While everyone has been getting excited about what the Great Wealth Transfer will do for our families, our institutions, and our economy, I find myself wondering if too many are worried about what dessert will taste like before anyone has hustled to the store to prepare the meal.
Let me root this dichotomy in some ground truths and macro trends:
- Increasing Healthspans - Mom and Dad, let alone Grandma and Grandpa, are living longer, which is obviously amazing! Can we all pay for that? Are we sure? Are you sure?
- According to Unusual Whales, "Despite nearing their 60s, nearly four in 10 Americans heading towards the end of their careers don’t even have a retirement account," per FORTUNE
- Long-Term Care - Anecdotally from our friends at LTCareNav, less than 10% of families have a long-term care policy and plan
- Legal Paperwork - Less than 50% of homeowners have a Will, let alone a Trust, POA for medical, POA for financial, and other fundamental documents
- Longer Homeownership - Few are willing to leave low / no mortgages with great rates, and who can blame them?
There are many facets to this conversation: family power dynamics, lack of communication about the State of the Estate (that includes legal, medical, and financial planning), embarrassment around amounts, pride in the lifestyles provided, fear of greed, incredibly generous offers of help, relationships in ruins over money neither earned, and families helping themselves prosper, thrive, and grow together.
I would like to offer a new framing: Without proper planning, paperwork, and process, there will not be a Great Wealth Transfer, only the Great Probate. How do we avoid this oncoming fate? We must treat the Business of the Family as a Business.
This means a regular cadence of governance meetings (annual or quarterly “board” meetings), current operating agreements (will, trust, POAs, etc), and reliable accounting of assets (partnering with the Wealth Manager and Estate Attorney and other Professionals while including all of the non-financial items they are not paid to care about). This means proper planning, paperwork, and process. This means doing the work so that there is increased family wealth, for the entire family.
So, what is a good first step? Like most human issues, it comes back to crisp, clear, and compassionate communication. Something like, “Mom and Dad, what’s the state of your estate? How do you wish to live out your final 5-10-25 years? How can we help make it so? What do you envision for your legacy? How can we help make sure you live out as many of your dreams as possible? How can we help?”
We have not just the incredible opportunity, but the incredible responsibility, to ensure that the Great Wealth Transfer goes to the family and not the government. Lawyers and courts and others are coming for your family wealth. One of the best ways to beat a bureaucracy is with its own paperwork. We can help ourselves and move our families forward…