You’ve worked hard to build your estate, and maintain it over time. Eventually, it will be time to leave your estate to your children. How will you make sure that they are prepared?
Just as you have a responsibility to manage your wealth, you have a responsibility to educate your children about how to manage it. Children also have a responsibility to learn. It’s your job to show them the way.
The dialogue about family wealth changes over time. Children might have a certain frame of reference as teenagers, but that dynamic changes once they marry and spouses are introduced into the family. The conversation about transfer of wealth happens over and over again, at different milestones in life. As the point of departure nears where there will be some significant asset transfer, all of the cumulative talks where you have been educating and steering the child over time will have to be used in their OWN lives.
Monday ( Sept 21) on the “Ash Cash Show” Ash Cash shared praise and admiration to his daughter, her growth and respect for money is inspiring, as she is active in the family business. At the tender age of twelve, seeing her using her earned income to purchase her own items, was a delight for him to see. Like most parents should, Ash Cash used the best time to start talking to his child about money and the family’s assets as early as he felt comfortable. The process ultimately has two parts that should be handled separately: teaching money skills, and revealing family wealth.
Think of it as a process of apprenticeship, where your children will learn from you how your family’s estate should be handled. Incremental learning and incremental responsibility will be the cornerstones of a successful education process.
When you feel like your children are mature enough to handle wealth management, and you respect the people they are becoming, it’s time to go to the next step and educate them about the family’s wealth and their inheritance. YES! THEIR INHERITANCE. Advisors say, that making them aware of your family’s wealth, and their responsibilities pertaining to it, early on will set them up for the best chance of success.
Allow your children to sit in on business conversations and learn to communicate as a business owner. You need to allow the next generation to make their voices heard when it comes to philanthropic endeavors. Don’t just sit around a table and make decisions about which organizations to give family money to, encourage your heirs to participate in the work these organizations do, and experience the difference that money makes.
It’s important to teach children the story and context that’s behind the accumulation of family wealth. It involves other members of the family who built something that is being passed down. In that story, there are highs and lows, setbacks, victories, and all of this is important in setting the context for stewardship. Share with them how complex it was to achieve the wealth and what it takes to keep it.
The education is KEY. If you have a portfolio and you look at its value over time, your heirs need to understand how different withdrawal rates will affect that value. It’s frequently an eye-opener for children and families when they realize that they have to be very deliberate about this process in order to preserve the wealth through generations.
Remember: This sense of accountability will permeate their lives and help them behave in matters of generational wealth.
Peace.
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