5 Tips for Successfully Passing Down Wealth

Wealth is like a baby: You must keep a continuous eye on it and take daily actions to ensure it continues to grow and thrive.

3. Include children in financial planning conversations.

Poor communication is the biggest cause of issues when planning for the future, no matter how much money your client has. It’s important to instill a goal-oriented and planning mindset as early as possible. Encourage your clients to speak to children about why the family has wealth and works so hard to maintain it, not just how. What is the true purpose of your family’s wealth?

On a regular basis, involve your client’s children in financial planning. Ask questions such as what do we want as a family in life? What causes that improve the world do we want to support? Do we want to take more family vacations, buy a new house, or invest in a second home?

Additionally, they should know what may be required later in life in terms of home health care or assisted living, and plan for what may be required to give your loved ones the care they need when they need it.

4. Ensure your client’s books are in order, and their children are aware of the financial management setup.

There’s the saying, “Nothing is certain in life except death and taxes.” While death sadly can’t be avoided, your clients can ensure their family’s financial information (and tax returns) are easy to access when it’s time for the next generation to take over.

Encourage your clients to clearly outline who is managing the family’s day-to-day finances. Is it a third-party? Is it a family member? How do they reach them, and should the worst happen, what is the continuity plan?

Many clients’ children have no idea where the will is, or who the attorney is. I even encountered one situation where a client’s children had found a will, and assets had started to be disbursed, only to then find another will prepared by another attorney that superseded the previous one.

Clearly these are headaches most clients do not want to pass on to their children, especially in the context of what will already be a difficult time.

5. Give children small responsibilities that provide insight into what it takes to manage wealth.

I was lucky to be raised by great parents who gave me important training wheels for managing my finances later in life. If I wanted to receive an allowance, I had to complete my chores. Quite simply without the work, there was no reward.

Grasping the importance of savings is another crucial concept to ingrain early. Unexpected circumstances in life always will come up and having a safety net is essential. When I was a child, whenever I earned money from those hard-earned chores, my parents allowed me to spend a third of it, but instructed me to save a third of it and use a third to do something positive and productive for the world. That could be donating to charity, using it to help someone in need, or even putting it towards a business idea.

This practice ingrained in me the importance of saving, while also encouraging creative thinking around how to grow my money through a potential business idea, and the importance of giving back.

As an advisor, make sure that your clients are taking the time to keep everyone on the same page when it comes to maintaining finances. The biggest key is communication, and while it can feel awkward at first, the more you practice, the easier it becomes.

When started early and done well, proper communication around money will lay the foundation of wealth for many generations to come.

Ken Eyler is CEO of Aquilance, a company that handles the personal financial administration needs for hundreds of ultra-high net worth families all across the country.