Build a Long Term Family Wealth Plan for Future Prosperity
American families typically focus on the single family unit versus the extended family, and on this generation and the next instead of on into the future. What would happen if your family had a plan for the next four or five generations?
Here are a few of the things you might do differently if you had a long term family wealth plan:
- Start a business together.
- Pool money from several family units and invest it for super long term gains.
- Use pooled money to give future scholarships, needed assistance or to found a business.
- Work as a family for your favorite cause and make significant impact over .
- Write a book about your family history.
- Setup family organizations – to lead the family – to invest the money – to educate the children.
- Write a document describing what the family values, how the values will be put into action, how the family will be organized.
- Formally meet with extended family members and spouses to carry on family traditions and discuss family business.
Here are some of the outcomes you might see if you had a long term family wealth plan:
- Family members keep in touch more.
- Family members share more of the same ideas, concerns and values.
- Family members cherish and pass along the family history and legacy.
- Family members use each other as resources, drawing on one another’s strengths.
- Family financial resources grow significantly over time.
What is a long term family wealth plan?
This plan involves making a conscious decision to unite as a larger family to plan for the benefit of the larger family through the fourth generation into the future. It involves identifying the larger family’s goals, understanding risks to accomplishing those goals, planning for the time when the family is more numerous, more spread out and less cohesive and it involves working outside of the immediate family unit.
Why might your family choose to pursue a long term family wealth plan?
- You could have a personal impact on the future.
- Your generation could be known as the ‘founding’ generation of the united family group.
- Your family could help kids, grandkids and great-grandkids have better lives.
- Your family could utilize long term investing techniques so that the family can continue to grow wealth.
- Your family could establish the legacy it wants to have – intentionally and with purpose and consensus.
- Your family could safeguard the family history and family legacy.
- Your family could better utilize individual member and family unit strengths, networks and knowledge to grow the entire family, family units and individual family members.
- Your family could beat the odds of going from shirtsleeves to shirtsleeves in 3 generations.
- At a minimum your family could further open the lines of communication between the now living members of a family.
- Your family could build a better future (financial and non-financial) for descendents.
- Your family could strengthen family ties – build a tribe.
- Your family could provide safe (within the family) opportunity for leadership.
Reasons you might not want to build a long term family wealth plan:
- It adds complexity to family relationships (especially down the road when more family members exist).
- The old adage to ‘Never do business with family’ is founded in fact – emotions can get nasty when shared assets are involved.
- It is new, a bit of a risk to try something different.
- Current generations won’t necessarily benefit financially.
- No models exist to build this – all the models are for the ultra wealthy.
- There is a general world view that family wealth dynasties are a bad thing.
- There may be a need to address differing views about equally valid ways of using money (custodians for the future generations or use the money now).
If developing a long term family wealth plan sounds intriguing to you, here are three steps to get started:
- Educate your family members and discuss theories and possibilities on what you want to do.
- Decide together if the family wants to start a long term initiative with each other.
- Define what goals or initiative(s) the family might want to undertake and why
We have developed a checklist for the family who wants to build a long term family wealth plan, the family who wants to preserve their culture and legacy into their great-great grandchildren’s lifetimes, the family who wants to work together as a tribe on a legacy, a project or an enterprise. Please refer to it to go beyond the above three steps.