Family conversations about finances can feel awkward and are often avoided. But transparent and timely communication between generations is vital for preserving wealth and family businesses.

 

The cost of silence

When you don’t communicate about your vision for your family’s future wealth, it’s possible that your children will build their own expectations. A lack of communication around wealth succession plans can lead to your children or grandchildren perceiving that the family has not fulfilled their obligations to them – whether that’s true or not.

This kind of emotional tension can severely impact wealth preservation, as plans for your family’s finances can become fractured. Because of this, it’s important to talk to your family about your wealth and how you’d like to have it handled in the future. Starting the conversation now means your children will be prepared to manage your family’s wealth in the future.

 

Overcoming fears

Planning for the future is a tough topic for most people – not only because it causes us to reflect on our own mortality and our own wealth journey, but because it can also require technical, legal and fiscal knowledge. Add to that a cocktail of emotions, including a natural concern for the well-being of future generations, and suddenly transparent wealth planning can seem extremely daunting.

It’s also challenging to find a time to have this conversation. Often, it’s put off or avoided altogether. Sometimes, the grown-up conversations can’t wait until they’re grown up. One way to approach this is by using a significant life event, like major birthdays or a child leaving for university, as a marker for having the discussion.

Before you begin such conversations, it’s important to have a game plan in mind. Do you know the purpose of your wealth? Does your vision align with the visions of your family? Asking yourself these types of questions can help guide you through this tough conversation. Make sure you know your own wealth plan before speaking with your potential successors.

 

Sharing plans for preservation

It’s also important to consider your family’s opinions towards wealth and its preservation. A good starting point is to think on whether the family has a shared interest in continuing the management of their wealth together.

Before having a more formal “sit down” about succession planning, instead find the time to speak to your family to determine how they would consider managing wealth in the future. Often, insights into your family’s thoughts on wealth preservation can be gleaned through informal conversations with your loved ones.

Consider their thoughts on the future and think about incorporating certain aspects of their approach into your own vision for your future wealth.

 

Vision into action

Once your family’s attitudes towards wealth preservation are known, put a plan in place to actively work towards that future vision. Consider writing it out together to ensure you’re all on the same page.

This plan should not only outline future wealth preservation goals, but also ways to maintain the family’s current wealth until it is passed on.

 

If you’re interested in learning more about structuring your wealth for the future, please go to www.hsbcprivatebank.com to find out more.