Inheritance and Estate Planning Success

What defines success when it comes to inheritance and estate planning?

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G____, our legacy planner, asked, “Suppose we were to say a family has successfully passed on its legacy to the next generation if two things, at minimum, are true: 1) the family’s wealth is still there when the first generation has passed away, and, 2) none of the members of the second generation have seen their lives destroyed due to improper use of funds; no family relationships have been ruined as a result of strife over money.

“Of families who use traditional financial and estate planning techniques and go no further, what percentage would you guess are successful, according to this definition, in the second generation? How many wealthy families still have the wealth and are still relationally intact in the second generation?”

“Maybe one or two percent?” I suggested.

“Oh!” he said. “You are pessimistic! . . . No. The real number is about 30 percent. . . . Thirty percent of all families who do traditional financial and estate planning are still intact in the second generation. While the assets were prepared for transfer, the heirs were inadequately prepared to receive them. They were never given the opportunity to explore the rights, roles and responsibilities of being an heir.

“By contrast,” he said, “what percentage of families do you think are successful, by the same definition, if and when they have engaged in full legacy planning?”

“I have no idea,” I said.

“The statistics show 90%-plus,” he said. [He referenced Roy Williams and Vic Preisser, co-authors of Philanthropy: Heirs and Values for these statistics.]

The key problem with most traditional estate planning, he said, has to do with a lack of “intergenerational communication,” a lack of attention to “family systems, creating a shared family vision, and matching the passion and purpose of one’s life with the purpose of one’s wealth.”

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This entry was posted on Wednesday, February 28th, 2007 at 8:33 am and is filed under estate planning, legacy planning, purpose, success. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.