If you’ve amassed sizable wealth, or are on the right path and getting there, it may be time to consider how to pass on some of that money to children and grandchildren—without creating problems that could harm their futures and destroy family harmony.
The fact is, family wealth—how it’s managed, transferred and used—can generate major drama among family members. As wealth grows, so does the potential for that money to create conflicts and bad financial decisions that can reduce a family’s financial position and even ruin intra-family relationships forever.
The good news: We can look to the strategies used by today’s ultra-wealthy families to avoid or mitigate such negative outcomes—and find ways to adopt similar strategies in our own families.
One of the most effective tools harnessed by the ultra-affluent is the family meeting—which is used to educate heirs and potential heirs about sound financial decision-making, to identify shared family financial values and to maintain (and grow) family wealth in a unified manner.
Family Meeting Benefits and Advantages
Family meetings can help avoid the thorny problems that can arise when inheritors who receive substantial assets lack the proper preparation and education to manage the money prudently.
Regular family meetings can also help families keep their wealth together and intertwined, which can have major advantages such as:
Being able to access certain types of high-minimum investments
Leveraging a larger fortune to lower the cost of financial advice and services
The underlying objectives are family cohesiveness, superior management of the family’s future across the generations, and the preservation and growth of the family wealth.
The family meeting principally provides a venue for multiple generations to discuss financial matters. Common topics covered at well-run family meetings include:
Promoting financial literacy in future inheritors
The family investment philosophy
Family philanthropic values and activities, and how they are financially supported
New business ventures and how to fund them
Family meetings are where a family’s values and mission are discussed, debated and honed. Governance structures are often addressed and refined. In many cases, family meetings are great settings to plan the action steps needed to prepare the next generation for family leadership roles. Often, the end result is greater feelings of cohesiveness, trust and support among family members of various generations.