Profile image
By CompareSilverPrices.com
Contributor profile | More stories
Story Views

Now:
Last Hour:
Last 24 Hours:
Total:

How to Build Intergenerational Wealth

Wednesday, February 15, 2017 17:01
% of readers think this story is Fact. Add your two cents.

(Before It's News)

”Up ahead they’s a thousand’ lives we might live, but when it comes, it’ll only be one”

- Ma in John Steinbeck’s The Grapes of Wrath.

shutterstock_futureA study by Oxford Place demonstrated that 70 percent of wealth transitions between generations fail. Difficulty in the succession of wealth process is often due to poor communication between family members, poor preparation of heirs, and no supportive family culture. The nouveau riche, which refers to the newly rich, generally doesn’t keep their wealth for long. Here is a TDV explainer on intergenerational wealth.

Sense of Family – Promoting solid family values is the first key to creating intergenerational wealth. This includes morality, ethics, sense of self, family, community and self-discipline. In some cultures, like Asia, the family unit is at the core of the business community, though this trend is on the decline as the cultures there are westernized.

By having a strong family unit, it can be easier to talk about the most important event when it comes to wealth succession: a death in the family. Many families find it difficult to discuss money. It’s even harder to discuss death. A strong family unit makes this process easier and, perhaps, even therapeutic.

Families might get together regularly to discuss each other’s highest values in accordance to the families particular circumstance. By developing communication patterns, the family can better support the development of offspring and live harmoniously with each other, thus creating a better environment for cowork and cohabitation.

These meetings can lead to better transition and stewardship of wealth, as well as successful business pursuits across generations. Such meetings can be recorded in what is sometimes referred to as a “Family Constitution” where the family can put to paper its values and principles; family member aspirations and business interests; establish a governance structure including decision-making and conflict resolution; and prime investment and liquidity strategies.
Education – Sometimes it comes down to old cliches: knowledge is power. Through good example, one can pass on self-discipline and understanding of society and, indeed, the money system.

It is via education that many of the abovementioned traits can be passed on. A sense of family, vision, values and beliefs represent the utmost important aspect when it comes to building intergenerational wealth.

This education must continue through one’s life. The pace of technological change is such that we must, throughout our working lives, continuously hone our skills and stay ahead of the curb. That might entail taking local community college courses that teach the skill we value most well into our adult lives.

Self-employment – By building your own business, you can free yourself from reliance on others for your job to remain viable, as well as from the modern “gig economy”, in which the only guarantee is you get paid on time. Self-employment also enables you to hire your children, and teach them the skills they need to be effective in the workforce and contribute to the family firm.

shutterstock_future

Running your own business could mean giving your children a competitive advantage: an in-production laboratory where they can learn to work effectively. The goal here, more than anything, should be to inspire the children to want to build their own fortune. This could complicate the running of the family business, sure, but individuality is an indispensable tool.

Sacrifice – A diligent work ethic and persistence is essential to building wealth. Not spending the money one accumulates now, and saving it or putting it towards further education, is essential.

This could entail spending the weekends on therapeutic activities, such as reading, exercise and preparing for the forthcoming work week. Perhaps an early evening out for a movie or to view an art gallery.  Sacrifice might not entail going to the bars and drinking.

Trust – A family trust is designed to be managed by the most financially-abled family member. Money can be taken out for education, medical expenses, and litigation. In such a trust, a family meets in order to elect the ablest based on merit. The person in charge does not necessarily enjoy special privileges (like taking out extra money for him-or-herself). They generally see that pre-guidelines for the trust’s assets are dutifully fulfilled. The rest of the family acts as counsel or watchdog to ensure the custodian is investing per guidelines.

There are many ways to structure such a trust. Benjamin Franklin set up trusts for both Boston and Philadelphia. He put in ~$125,000 dollars in modern dollars. But none of the money could be withdrawn for one hundred years. But a fraction could be taken out at 100 years. The amount of funds in total could not be withdrawn for another century thereafter.

Venture Philanthropy – The wealthiest individuals are trying to solve the world’s problems. This in and of itself is considered by many to be philanthropy. In Asia, philanthropy in a family (85% of businesses there are family-operated) is sometimes used to taught values and business acumen to potential heirs, as well as imbue in offspring a sense of morality and purpose. Learned skills must ensure the philanthropic project yields a social return and achieves its goals, while not going bankrupt.

People give to charity for a sense of emotional connection to others, to take social responsibility, to create sustainability and create a family history and local legacy. Philanthropy can become a key aspect of a successful business.

While modern philanthropy entails sometimes cutting cheques – like old school – modern philanthropy by entail a specific venture with goals in mind, commonly referred to as “venture philanthropy.”
Dream Bigger

There are many questions that differ from family to family when it comes to intergenerational wealth, like when is a good age to make family wealth available to a younger generation? What if they don’t wish to work in the family business? And, once spouses in future generations are involved, that will complicate the trust.

There are various strategies to deal with all this. Some entail taking Benjamin Franklin’s advice and making the wealth available is a stagnated manner, instead of all at once. Some wait a couple generations or so before making wealth available to future generations.

These are technical details. In order to get to this point, one must’ve built not only functioning businesses, but a functional family.

When we think about our legacies, and instill such patterns of thought in our children, we can help our offspring dream bigger dreams, and create the conditions for wealth to be passed down between generations.



Source: https://comparesilverprices.com/metals/intergenerational-wealth-how-to/

Report abuse

Comments

Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

Top Stories
Recent Stories
 

Featured

 

Top Global

 

Top Alternative

Register

Newsletter

Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.