Part 2: Family Meetings: How, What and When Do We Tell The Kids? Financial Information In An Information Age

The traditional way of talking about wealth within a family is typically…silence. There is often fear about broaching the whole topic of family finances because of worries that sharing too much information will diminish one’s power, or that information will be misused or misunderstood.


What does “ruining the grandchildren” mean? Sometimes, unfortunately, it means “keeping them ignorant!”


Knowledge is power, and staying silent on important topics like these leads to conflict, ignorance, and resentment.




When it comes to financial issues, kids usually have simple questions. They want to know what they are getting and when, and they want to be sure that they are treated fairly.


They also often ask questions regarding their inheritance. Can I receive a loan or gift? What happens if I need money sooner? What happens if the family’s financial situation changes? Who can I turn to for advice?




More important financial questions often elude young family members. The most important questions they should be asking are questions like “What is the real ‘meaning’ of wealth?” “What is the best role for me to advance my family’s goals?” “How do I gain the knowledge necessary to do what is expected of me?” “How should I protect my own family?”




Intentionally preparing the next generation to take over family wealth is important in creating legacy wealth for future generations. Communication and education are essential in understanding and passing on family culture and developing family goals. By creating an environment for information sharing and teaching the next generation to be real stewards of wealth, and not just inheritors, the family is strengthened — and litigation becomes far less likely.




Two family stories serve as illustrations here. It is a tale of two very wealthy families from the turn of the Twentieth Century:


Vanderbilts: In the late 1800’s Cornelius Vanderbilt employed legions of accountants and lawyers to create tax-efficient estate plans — but he did not prepare his children to receive the massive fortune. Instead, he created family bitterness — Cornelius left 90% of his fortune to one son and 10% to his wife and other children. Future generations were plagued by overspending and poor self-esteem. By 1973, at a family reunion, there were no millionaires left. Less than 50 years after Cornelius’ death, one of his direct descendants had died penniless and no Vanderbilt was counted among the world’s richest people. In fact, of the 14 most notably wealthy families in American history, only three Vanderbilts are on Forbes’ list of the 400 wealthiest families today, and not one is near the top.


Rothchilds: Nathan Rothchild also made sure that proper tax, estate and investment planning was in place. Then, Rothchild intentionally prepared his children and grandchildren to be independent, self-confident members of society, apart from their family wealth. He created organizational and decision-making processes that included family communication and a solid set of shared values. He created a family bank to support entrepreneurial activities, organized mentoring and annual family reunions. The family’s shared values were taught; there was an explicit expectation for members to participate in family activities, and members were expected to be actively engaged in charitable endeavors. The Rothchild family continues to thrive today. The family owns and operates some of the largest and most profitable investment banks around the world. Combined, their fortunes total more than $1 trillion.




If you want to create legacy wealth, you have to prepare your inheritors. When it comes to family wealth, communicating and preparing children and grandchildren is what will sustain family wealth for future generations. 


Communicating shared family values, creating sound organizational and decision making processes, and mentoring children to understand the real meaning of family wealth are all issues families should not be silent about. Following Nathan Rothchild’s lead to discuss and prepare children to be independent apart from their family wealth, and to be self-confident members of society, will help your family to thrive in the future.


Here at Lagerlof, our Private Fiduciary team conducts “family meetings” where these important topics and issues are discussed with all members of the family, not just the patriarchs, to assure that the family is well prepared to be good stewards of their family wealth and legacy. 


If you and your family have questions or would like to further discuss how to best prepare your family for the transition of wealth, give us a call.

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