Issues of succession and inheritance have the potential to create serious family conflict if not handled carefully.
At Morgan Stanley’s 4th Annual Australia Summit, we gathered representatives from three well-known wealthy families for a candid conversation on some common problems and how they can be better handled.
The panel agreed that families are complex and relationships can be challenging, which makes inheritance and succession enormously difficult topics. In addition, money can be a dividing influence which has the potential to make small disagreements significant.
A key theme that came up throughout the discussion was the importance of communication. All panel members related personal examples where better communication could have reduced or circumvented issues and confrontations. They offered several tips on improving the quality of communication including:
- Dedicate specific time to meet and have necessary conversations with your family. Having a dedicated time allows all parties to be appropriately prepared and can reduce emotive reactions.
- Discuss more than simply who gets what. As a family, discuss and decide on your values, principles and how you are going to make decisions relating to family wealth.
- Have open and transparent conversations with children early. It’s often the case that families don’t start seriously considering succession and inheritance until a major life event. In some cases, that will be too late. Inclusion in family discussions also can enable empowerment and clarity.
- Be sure to address and work through any concerns or issues as they come up. Problems rarely resolve themselves and when an issue festers it can create significant tension amongst families.
- Wherever possible, engage an independent party to help establish and uphold your family’s agreed values. This will help keep conversations on track and can aid in mediating topics of contention.
In addition to communication, below are some other topics the panel discussed which you may want to consider as you navigate intergenerational wealth management.
Managing successful investment portfolios
Dealing with senior family members can be challenging as they have often achieved great success in business and can be larger than life characters. Outside of business decisions, this can lead to difficulty around sensitive family discussions as they tend to be confident of their judgement and decision making. This can be problematic when it comes to managing an investment portfolio, as being a strong investor usually requires a different skillset to running a successful business.
If investing is not something your family has deep expertise in, seek professional help. Morgan Stanley Wealth Management has an extensive network of financial advisers that are experienced in high net worth investing and managing the challenges that come with intergenerational wealth management.
Equal or Fair?
An often challenging part of intergenerational wealth management is estate planning and it’s important to consider whether equal allocation of assets is indeed equitable. There are many valid reasons for an unequal division of assets including past contributions made for weddings, education and housing that not all family members received or a member who has taken on caregiving responsibilities who may have foregone time and wages. In those instances, equal would not be fair. Whatever approach you decide, transparent and clear communication is key to ensure all parties understand your reasoning behind your decisions. As challenging as the intersection of family and money can be, most issues can be addressed through careful planning, open communication and the right guidance.
For more from Morgan Stanley’s Australia Summit, speak to your Morgan Stanley financial adviser or representative.
