A Family Enterprise Approach to Generational Wealth

Family Legacy Planning

The goal and purpose of Traditions Wealth and Legacy Planning is to help families sustain wealth for multiple generations. According to research:

  • *70% of family wealth will be lost by the 2nd generation.
  • *90% of family wealth will be lost by the 3rd generation

The vast majority of family wealth transitions fail because of the following reasons:

• *Lack of trust and communication within the family

• *Heirs are not adequately prepared to receive family wealth

• *Poor financial and estate Planning within each family generation

The approach of Traditions Wealth and Legacy Planning is to treat multi-generational families as a business enterprise. No official legal structure or document is needed to achieve this, it only requires a family mindset. 

The unofficial family enterprise should have the following:

  • Family Mission Statement
    • “Should define the purpose of their wealth and what they are working towards as a family”
  • Agreed Family Values
    • “The behaviors or belief system that guides the family”
  • Family Constitution
    • “A timeless document that creates a system of family governance.”
  • Yearly Family Meetings
    • “A meeting for each family generation to gather and address important family issues. It’s also a time to remember the family mission, values, and instructions in the Family Constitution.

Each family generation under the Family Enterprise is viewed as a family business unit. A Family business unit will have its own mission and structure based on its own unique needs, but it’s consistent with the mission and values of the Family Enterprise.

 See XYZ example below of a Family Enterprise and individual business Family Units.

Family Enterprise: XYZ Family Enterprise

  • XYZ Mission: “To care for each other and their community”
  • Business Unit 1: The Senior Family Generation 
    • Mission: Give their knowledge, time, and expertise to XYZ Family
  • Business Unit 2: The Middle Family Generation
    • Mission:  Provide comfort and support to XYZ Family.
  • Business Unit 3: The Youngest Family Generation
    • Mission: Learn from senior generations in XYZ Family.

Creating that type of structure for your family might seem a bit unusual. However, keep in mind that organizations and families have sustained their financial success for 100 years or more, all have 1 common denominator that has allowed them to sustain their wealth. They all have a structure for these 2 important assets. 

1. Humans Assets

2. Financial Assets

 Creating a structure for Financial Assets is not enough. A Trust is a great tool for managing financial assets, but a trust does not have the ability to control the behavior and thinking of human assets. This is why even the wealthiest families fail at sustaining wealth beyond 3 generations. They assume, just by creating a complex Trust, their problems have been solved. For long-lasting generational wealth, there needs to be a structure for human assets (the family members). If human assets don’t have structure, family wealth, regardless of size, will be at risk when financial assets transition from generation to generation.

At Traditions Wealth and Legacy Planning, we are prudent investors of both the Human and Financial Assets of the Family Enterprise. We pride ourselves on building a relationship with each family generation ( Family Business Unit) and bringing them together to work as a cohesive unit (Family Enterprise) for a common purpose (The Family Mission). 

We look forward to working with your family enterprise.

Written by:
Lemar Williams, CFP®, CPWA®, CTFA, CLU®
Founder & President
Traditions Wealth and Legacy Planning

*Roy O. Williams, For Love and Money

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