Guide
Tip Allow the next generation to practice managing wealth. Consider gradual empowerment, such as managing small amounts of wealth or taking on smaller tasks in the family business.
Tip Recognise their individual strengths and help them choose their area of focus. Let them do research on new technologies, for example, or allow them to care for investments that they show an interest in.
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You have spent your entire life creating or maintaining wealth through hard work, patience and commitment. Over the years, you’ve acquired the crucial skills to manage and develop your wealth, and you want to pass these on to your descendants. But how do you do so in a perilous sea prone to unpredictable storms and powerful tides? Inheriting wealth overnight can change your life. Some see an inheritance as an opportunity and use it to launch a new business, career or investments. While some find the experience distressing, others may find it exhilarating, quitting their jobs and going on a spending spree until the money is squandered. Many next-generation clients do not feel comfortable taking over the family business or inheriting a large sum of money. But preparing the next generation can be a challenge, because talking about money and wealth isn’t easy. Our Next Generation advisers understand that this is an intricate process that often requires professional advice. Here we provide some approaches for those wondering how to begin a difficult but important conversation. Talk legacy
Some children may not even be aware of their family’s wealth or that they someday might become responsible for it. Others may have an idea but lack concrete awareness of its size and composition. In either case, you as parents can broach the issue by talking about how your wealth was acquired and the ups and downs you faced along the way. Focus the conversation on your core values
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rather than the money, and communicate how these values supported the decisions you have made regarding your family and business. Family protection
When it comes to passing on your wealth, there are generally three types of recipients: tax authorities, charities or family and friends. Your values and priorities can contribute to the decision on how you will transfer and protect your wealth. If you choose to pass your wealth on to your family, you must consider who gets what and have a plan in place. This can help to manage conflicts that may arise if your heirs are dissatisfied with the division of assets. A benefit of planning your estate during your lifetime is that you decide who will inherit your wealth and in what proportions. It is also worth considering ways to prevent your heirs from using the assets in an irresponsible way by structuring your succession to provide for a gradual transfer of assets. Family fairness or business fairness
If you intend to pass on the family business to your heirs, it is advisable to begin the succession process during your lifetime. The primary consideration should be fairness – but you will need to decide whether your priority is being fair to the family or fair to the business. What is fair for a family business would most likely mean prioritising profitability, for example. When it comes to being fair to one’s family, however, there are other considerations. What is fair for the family might not be best for the business. Also, fairness does not mean equality. You and your children may have different ideas of what is fair to you and to them. Owning a family business can be substantially riskier than having a stable job due to illiquidity and the lack of an
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