One of the biggest challenges in wealthy families is when/how to talk about the family wealth to children. There are a number of factors to consider:
1. Being aware of other ways children will learn about it themselves, e.g. from the media, direct research, and from friends (it’s a bit like sex education). Would you rather your children find out about the family wealth from reports and rumours that are laden with assumptions? It’s better to tell them more than have them fill in the gaps in what you do tell with misinformation.
2. Children will also make assumptions about family wealth based on the lifestyle you live. This is the “indirect” way you tell them about the family’s wealth, status and influence. Be aware of what messages you are sending about the family wealth by your actions (aside from your words).
3. Age-appropriateness is essential at all time, as well as taking the children on a controlled journey as they grow older. It takes some balance and nuance to ensure children know as much as they should as teenagers, young adults, and as they mature. Taking a step-by-step approach works well to avoid any “shock” that can have negative consequences.
See a number of good articles linked below for additional insights.
Consider This: When did you tell your children about the family wealth? How much do you think they already knew by then? Have you considered the risks of not telling them (i.e., not giving them authoritative information straight from the horse’s mouth)?
Original articles:
- How to talk to your children about money
- Families Can Preserve Their Wealth By Talking About It
- The first-gen wealth creators who struggle to talk to their kids about money
- What Do We Tell The Children? Intergenerational Talks About The Family Business And Wealth
- To Prepare Your Heirs for Future Wealth, Don’t Hide the Truth
- Wisdom of wealth: when is the right time to talk about money
Here is more on reading on family succession planning.
