It has been my observation that the financial services industry has done a poor job of truly helping people with wealth transfer. The public, and many professional advisors have limited thinking about how wealth is created and transferred upon death. The existing mindset around estate planning normally leads up to the death of one generation and then distributes the assets to the second generation, who is then free to use the assets in any way they choose.

In James Hughes’ book, Family Wealth, Hughes describes a recurring pattern of families creating wealth in one generation, transferring it to the next generation who then consumes the wealth leaving nothing for the third and future generations. He calls it Rags to Rags in three generations.

The idea that someone creates wealth over a lifetime and, at their death, passes it to their kids without a plan for how the money is to be used is proof that more education is needed.

The problem, in my opinion, is the mindset that assumes everyone in the family knows what to do or a belief that things will be learned through osmosis. Under this mindset, there is no emphasis on educating family members about money, their beliefs, their values, or even the giver’s wishes after they pass. Therefore, there is very little guidance given for what the receiving generation should do with the money coming their way.

I often hear the same comment from people who are grieving over the loss of their mother or father, “I am trying to figure everything out”.

What a powerful comment: “I am trying to figure everything out.” If you dissect this statement and consider what is being communicated with these words you quickly realize that “everything” encompasses a lot of things. You also realize that the word “trying” means that there was little if any guidance is given from one generation to the next about what needs to be done.

To understand why there is such a disconnect between generations and how to help connect the dots, you must first understand the root of the problem. It is my belief that there are two primary reasons families fail to connect generationally:

  1. Many people tend to believe that “everything” simply equates to financial related matters, but when it comes to “trying to figure everything out”, “everything” is much more far-reaching than simply money and possessions. It literally includes “everything”. What is “everything”? Everything includes anything relating to Family, Faith, Fitness, Finance, Philanthropy, Education, and more.
  2. For many families, there are up to four living generations: grandparents, parents, children, and their children’s children. While some of these families have traditions that include vacations, special occasions, church attendance, and even closely held secret family recipes, very few have a shared family plan that reaches into future generations.

Imagine for a moment that the patriarch of your family gathered all generations together to outline a family legacy plan which included a meaningful discussion about what your family stands for, what values you share, what wealth strategies are in place, what to expect as one generation dies and a new one is born.

What if this were to happen? What if each family member and each generation had a responsibility to perpetuate the family plan? How powerful would this be for future generations?

Instead of each generation starting over and struggling with “I am trying to figure everything out,” you have an opportunity to equip your family for generations. You just need to think differently about what it means to lead a family and form a new mindset of what generational planning means.

All of this could very well be a result of not knowing that there is a way to plan generationally.


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