A recent article on Forbes.com took a look into the surprisingly high rate at which intergenerational wealth transfers are failing. According to research done by Roy Williams and Vic Preisser, the study found that intergenerational wealth transfers fail a staggering 70% of the time!
The main factor cited in these failures was that the families in question simply did not implement any post-transition planning. In other words, the heirs were never prepared to take on the privileges and responsibilities of inheriting the family’s wealth!
On the contrary, the study found that families who were actually successful in preserving their wealth had put much forethought and preparation into how their wealth would be passed down.
For example, if family wealth was often used for philanthropic purposes, the younger generations would have a hand in this type of administration before the head of the family ever passed on. Or, in the case of a family business, children and grandchildren would be given opportunities to participate and learn early on what may be expected of them in years to come.
The obvious conclusion to draw from the numbers is that most families with a lot of wealth are simply not preparing the next generations for the roles they will play. This, coupled with potential strain and animosity among family members, has led to a reality in which the vast majority of intergenerational transfers are failing.
Fortunately, this does not have to be the fate of your family’s wealth. If you are serious about making sure your inheritance is never lost or wasted, the time to start planning and having tough conversations with your heirs is now.
Meeting with an Orange County estate planning attorney is the first step in this process. If you are ready to get started putting a plan in place that will protect your wealth for future generations, be sure to give our Newport Beach trusts, estates and probate office a call at (949) 260-1400 and ask to schedule a Family Wealth Planning Session with the mention of this article.