5 Questions You Must Answer To Prepare for the Inevitable


Did you know that we are entering the largest generational wealth transfer in history?  In fact, this wealth transfer will be so massive that a staggering $1 trillion in assets will be transferred each year for the next 50 or so years, totaling $59 trillion. That’s ‘trillion’ with a ‘T’!

According to a study from the Boston Center of Wealth and Philanthropy, these assets will go to a combination of heirs, charities, and taxes.  Of the $59 trillion, $36 trillion is expected to go to heirs.  While on the surface this sounds great for those who are inheriting the money, the reality is that wealth transfers are creating a whole new set of challenges for families.  

It doesn’t matter how much money you’re transferring.  Whether it’s millions or thousands, the key is to keep your money protected and managed properly. 

According to The Williams Group, approximately 70% of wealth transfers are not successful due in part to family dynamics and unresolved issues among family members.  Often times the beneficiaries will receive the assets successfully, but it’s after they have received the assets that conflict, strife, and possible loss of assets sets in.  Three of the most common reasons for transfer failures are:

  • Lack of trust and communication.
  • Heirs are not prepared for their roles and all that inheritance brings.
  • The family did not have a mission statement that identifies shared family values and priorities.

Needless to say, the statistics of failed wealth transfers are frightening.  But the good news is that you can prevent the collapse of your estate by taking the appropriate measures.  It all begins right at home.  It will require you to involve your heirs in the estate planning process and prepare them on how to manage the assets once the estate transfers. 

Begin by asking yourself the following 5 key questions to help guarantee a successful wealth transfer

  1. If something happened to you tomorrow, is your spouse comfortable, or familiar enough with the financial details to completely assume management or oversee the assets?
  2. Do you have all the documents in place that are necessary for your spouse or children to have access to your accounts now?  Do they know where this information is kept?
  3. Have you involved your children in the estate planning process?
  4. Would your children be prepared to competently assume management or oversee their inherited assets?
  5. Does your family (spouse and children) have a relationship with your advisors–financial advisor, estate planning attorney, and CPA?

If you answered “no” to any of these questions, then it’s time to beef up your family communications.  Try holding family meetings that address topics related to your family’s estate plan.  These meetings will help family members understand the priorities of other family members and will provide a forum for open communication and joint decision making.  As you begin to involve your children in the estate planning process, you will start to build trust, communication, and harmony. 

A trusted family advisor can also play an important role in ensuring a successful wealth transfer.  By engaging the entire family, a family advisor can help craft a plan with the long-term goal of helping the next generation thrive.  Many family advisors will conduct speaker series about raising financially responsible children.  They can also provide advice around philanthropy to introduce gift-giving strategies or creating a family foundation.

So the number one thing that you can do right now is to open up the door to healthy communication with your family members.  Making sure that everyone is on the same page will greatly increase the chances of success for the generations to come. 

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