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Common Concerns in Transferring Wealth — Confirmations from Princeton

14Nov 2010

Last week I had the opportunity and privilege of being one of three facilitators at an event at Princeton University entitled, “Conversations about Family, Wealth & Philanthropy”. With my long-time friend, Doug Bauer (CEO of the Clark Foundation, formerly of Rockefeller Philanthropy Advisors) and my new friend, William Zabel (well-know estate planning attorney in NYC and author of The Rich Die Richer and You Can Too), we met with a select group of Princeton alumni and families. We discussed the issues they are facing in dealing with the impact of wealth on their families and how to utilize family philanthropy to address these challenges.

Prior to our meeting together, I put together a list of the most common concerns I hear from the families with whom I work. Part of my goal was to help the families at the Princeton event to be able to “normalize” their concerns — that is, that what they are experiencing is normal or common for those in similar situations (in actuality, the issues are common across families, regardless of the level of financial wealth they have.)

At the beginning of our day together, Doug had each participant share the issues they wanted addressed or they question they would like answered from attending the day’s proceedings. Let me share with you some examples of the concerns shared:

*How do you not raise spoiled children?

*How do you transfer wealth without damaging the next generation?

*How do you decide how much to leave to your children?

*How do you train your kids to understand what work is, but also expose them to the larger world?

*In philanthropy, how do you choose from all of the choices and opportunities available?

*What are principles for deciding when and how much to share about the family’s finances with the next generation?

*How do you balance moving from your full-time profession to some form of retirement and more active involvement in philanthropy?

*How do you manage the transfer of control in multi-generational philanthropy, from one generation to the next?

*How do you help your children develop positive character qualities without having to go through all of the difficulties you had to?

Interestingly, our lists had some significant overlap. Here are the issues I identified prior to our meeting, as being the most common I help families address:

+Husbands & wives having difficulty reaching agreement on important decisions. It is important to note that there is not always a disagreement, but there just be a lack of agreement. Sometimes spouses don’t agree on how much to give to their heirs (or when or how), but as often, they just get “stuck” because they are not sure what to do.

+Character development for the next generation. Most frequently, this includes developing a good work ethic, managing money well, and not having a sense of entitlement to the privileges they have experienced.

+The dynamics of parent – adult child relationships. Moving to the life stage where one’s “children” are now college-aged, young adults or even middle-aged creates new and different communication patterns. Parenting is different — and both parties (the adult children and their parents) frequently experience difficulties in figuring out these new patterns.

+The challenges of relationships between senior parents and their adult children. This issue obviously is not limited to families of wealth, but the ramifications can be multiplied by the decisions that need to be made, and the financial resources involved. Many financially successful senior adults are used to making their own decisions (and decisions for others), and moving to a new stage of life where others question their judgment or want to be involved in making decisions frequently creates tension.

+Career development for family members. Currently, I am working with several young people — from high school and college students to twenty- and thirty-somethings. And sometimes, this is one of the primary areas of concerns for their families.

+Getting the next generation actively involved in the family’s philanthropy. A number of families I serve are just starting to become more actively involved in their philanthropy. And they would like their young adult, college-aged, and teen-aged children to participant at a significant level, being personally invested in the process.

+Dealing with complexity of life issues. The busyness of life and demands from their community involvement; owning, managing and maintaining multiple residences; the challenges of each family member’s busy schedule and finding time to be together — all are common challenges I help families negotiate.

Although my list had more breadth than their initial questions, as I shared the items, the participants had numerous personal examples regarding the topics I raised.

In addition to identifying the most common issues, we also discussed how to address their concerns. Probably one of the most important “answers” that came from our discussion, was that there are no easy answers, and that each family’s situation is fairly unique, especially given the personalities of the family members involved. I did challenge them with the following thought:

You don’t need ‘answers’. You need a process to help you find the answer that fits for your family and your values. But it has to be a process that works, and a process that you work over time.

That’s how I assist families — designing and walking them through the processes they need in order to make difficult decisions, helping them understand the options they have (and sharing options they maybe weren’t aware of), and accurately perceiving the potential results of their choices. Its fun! I love the fluid dynamics of each family that I get to serve. (As I often say, my life is never boring!)

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