Our Process

Are You Prepared To Participate In The Great Wealth Transfer?

Over the next 40 years, $41 to $136 trillion in wealth will transfer from one generation to the next. That's a staggering more than $1 trillion each year! At the same time:

90% of inheritors will change advisors upon receiving their inheritance
Only 30% of families will retain control of their assets and family harmony in the first generation

How do we define a successful wealth transfer? "When the heirs receive and manage assets in a manner to foster their development and lifetime goals." - Institute for Preparing Heirs

Advisor Self-Checklist

See how well prepared you are to participate in the great wealth transfer. Take a few minutes to complete our Advisor Self-Checklist.

Our Process: The Three "A's" To Successful Wealth Transfer Planning

Helping your clients prepare assets for heirs will not be enough going forward. Advisors need to begin preparing heirs for assets. At the Institute for Preparing Heirs, our process for advisors focuses on developing a deep understanding of how family dynamics play a critical role in the single biggest risk an affluent family will ever face...transferring wealth to inheritors.

Before we move on, let's share our definition of wealth. "Wealth includes resources and assets in all forms, from cash to bonds to ownership interests, real property, even family name, reputation, experience and intellect, as well as education of all family members and spouses, and their influence in the community." -Institute for Preparing Heirs

Step 1: Awareness. Studies show that internal family dynamics underlie the great majority of estate failures, not professional advice. The graphic below shows the underlying causes of most estate failures.

Pie Chart

60% Trust and Communication Breakdown

25% Failure to Prepare Heirs

15% All Other Causes (tax, legal, mission, etc.)

What Worries Families Most About The Influence Of Wealth On Their Children. It's not whether or not they will leave their heirs enough money. Parents worry much more about the impact of wealth upon their children...and whether they have an appreciation of the responsibilities and burdens that affluence can bring.

Chart

According to a 2011 study from Boston College Center on Wealth and Philanthropy, The Joys and Dilemmas of Wealth, ultra high net worth families were asked, "What is your greatest aspiration in life?" Respondents most often answered:

To impact the world through philanthropy
To make more money
To preserve my assets
To be a good parent

Families Who Beat The Odds. Roy Williams's interviews also revealed that families who successfully transition wealth, while maintaining strong family unity, share several critical traits.

Total family involvement, including spouses and grandchildren over age 16, in the wealth transfer and estate planning discussion
A shared family vision of long-term family goals and values in a Family Mission Statement
High level of communication and trust among all family members
Clearly roles of the heirs

Tools To Help Advisors Open The Conversation. The Institute for Preparing Heirs offers thought-provoking, innovative family wealth conversation-starting tools for advisors to help a family understand the impact of wealth transfer on heirs. These tools take into account: does the family have a wealth mission statement, have the future roles of family members been discussed and defined, does the family conduct regular family meetings, and more. Through conversations such as these, channels of communication are opened, trust is strengthened and families can begin to prepare for wealth.

Step 2: Assessment. How to tell if a family is at risk? Whether a family or individual is transitioning a business or assets, now is the time to ask:

How sound is the wealth transition plan?
How well prepared are the heirs to retain control post-estate transition?

The Institute offers assessment tools for a family to guage its current level of readiness for wealth transition:

Family Wealth Transition Checklist: This preliminary checklist evaluates the odds by comparing a family to thousands of families who have transitioned before. This 10-question Checklist is typically completed by one family member. It takes about three minutes, and is almost 80% accurate in predicting how the next generation will fare after the estate transitions. It is intended as a “quick read” on the family’s readiness for transition. Take a few minutes and complete our online Checklist.

Family Self-Assessment: If the family member's score on the Family Wealth Transition Checklist raises interest or the family simply wants to more fully assess the entire family’s level of readiness, all family members may participate in our more comprehensive Family Self-Assessment. The written report pinpoints areas of specific weakness within the family's preparations for estate transition. All responses are, of course, confidential even to other family members.

Every family member completes a 24-question anonymous and confidential questionnaire including spouses and children/grandchildren over age 16
Responses are compared with the thousands of families in our proprietary research database
Three critical areas essential for successful wealth transfer: trust and communication levels, heir preparedness and clarity of the mission for the family’s wealth are carefully measured
A detailed written report provides individual results and specific recommendations for action contained in a detailed written report

Once the Family Self-Assessment report is presented to the family and they have a clear sense of action in hand, they may be ready to begin to make essential changes that will lead to the successful transfer of wealth to the next generation.

Contact the Institute for more information about the Family Self-Assessment and the role of the advisor with the client family.

Step 3: Action. What can you do for your client families at risk? Our experience has shown that full family involvement in the wealth transfer planning process is critical to success. Families must have the willingness to invest time and energy into learning how to work as a team to preserve their wealth and harmony. There are a number of actions a family can take on their own. A great place for the family to start is by having "family legacy conversations." This means the sharing of how the family wealth was built in the context of the personalities of those who earned it. Deeper discussions may require the assistance of a skilled family coach to facilitate the process. Contact the Institute to learn more about the best practices for family coaching.

Contact Us. Or Call To Learn More. 626.389.8664