It is disheartening to learn that by some estimates, 90% of affluent families have lost the bulk of their resources and prosperity by the third generation. We live in times of chaotic changes for which there is no way to anticipate every outcome. But there are ways to reduce the odds of your heirs losing their inheritance.
If you want to preserve generational wealth for your descendants, below are some points to consider.
Inspire interest in the family business
Whether it’s oil, cattle or real estate, involve your children and grandchildren from a young age with the inner machinations of running a large corporate entity.
There are lots of moving parts, both figurative and literal, to a bustling company. At a young age, allow them to put on a hard hat or safety vest and accompany you on a tour to see just what it is that you do. Teach them how to walk a fence line from the back of a horse or go watch the oil derricks extracting black gold from the earth.
Make room at the boardroom table
One of the factors that can make beneficiaries lose interest in following the family business is to see no signs that there is room for them at the table for the next 30 or 40 years. Show your sons and daughters and grandchildren that there is a path to prosperity for them if they knuckle down and do the work.
Provide opportunities, award initiative
Unpaid internships with your company during summer breaks home from college or even paid lower-level positions while in high school and the university years are a great way to ease a younger relative into the lower echelons of the family business.
Don’t make sweeping promises
“This will all be yours someday!” is not exactly true if they have siblings and boards of directors and shareholders to appease. Instead, teach them the fiscal skills they will need to understand financial hierarchies and estate planning structures to preserve what they inherit.