The role of values.
If you knew that there was a 90% probability the inheritance plan you have so carefully crafted for your children and grandchildren was going to fail them, what would you do?
It is no idle question. Studies show that inherited wealth is lost in six out of ten families by the end of the second generation, and that by the end of the third generation ninety percent of families have blown through the family fortune. More importantly, as the family affluence steadily dwindles, and finally disappears, the family itself is often left shattered. The old adage, “Rags to riches to rags in three generations” has been true for centuries. Even so, the goal of traditional inheritance planning is still to minimize taxes, and to pass as many assets as possible to the inheritors. Professional advisors usually do a good job of achieving those objectives; but, if the family itself is destroyed in the process, how can we call that success?
The true measure of the promise created by an inheritance plan cannot be found on the bottom line of a personal or business balance sheets. Those numbers define a condition–they do not describe a family.
There is a gap between traditional planning, with its focus on asset transfer and taxes, and the strength and unity which people would like to see families enjoy in the years ahead. To bridge the gap, The Heritage Institute created The Heritage Process, a unique and powerful process designed to strengthen and unify families for generations. It does this by uniting the values and beliefs the client holds dear, with the financial wealth they have earned. It is based, in part, on the reality that for the inheritors to thrive as individuals and as a family, they must understand that the money is only a tool. The best use of that tool is to support the values, traditions and causes which helped to shape the client’s success.
Many advisors make at least some mention of values when they do traditional planning so that their clients can invest in areas that reflect their values. That is an important step, but it does not begin to address the real need for ongoing mentoring, training, family communication, and other concrete skills that families must learn and practice if they are to beat the 90% inheritance failure rate.
If you believe, as we do, that it is what you value, not the value of what you own, that is truly important, then you will appreciate that the steps to success as a family are also those by which wealth can be successfully transferred across generations.
Putting family before fortune when you do your planning may be the only way to save them both.
It is no idle question. Studies show that inherited wealth is lost in six out of ten families by the end of the second generation, and that by the end of the third generation ninety percent of families have blown through the family fortune. More importantly, as the family affluence steadily dwindles, and finally disappears, the family itself is often left shattered. The old adage, “Rags to riches to rags in three generations” has been true for centuries. Even so, the goal of traditional inheritance planning is still to minimize taxes, and to pass as many assets as possible to the inheritors. Professional advisors usually do a good job of achieving those objectives; but, if the family itself is destroyed in the process, how can we call that success?
The true measure of the promise created by an inheritance plan cannot be found on the bottom line of a personal or business balance sheets. Those numbers define a condition–they do not describe a family.
There is a gap between traditional planning, with its focus on asset transfer and taxes, and the strength and unity which people would like to see families enjoy in the years ahead. To bridge the gap, The Heritage Institute created The Heritage Process, a unique and powerful process designed to strengthen and unify families for generations. It does this by uniting the values and beliefs the client holds dear, with the financial wealth they have earned. It is based, in part, on the reality that for the inheritors to thrive as individuals and as a family, they must understand that the money is only a tool. The best use of that tool is to support the values, traditions and causes which helped to shape the client’s success.
Many advisors make at least some mention of values when they do traditional planning so that their clients can invest in areas that reflect their values. That is an important step, but it does not begin to address the real need for ongoing mentoring, training, family communication, and other concrete skills that families must learn and practice if they are to beat the 90% inheritance failure rate.
If you believe, as we do, that it is what you value, not the value of what you own, that is truly important, then you will appreciate that the steps to success as a family are also those by which wealth can be successfully transferred across generations.
Putting family before fortune when you do your planning may be the only way to save them both.
posted by Heritage Institute Blog at
12:32 PM
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