Are Your Heirs Prepared For The Future?

By Wendy Barasch and Beata Kirr

After years of working in a lucrative profession, you may have amassed more savings than you need. And as you plan for transferring the surplus to your heirs, maximizing wealth may seem like your biggest concern. But handling substantial financial assets can be a complex undertaking. Are your future family leaders equipped for the challenge?

Cultivating the next generation as stewards of family wealth requires more than just making sure they know the numbers. If it is important to you how wealth is deployed when it passes to them, they need to share a common vision, internalize the family and philanthropic legacy, and get comfortable with decision-making. Start with a plan to engage your family so they understand your wealth and values while gaining the financial knowledge to make informed decisions in the future.

The Roadmap

In many families, the next generation has not been intimately involved in deploying wealth and understanding your intent regarding the deployment of that wealth Some, especially if they are young, may not even be aware of the wealth at all. But because they will likely take the reins someday, involving future family leaders early is crucial.

You may want to consider a pretty careful plan for conveying this information to your family. A proposed timeline can be seen here. Or you may want to take a more casual approach. Either way, there are key questions to keep in mind:

• How much do your children know about the magnitude of your wealth? Do you believe that they are prepared to responsibly handle this knowledge? What are your concerns for how wealth could impact their relationships (professional, social, family) or future life decisions?

• How much detail should you share with your children at one time? Should you spread the information over different conversations, or discuss it all at once?

• What role do you want the family wealth to play in each child’s individual success? Have you conveyed your values and do your children understand how they relate to your wealth, philanthropy, or guiding life principles?

• How do your values align or differ from theirs?

• Do your children have a basic understanding of finance and investing? Do they have enough financial know-how to participate in and lead financial discussions?

An Engaged Family Is a Cohesive Family

Wealth is a responsibility. How you discuss it with your family and your vision for its future use should be an integral part of your wealth plan. The next generation will likely be the future stewards of your family’s legacy. Do you want to leave it to chance or guide them now so they can make optimal decisions in the future?

Wendy Barasch is a Principal and Financial Advisor in Bernstein’s New York office. She has advised many personal and corporate clients regarding complex financial questions, including retirement planning. Beata Kirr is a National Managing Director in the Chicago office, and Head of Private Client Core Asset Strategies at Bernstein. She is a member of the Private Client Investment Policy Group, which builds and manages client’s strategic asset allocation advice. Beata is also the host of Women & Wealth, a part of the Bernstein Insights podcast series. For additional Bernstein thought leadership for women investors, click here.