When parents die, their children become orphans. Parents and children can have a deep and enduring relationship, and parents can be a key part of their children’s ‘origin story’. When parents go, they leave a void, and children need to process and grieve that loss, and then hopefully find a way to continue their own stories – both individually and as a family.
While assets are inanimate objects, owners can have something of a ‘relationship’ with them. When a founder creates an operating business, it is akin to birthing a child. The business needs attention as it grows, and can become a part of the owner/founder’s identity. The conviction and story behind certain investments can be of non-financial value to the investor. Other assets may carry sentimental value and connect strongly to family memories: art, jewellery, an heirloom, or even a tea set.
If parents choose to transfer their assets to their children (either during their lifetimes or afterwards), this ‘relationship’ with assets can change. The child of the founder may not feel the same way about the business her father started, or may reject ownership of certain assets (e.g. fossil fuels) because of their values and beliefs. If a child associates the successful family business with an absent workaholic parent, they will not want to ultimately own it! Deciding who gets the tea set may be far more difficult than splitting the portfolio of listed equities. Assets can become orphans.
These considerations are important when thinking about intergenerational wealth transition. If parents want their children to share their passion for certain assets, the time to start is early – by telling the stories of those assets and ensuring the feelings around them are positive.
Consider This: How do you feel about your family’s financial assets? How does this contrast with how other generations in the family? What stories do you tell about them? What associations do they carry for your children?
- Running a Family Business Means You Need to Prepare Your Kids to Take Over — Here’s How to Do It Right.
- Most family-owned businesses continue to lack formal succession plans
- ‘Start engaging next generation of clients as early as possible’ – rewatch integenerational wealth webinar
- Inheriting a business? Here’s how to ensure a successful transition
- A New Year, Another Chance To Secure The Future Of Your Family Business
Here is more on reading on wealth transition.