Is your family set up to succeed or fail?

The idea of leaving a generous inheritance to your family may sound appealing and even noble. Except that it usually doesn’t work that way.

The idea of leaving a generous inheritance to your family may sound appealing and even noble. “A good man leaves an inheritance to his children’s children,” says Proverbs 13:22. We may not be the Rockefellers, but passing our overflow to the next generation or even generations, rings of success!

Except that it usually doesn’t work that way. Your sweat and tears, the hard work and scraping by, the breakthroughs, the climb up, the shrewd decisions, the selflessness, the careful planning — are usually not enough. Nine out of ten traditional inheritance plans will fail according to The Heritage Institute — that’s ninety percent and most of them in the first generation. By the second generation of inheritors, it is most assuredly squandered — often causing damage along the way. Money can be like dynamite — powerful for good or bad. We may intend it for blessing, but it can actually cause harm. So, the question is, what’s different about the other ten percent?

The truly successful ten percent prioritize passing wisdom before wealth. King Solomon summarized it like this, “Wisdom along with an inheritance is good and an advantage to those who see the sun. For wisdom is protection just as money is protection, but the advantage of knowledge is that wisdom preserves the lives of its possessors.” (Ecclesiastes 7:11–12)

The Heritage Institute says, “We believe that when parents who build wealth pass only their material assets to their children, and not the values by which they have lived, there is little chance the family, or its wealth, will survive for long.” The failure rate often boils down to one or both of the following inheritor issues:

1. A Lack of Knowledge

There is little or no understanding of how to wisely manage the inherited wealth either because of practical misconceptions, lack of preparation or a wayward spiritual perspective of money’s purpose in life.

2. A Lack of Appreciation

Most people, even family, do not value what is free to them.

It takes a purposeful approach to remedy these and they are too important to leave to chance. A safe and noble route would be to consider earmarking a small (and potentially less harmful) amount to your children and then the remainder to a valuable charitable cause. However, if you are willing to put in the work that it takes to pass along wisdom before wealth, here are the keys to creating an impactful family legacy:

Record Your Story

Share your values, your faith, and your passion. Be sure to include what drives and guides you and the obstacles and victories you experienced along the way.

Choose Advisors Wisely

Because you need support to create a purposeful plan, ensure you have advisors that support the “wisdom” philosophy not just in theory but in practice. It may also be a good idea to introduce your children to your advisors if there is not already collaboration.

Offer Perspective

Communicate logistics, teamwork and vision through periodic family meetings or retreats. The goal is to steer the conversation from “What’s in it for me?” to “How can I help make an impact?” An experienced third-party might help to guide these discussions.

Choose Successor Trustees Carefully

One sibling in charge of another may not be the best for family dynamics unless the expectations are clearly set and accepted. A private, professional fiduciary is an option. In either case, the trustee(s) needs to be responsible, honest competent, and available.

Get Organized

One easy way to minimize complications is to have a list of what you own (and anything you owe). You should save important documents in a safe, logical place. Don’t over-complicate or over-control your plan more than necessary.

Prioritize People Over Assets

Regarding your family, seek to build relationships rather than chance their unraveling. Unequal inheritances (especially to children) are generally not a good option although you do need to consider the unique situations of each heir. You may think about the charities and ministries you are passionate about and how your assets can continue to be a resource and a blessing.

If you want to do all you can to help your children and grandchildren succeed pass along wisdom before wealth…

And that is just one more Principle of Prosperity!

Anthony Saffer, CFP of One Degree Advisors, Inc. coordinates principled financial solutions for families. Learn more at: onedegreeadvisors.com

Advisory services offered through One Degree Advisors, Inc. Securities offered through Securities America, Inc., Member FINRA/SIPC. One Degree Advisors and Securities America are separate companies.

Securities America and its representatives do not provide legal advice; therefore it is important to coordinate with your legal advisor regarding your specific situation.