According to a Forbes article, a walloping seventy percent of intergenerational wealth transfers will fair. The article discussed a study examining the long-term effects of wealth transfers in 3,250 families. Failure was defined as situations where the heirs dissipated wealth, often with the family assets becoming the root source of friction and dispute.

The researchers claimed that poor professional advice was not the cause, and the estate planning attorneys, financial advisers, and tax experts usually did a good job for their clients.

So what went wrong? According to the study, poor family transition planning usually caused these failures. In other words, “no one in the unsuccessful transferring families was preparing their heirs for the multiple kinds of responsibilities they would face when having to take over the reins.”

The common theme among the successful thirty percent of families studied was the identification and communication of long-term lessons and values that pass along with the assets:  “A key component was to identify a family mission as well as a strategy to attain it. The heirs understood that the family’s identified mission was about the family wealth. With that known they were given the opportunity to practice their roles for the future, in philanthropy, the family business and other ventures at a more minor level than they would have upon the passing of the patriarch or matriarch who headed the family at the time.”

Based on the report, the recipe for successful wealth transfers is open and honest communication between family members.

The full Forbes article is available online at:

Posted in estate planning, trusts, wills |