Beyond the Numbers Blog

Preserving Wealth Across Generations

Posted on January 18th, 2015

In managing a family office, you’re not only managing family wealth, but the family issues around that wealth. All families are concerned with how to preserve their wealth for future generations. As a family office employee, here’s a few ways that you can help prepare the family in this process.

Get Everyone Involved Early

The head of the family has to be the driving force behind any wealth transfer discussion. So getting them to begin discussing it with everyone in the family and family office is crucial. Without proper planning, the tax burdens of an unexpected passing can make the surviving family members’ grief worse. If you need to convince them, you can show what would happen to their estate right now using what if analysis. Once they see how much damage comes from not being prepared, you can start working with them to mitigate problems.

Once the head of the family is on board, then it’s time to get the rest of the family members involved. Complete family involvement is key to the transfer and preservation of family wealth. Many of our clients send reports to family members as soon as they are of age. But the younger generations are digital natives – they are going to want to see everything on their mobile phone. So make sure you have a solution that supports mobile reporting.

Too many family fortunes have been destroyed by a lack of planning and communication. Getting everyone involved early gives them a sense of ownership and control. If everybody is working together for the same purpose, you create trust and maintain family unity.

Discuss the Options

There are lots of ways you can preserve wealth in a tax-efficient manner.  Whatever methods you consider, selecting one means having access to both the right information and the right expertise. Understanding exactly what assets your family holds, how much potential capital gains they face, and where you have the opportunities to save are key.

Whoever helps with your taxes is always going to need information about the family’s assets. Whether that’s a high-level ownership report or a detailed holding and performance view, you need to be able to deliver the right reports to them so they can help you make the right decisions.

Doing the accounting work early and setting these structures up accurately saves you a lot of headaches in the future.

Plan for All Life Events

Whether we like it or not, families change. From the birth announcement to the death certificate, your family office must be ready to handle all family life events.

Wealth transfer isn’t the only life event you need to plan for. When a child is born or a family member marries, the family office has to handle the details. From creating trusts, bank accounts, and overseeing any legal actions, major life events create work in the family office. Move beyond the classic checklist by building all of the steps you need to take into a workflow. Now you have verification, responsibilities, and oversight for every life event.

Pass Along Family Values

Perhaps more important than just passing their wealth to future generations is passing along the family’s values and mission. Get the younger generations involved in understanding both any businesses and investments as well as philanthropic efforts. To break through to them, you need quick and simple way to convey key information. From interactive reports, presentations, to static numbers, you know what each family member is going to respond to.

Charitable bequests can reduce the eventual estate tax burden. With the right reporting tools you can show the younger generation how they can use charities to effect change instead of writing a big tax check. Charitable bequests have the side effect of enforcing and encouraging the family mission. Your heirs will be comfortable as they explore their independence.

At FundCount, we are dedicated to helping you meet all of your client needs, at all stages of their lives. See what our family office accounting solution can do for you.