Family Wealth Planning
The Ultimate Guide for Family Wealth Planning by Pillar Wealth Management
The generations that are uncertain about their economic future often rely on family wealth to sustain their lifestyle. High net worth families tend to build generational family wealth by creating structures such as foundations or trusts to help transition the family’s wealth or shares to the next generation.
Family wealth planning effectively ensures that your family is equipped to preserve and grow their inherited wealth while managing major family expenses.
Families with individuals who have a high net worth of $2+ million in liquid assets can benefit from a professional financial advisor’s help. Our exclusive guide can help you hire a suitable advisor to meet your needs.
Family wealth planning is one of the most critical aspects of preserving your wealth for the next generation. But it’s just one component of wealth management. Discover what to look for in a wealth manager so your investment performance and retirement security are as assured as possible. Click the button to request our free comprehensive guide.
4 Steps for Successful Family Wealth Planning
1. Start with family conversations
Your legacy pertains primarily to the future of your assets, your wealth. However, your legacy also includes your values and goals. You will want your family members to be similarly positioned regarding your values and goals as well as your assets — which are the family’s assets. So, start conversations about what the family would like for the future and what their thinking is about their legacy.
2. Details matter
Family legacy planning is about more than having a vague idea about the future of the family. It’s vital to look at all of your assets in detail. What should be the future of these assets? Who are the family members most likely to take care of each of your assets effectively? Which of your children would benefit substantially from inheriting certain assets? No detail is too small!
3. Create a strategy
As your ideas for a legacy plan begin to take shape, make a detailed assessment of your wealth and how it will be managed in the future. Working with a financial planner is an effective way to develop a strategy that will preserve your wealth for future generations. You can get their opinion of your plan, and an outside opinion can only add to your understanding of what is best for you.
4. Monitor the results
Working with your financial advisor, devise a schedule for monitoring your plan. Discuss your plan with the family and make sure they understand the importance of being committed to a schedule, in particular, regular family meetings to discuss the progress of the plan. Regular meetings are opportunities to evaluate and re-evaluate the family’s goals and ensure that everyone has a voice in decision-making.
Succession planning, asset allocation, estate tax management, retirement planning, and wealth management can require an experienced financial advisor to start productive conversations to help your financial desires align with those of your family. Financial advisors at Pillar Wealth Management are skilled in helping clients with $5 million to $500 million in liquid investment assets. You can schedule a free consultation with us to get started on preserving your family’s wealth. Having the assurance that your family’s financial future is secure can feel incredibly rewarding.
Table of Contents
What Is Family Wealth Planning?
Accumulating, managing, and preserving long-term financial wealth for your family in the present and for the future is known as family wealth planning. Effective family wealth planning aims to align your financial goals with your family’s best interest. Your individual value and your family’s collective value influence how you set and plan for long-term objectives. Communicating and making these decisions together by engaging in open dialogue can help each of you comprehend the role and meaningfulness of wealth for a sustainable legacy.
Reaching out to an expert for advice can help you implement an effective plan for yourself and your loved ones. In particular, if you have high-value assets of over $2 million in liquid investments, you need your family’s finances to be in the right hands. Our exclusive free guide can direct you towards selecting a reliable financial advisor.
Specialists allow you to engage in strategic planning by discussing your long-term goals such as wealth transfer, legacy planning, and charitable giving and developing a plan to work towards them. You can reflect on the plan to make sure that it accurately represents your family’s values and objectives. Managing major expenses like college tuition and weddings requires anticipation and the participation of each family member so that they can understand financial responsibility and accountability.
Wealth management is a complex process that needs the unbiased perspective of a team of skilled specialists. Collaborating with wealth managers can combine the knowledge and expertise of various professionals to help you create investment strategies to protect your assets. Our hardcover book, The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies for Families Worth $25 Million To $500 Million, discusses how you can safeguard your wealth. Trusted advisors can help your family map out the future you envision.
Family Legacy Wealth Plan
When it comes to family wealth planning, legacy planning, estate planning, and inheritance are key terms that come to mind. They are similar in the sense that each pertains to planning for your family’s future finances, but each of these financial strategies is also specific to a certain financial aspect.
Legacy planning is the process of planning how you will bequeath your assets or property to your loved ones or next of kin after your death. It consists of more than just real estate or cash assets, and it can include family values you would like to convey to your heirs, for example, charitable giving. You can leave behind the legacy of supporting a certain family narrative that your future generations must uphold, or you can require them to continue funding a particular foundation or cause in your name.
Estate planning is almost synonymous with legacy planning, as it too centers around the aspect of planning the transfer of your wealth to your heirs. An ‘estate’ is typically associated with the wealthy, making it a term more often used for high net worth and ultra-high net worth families.
Whether it is a simple or complex estate plan, both can be drafted based on the number of your assets or the size of your estate. In addition to inheritance, estate planning can help you plan for unexpected incapacity and even be used for tax mitigation purposes. Our advisors are skilled in estate planning for high net worth and ultra-high net worth investors. Get in touch for a consultation with one of our experts.
Inheritance itself is a financial term used to describe the assets passed down to an ascribed heir after someone’s death. These could include stocks, cash, bonds, automobiles, jewels, art, antiques, or real estate properties. An inheritance plan is a part of the estate plan, and it more specifically defines which assets you would like to pass down to whom.
3 Tips for building a family wealth plan
1. Take a multi-generational approach
When creating a family legacy financial plan, it is important to consider the future of both the younger and the older generations. For the younger generations who have a long and healthy life to look forward to, you will want to do whatever you can to support their progress, whether in their education or their career plans. For the older generation, you will want to look at how to best care for them as they age and as they confront the health and lifestyle issues faced by older people.
2. Foster transparency
In our society, talking openly about money and our financial situation is not common. So, we tend to hesitate about discussing these issues, even with close family members. However, it’s important to make the effort to overcome this taboo in order to pass on your knowledge and expertise to the younger generation, who will then be in a better position to be good wealth managers themselves.
3. Protect your assets with a trust
Through as estate plan, you can protect your assets and gain tax advantages by creating a trust. The assets in a trust are managed by a trustee, someone who is fully aware and knowledgeable about how you want to distribute your assets to your heirs. A trust is a legal instrument that is designed to manage your assets as specified in your estate plan.
When Do You Need Family Wealth Planning?
A family wealth planning strategy should be in place regardless of your level of income. If you plan to continue accumulating wealth, a growing estate can become challenging to manage on your own. Seeking input from your loved ones about their financial aspirations can help set the foundation for family wealth planning. Still, ultimately an external advisor is needed to ensure that it is followed through with. Our Ultimate Guide can help you look for the best advisor to secure your financial future.
Why You Should Start Family Financial Planning Now
High net worth and ultra-high net worth families have constantly growing assets, which makes it more complex to manage their wealth. A wealth manager or financial advisor is crucial in this respect to make it easier for you and your family to communicate and cooperate to manage your assets. You can approach a family office, which is a financial institution driven to help your family in its financial management.
Family wealth planning makes sure that your hard-earned money is not squandered at the hands of your inheritors. Therefore, it also takes into consideration the importance of instilling values in your heirs to preserve your accomplishments and guide them on financial responsibility and stewardship.
Working with family wealth managers
You can establish a framework for family wealth planning through conversations and consultations with family members and others with whom you feel comfortable discussing your financial situation. However, this type of family planning cannot replace the expertise provided by a financial manager or advisor. Family wealth planners can help you develop a shared sense of family purpose, which can motivate you and your descendants to use your wealth in a way that creates opportunities and supports their community. They can give you custom investment strategies to help maintain your wealth even after you’re gone. Some of these investment strategies are discussed in our guide.
Family Wealth Management Services
Wealth planning requires an unbiased, third-party advisor to address this sensitive and complicated topic. Family wealth management services use their resources and expertise to provide you with opportunities to grow your family’s portfolio while mitigating any intra-family disputes. You can learn more about improving your portfolio in our Performance Guide. Here are a few things to consider before hiring a family wealth planning service.
Hiring a lawyer to plan your legacy is not sufficient, as they may lack the knowledge and financial expertise to meet your needs. Specialists who are skilled in the estate planning of wealthy individuals can be found at family offices, and they can work alongside a team of financial advisors for your benefit.
A Single Family Office (SFO) is run by a team of expert financial advisors whom the family trusts to handle their finances, legal affairs, and tax management. It charges a higher fee to offer a more personalized service with a high level of control for your family.
Multifamily offices (MFO) are often opted for by ultra-high net worth families who want to have customized financial, tax, and legal services. They can consist of financial institutions or professionals who provide more expertise in this particular field.
High net worth families have significant wealth, which needs a family office with wide-ranging expertise to help them manage their wealth and formulate their future monetary aspirations. Wealth managers at Pillar Wealth Management have vast experience in managing the finances of high earners. Schedule a meeting if you’d like to have a chat with someone from our team.
How can family wealth planning help my family?
Financial management advisors, investment advisors, wealth managers – each cover the aspect of giving you financial advice. Hence, you may be wondering, “How can family wealth planning help my family?” Family wealth management services offer you insights customized to each family member’s personality with the goal to secure your wealth for the future.
1. Keeping the Family Conversation Going
Helping clients start family-focused conversations is key to planning an effective estate or legacy plan. Family wealth planners ensure the participation of their client’s family in discussions regarding wealth so that their client’s intentions are communicated clearly. Identifying personal values and goals helps the client be in sync with their family’s wishes. This makes each member understand and take responsibility for their individual role in the estate plan.
An open forum to present ideas and opinions prevents future conflicts. Your financial advisor will treat this discussion like a business meeting, starting by stating the objective of the meeting and aiming to come to a conclusion that is in the best interest of you and your family.
2. Preparing for the family wealth plan
Effective family wealth planning involves gathering data to make financial decisions, such as which heir is set to receive how much inheritance. Are there potential conflicts in extended families, or do the children need guidance on how to allocate assets? Do you already have a previous legacy or estate plan in place? These are the questions that a financial advisor will seek to answer.
They may advise you to set up an allowance for your children to help them get accustomed to the responsibility that comes with high-value assets. Additionally, reviewing your legacy plan in front of your heirs can serve as a reality check and start important conversations about the duties they will be expected to take on.
3. Strategic family wealth planning
To carry out an established family wealth planning, your advisor may suggest strategies to you and your family to fulfill your objectives. This includes health insurance, long-term care, and whether your family will be expected to cover your expenses in the event of any incapacitation. If you wish to help your heirs gradually become financially equipped to manage your estate, your planner may suggest annual or lifetime gifting strategies. This will allow a particular sum of money to be transferred as an inheritance at pre-determined intervals.
In the case of the transfer of a family business, a legal team can help the transition, either in terms of being a stakeholder or assuming the responsibility of overlooking the business itself. Planning for charitable initiatives can help carry on family goals and values.
4. Adjusting the plan with time
Family wealth planners will help ensure that you commit to an annual meeting where they review and address any concerns regarding your family wealth planning. Ongoing support and communication are necessary to refine and reevaluate any changes in the roles or objectives of the family members.
Family discussions help to clarify family principles and risk investment profiles, which can help build a long-term family wealth planning strategy. Changes in circumstances can affect your financial standing, and family wealth planning helps you make alterations as needed.
How much net worth should I have to consider family wealth planning?
You might be wondering, “How much net worth should I have to consider family wealth planning?” While people of any financial background can benefit from legacy planning, people with high-value assets should especially prioritize the security of their wealth. Family wealth planning is crucial for very high net worth individuals, i.e., those who have over $10 million in assets, and ultra-high net worth individuals, i.e., those with a value of over $30 million in assets. Wealth is volatile, and a proper family wealth planning strategy can help establish and nurture your legacy for generations to come.
As you begin working on your wealth plan, your family dynamics, future life, and financial circumstances can result in the need to adjust your plans accordingly. This makes family wealth planning an ongoing collaborative process. However, you can achieve this as long as you and your loved ones clearly articulate your desires and future objectives. At Pillar Wealth Management, we cater to high net worth families with $2 million to $500 million in liquid investment assets. If you’d like our professional advice on how to start managing your family’s wealth, schedule a meeting with us today!
To be 100% transparent, we published this page to help filter through the mass influx of prospects, who come to us through our website and referrals, to gain only a handful of the right types of new clients who wish to engage us.
We enjoy working with high net worth and ultra-high net worth investors and families who want what we call financial serenity – the feeling that comes when you know your finances and the lifestyle you desire have been secured for life, and that you don’t have to do any of the work to manage and maintain it because you hired a trusted advisor to take care of everything.
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