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Financial Inheritance as a Family Conversation

Charles Collier (Harvard University)

The author believes that the true wealth of each family is not financial and, as such, recommends first discussing the principles that will guide your decision about how much to give your children. It makes sense to have these conversations before implementing various estate planning strategies. He argues that money is important, but not all-important. The best thing you can do for your family is to invest in their human, intellectual, and social capital.
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Retaining the Family Assets after Wealth Transfer

Diane Doolin, Carol Sherman (Institute for Preparing Heirs)

The great wealth transfer is well underway. Boston College Center on Wealth and Philanthropy conservatively estimates that $1 trillion will pass from one party to another each year during the next 50 years. But even the best investment strategy cannot ensure a successful wealth transfer. Family dynamics – how family members interact with each other and the family as a whole – have a far greater impact on wealth transfer than previously understood. When family dynamics are ignored in the wealth management process, assets frequently pass to individuals unprepared for all that inheritance encompasses.
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One of the worries most consistently voiced by families of affluence is how to raise children who are productive, motivated, responsible, and generous. In this article, clinical psychologist Dr. James Grubman explains how this task is difficult both for parents who have acquired wealth during their lifetime and for parents who were raised amidst wealth themselves.
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This article highlights common challenges for parents who have created significant wealth, many of whom face a classic conundrum— wanting to share the benefits of money with children, but wanting to control how the children use the money. How can parents trust their adult children to use the wealth responsibly? When can they risk giving up control, and how can they best prepare the next generation to take control? The article offers guidance on how parents can meet these challenges.
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In the broadest sense, estate and financial planning involve helping families pass on their wealth so that the next generation uses it wisely and well. Passing a pile of money to heirs is not a complete solution, as we see from the predominantly sad stories of lottery winners. Heirs must be prepared to receive their wealth and learn to use it according to the values of the family. To help them, they must inherit not only financial wealth, but many other capabilities, connections and resources that prepare them to achieve the highest and best purposes of their inheritances. This article explores six forms of wealth that families can pass on to their heirs.
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This article looks at the experience of wealthy families and how various origins of wealth can be a source of internal conflict, how individuals struggle to come to terms with great wealth, and how the quality of their adjustment can influence what happens with the money. These issues are important because they affect financial choices, how individuals face issues of inheritance and succession in their families, and how people raise their children.
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Immigration To The Land of Wealth

Dr. Dennis Jaffe, Dr. James Grubman

A surprising statistic is that over 80% of wealthy households have achieved their position within one generation. Only 20% of the wealthy have been raised with inherited wealth. First-generation wealthy families (“New Money”) are much like immigrants, having travelled from the economic culture of their birth to a much higher economic level. Those marrying into wealthy families from a more modest background are also immigrants of a different type who make the journey suddenly. Many of the stresses experienced by individuals, couples, and families of affluence are similar to other types of immigrant experience, including the strains between first-generation parents and their native-born children and grandchildren.
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Multi-jurisdictional tax lawyer David Lesperance makes an interesting argument that getting this issue ‘right’ will be the most important factor in determining whether clients maintain and grow their wealth over their lifetime and future generations. If you think that he is overstating its importance, it is worth remembering that the decisions made by our own ancestors to move from their country of origin had a profound effect on the course of not only their own lives, but those of the generations that followed them.
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Have you identified what sustainability means to you with respect to your own wealth? Is it about leaving a legacy for children, grandchildren and the generations beyond? Is it about charitable intent? Or is it focused on ensuring that you and a spouse or partner have sufficient resources for the rest of your lives? Many families have a strong desire to make their money last for the long term. Yet their plans and goals for making that happen vary widely. They all face essential questions of how to get from here to there.
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If you own a cottage or vacation home, your personal, emotional and financial commitment to it is often very significant. Who will inherit the property and how and when it will be inherited become serious concerns and are often worrisome. Without proper planning, cottages and other vacation homes can become the basis for family disputes, turning what should bring the family together into what tears the family apart.
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The author of this article has worked with very successful and affluent families for nearly 25 years, and the issue of passing on values is the most frequent topic on which she is consulted. During these many years, and through the extraordinary openness of clients, she has learned five important lessons about values transmission. This article reviews each one.
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You want to protect your hard-earned family wealth from the fallout of any future divorce. A prenuptial agreement is called for, but few financial negotiations are as fraught with emotion. How do you talk to your child about this sensitive topic without causing friction in your relationship? And, how does your child raise the issue with his or her spouse-to-be without killing the romance? There are no easy answers, but understanding the fundamentals of prenuptial agreements will help ensure that the agreement is ultimately fair to all parties, achieves the family’s objectives, and will withstand any future challenge.
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Family Flourishing: Giving Voice to Silent Generations

Jay Hughes, Susan Massenzio, Keith Whitaker

One of the most pressing tasks facing families today is to break the silence and help each generation find its voice. This is a task not only for families with wealth but also for any affluent family, in which material means and parental hyper-vigilance can stifle initiative just as effectively as a large trust fund can. Here is a sketch out of some of the steps to help future generations find their voice.
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Succession problems are usually characterized as the parental generation’s struggle to let go of authority, responsibility and control-passing the baton to the next generation. And certainly, those problems can be dauntingly real and frightening to almost all business owning parents. But in many cases succession-and ‘letting go’ in particular is a two-way street.
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Ensuring Success in Wealth Transfers

Kathleen Burns Kingsbury & James Grubman (Investments and Wealth Monitor)

Inheritances and wealth transfers are inherently complicated affairs. Using an analogy from the game of football, Kingsbury and Grubman discuss how families can increase the probability that they will execute a successful wealth transfer. They argue that the key element that many families forget about is involving and preparing the beneficiary in the wealth transfer. This is because the wealth management industry is overwhelming targeted at serving the trust creator (the settlor) and managing the wealth itself. If more time and thought were given to preparing the eventual beneficiaries of the trust, wealth transfers would be more likely to be successful.
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An important article by Jim Grubman on the importance of parents and grandparents working constructively together to raise the next generation.

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