You’ve worked hard to get where you are. You’ve built your wealth over time and now you want to ensure it will last for future generations.
You already know how difficult creating wealth is, but you may just be realizing that preserving it comes with its own unique set of challenges: you want to know the money isn’t going to run out; that you don’t have any gaps in your wealth management strategy; that you will be able to comfortably fund your lifestyle and evolving goals; that you have a solid estate and business succession plan.
Family Wealth Is Not Self-Perpetuating:
Regardless of culture, the global tendency is for family wealth to become depleted after about three generations, and often after two or even one.
A study by The Williams Group of 2,500 wealth transitioned families over 20 years found that 70% of families lose control of their assets and family harmony within one to three generations following the wealth transfer. This was true for families with both owned and sold businesses.
The typical family wealth life cycle is as follows:
Generation 1: Wealth Creation
Generation 2: Wealth Consumption
Generation 3: Wealth Depletion.
The top reason study participants gave for wealth transition failure was a breakdown of trust and communication. Other factors included a failure to adequately prepare heirs and a lack of family mission statement.
“Preservation of long‐term family wealth is a question of human behaviour.”
James E. Hughes Jr.
If family wealth is such a challenge to maintain, what are the factors associated with a successful wealth transition to children and grandchildren?
When you commit to developing the factors mentioned above, you will be well on your way toward family wealth preservation.
With the right professionals by your side and a dedication to developing the familial trust and unity, you can successfully preserve your wealth for generations to come.