Navigating Questions on Transferring Wealth

I recently had a conversation with a friend and donor of The Signatry who owns a very successful real estate investment business. He is in his mid-sixties and is starting to think about the succession of his company. He told me that his advisor brought up the conversation of succession planning, but then immediately went to into the details on strategic options of how to pass on the wealth of his business to his two children and potentially grandchildren.

Judging from the look on his face, this is not where he wanted the conversation to go with his advisor. My friend needed to think about a few bigger picture questions before the transfer methods were rushed into place. Instead, I asked him why he would transfer wealth to his family. Transferring wealth is not wrong, but before he gets to the “how” of the transfer, he should figure out the “why”, which will lead to “how much.”

Entering a Period of Major Impact

Passing wealth on to the next generation will occur – no one can take it with them when they die. A Boston College study estimates nearly $70 trillion would be transferred in the U.S. in the next 40 years. We are in the first quarter of that transfer now. With so much monetary wealth transferring in the next few decades, advisors will be essential to help guide and navigate clients through these plans. However, planning involves more than the action of the transfer, it is the heart behind the action that is just as important.

Therefore, start with the “why” with your clients. Why does the client want to pass on wealth to the next generation? This will hopefully lead to further questions like: Is the next generation ready or prepared for this type of wealth?  Have they been trained?  Has this amount of wealth been communicated to them?  Is the next generation healthy, and more specifically, spiritually healthy? Here is a great piece that Bill High wrote on the subject with great questions to begin your conversations.