Building Family Wealth

Building Family Wealth

Wednesday, September 6, 2017

By Darrell Raum, Chief Credit Officer

Over the years, I have observed there is quite a wide variety of results from the transfer of family wealth from one generation to the next. Sustaining family wealth across multiple generations is difficult. Those families with a mid to large size business usually spend a good amount of time on business succession planning. I would suggest all families with any wealth at all should be continually developing a plan to transfer wealth to the next generation, whether they have a business or not.

The reason you have to continually plan is because of tax laws constantly changing, the amount of wealth a family has changes, and the overall dynamics of the family continue to change as the needs and capabilities of the generations change.

There are several things to think about when developing your family’s wealth building plan:

  1. First of all, what is the vision of your family now and for the future? This vision may have served you and your previous generation well. For successful families this vision has been rooted in core beliefs and values.
  2. Your family values have to be at the core of every financial decision being made for the family. Some of the biggest mistakes made are not effectively sharing these values with family members, not allowing for open dialogue, and not getting all the family members involved.
  3. Family members require training and mentoring. Wealth building has fallen apart for many families because of a failure of the head of the family (Mom and Dad) to effectively carry the vision forward. Every generation’s environment growing up is different, each individual’s personality is different. This makes getting the next generation to understand and believe in the family goals an ongoing task.

It takes courage to plan for the future. It is easy for the older generation to want to cling to the old ways of doing things, or not be willing to invest in the future. At the same time, it is hard  sometimes for the younger generation to understand everything can’t be done at once, and most things of value take time to develop.

Through building family wealth we all need to remember it’s not about making money, it’s about much more. A life of true wealth is built upon a clear and great purpose, for the good of people who care about each other, to help family members reach their full potential, and to carry on a legacy of respect, and purpose for generations to come.