll die within a generation. It’s curious that people will spend time crafting a detailed financial plan, but fail to create a plan to preserve those principles that will make the most difference in their heirs’ lives.

Money does not come close to comparing to the memories, witness and wisdom that you leave behind.  These items matter significantly more.  These items are of most importance to your heirs. Which of your principles and ideals are of the greatest worth? What values do you want to sink deeply into the hearts of your heirs?  What vision will inspire those who follow you? 

We can help you create an effective legacy plan that will last for generations.