Have you thought about your family’s wealth recently? Are you confident that if something were to happen to you, that your next of kin would be positioned to carry on the family’s legacy, managing the estate, and furthering the family’s charitable endeavors across multiple generations? Those are difficult questions to consider, to say the least.
Wealth and estate succession planning can be both intimidating and an uncomfortable proposition. The very act requires families to envision a time when some of its members are no longer around. Despite the difficulty of such a task, this legacy planning, as it’s often called, is perhaps more necessary now than ever before. According to authors Roy Williams and Vic Preisser, across the next 25 years, an estimated $68 trillion is projected to be transferred through family generations. But Williams and Preisser also assert that 70 percent of all wealth transfers historically fail after a single generational transition, and 97 percent of multi-generational wealth transfers fail within three-generational transitions.
The vast majority of those transfers don’t fail because of poor financial planning, taxes, or investments. Instead, it’s often because families don’t understand the concepts of planning in terms of financial literacy and education for future generations. This is where Plante Moran Wealth Management excels. With roots in one of the largest accounting, tax, and consulting firms, Plante Moran Wealth Management guides its clients through all necessary wealth management and family succession planning. “Successful families invest time and resources in preparing future generations for their responsibilities and opportunities,” says Sara Montgomery, a senior manager at Plante Moran. “It doesn’t happen by chance.”
When it comes to family legacy planning, Plante Moran Wealth Management builds its strategy around two central pillars:
Most families start the succession planning process with technical education and often miss the mark by focusing on purely financial topics. Plante Moran Wealth Management’s experts understand this and often guide families through conversations about their legacy, discussing the family’s values, history, and overall wealth and estate plan. “We can absolutely help a client grow their balance sheet; we can also provide them with the peace of mind to know their kids are prepared to inherit and steward their wealth in a way that enhances their lives—and doesn’t derail it,” says Montgomery. “Family education is about all forms of capital – human, intellectual, reputational—not just the financial capital.”
Establishing a Process for Strong Communication
Open communication is a necessity for family members to discuss goals and expectations as those things relate to the family’s wealth and overall success. Paramount to this process is the family’s ability to come together to discuss how the family’s human and financial capital will be invested in the future or how it will manifest itself. For example, if multi-generational charitable giving is a priority, the family needs to create a process and strategy to enable family members to come together to direct philanthropic dollars. Family members are often eager to engage but are not sure where and how to start. Creating a structure and setting expectations can be a helpful first step to move a family from a theoretical vision to more tangible activities and outcomes.
Plante Moran helps families construct a strategy to reach these goals, guiding families through a tailored family education process focused on their unique goals. A clear and straightforward family governance strategy can even be created. “You must talk about your family values, history, struggles, and successes alongside any discussions regarding family finances,” says Montgomery. “If you don’t want your money to define your children, you must avoid it defining your relationship with them.”
Perhaps most important, Plante Moran adheres to a relationship-driven mission statement, personalizing the guidance that it offers to each of its clients. This provides clients with an opportunity to enhance the technical planning that they are doing by connecting it to the values and family principles that aren’t translated through legal documents, financial statements, or performance reports. Plante Moran Wealth Management recognizes the importance of being a family’s partner as they create a process and strategy for effective family succession planning.