By Russell W. Norwood via Iris.xyz
First generation wealth creators have many new opportunities, but along with new wealth comes many responsibilities and challenges.
For many families, a financial windfall can be life-changing— an opportunity to take their lifestyle up a notch and create a legacy for future generations. Unfortunately, American families don’t have a great track record in that regard. According to a 30-year study by the Williams Group, three-quarters of wealthy families failed to successfully transfer their assets to the next generation. Shockingly, the assets of nine out of ten families were completely lost before reaching the third generation.
The study concluded that the failures were primarily the result of mismanagement and poor communication among unprepared family members. In many cases, the lack of a shared values and purpose doomed the family legacy. If you expect to receive a financial windfall—the sale of a business, a stock option award, an inheritance—it is important to consider the long-term impact of your financial decisions. Successful families of wealth share many of the same attributes. Chief among them, they plan and build a strategy to pass their knowledge and wealth on to the next generation, and for the next generation to pass it on to their heirs.
It requires some upfront work, creativity and organization, but they are rewarded with multi-generational legacy. Here are six key steps to ensuring a successful wealth transfer:
1. Hire a Family CFO
Families with new-found wealth need the advantage of an independent, unbiased mind to ensure the family’s affairs are being planned, managed and executed efficiently and in accordance with the its strategic goals and objectives.
Click here to read more on Iris.