We’ve learned a lot from the COVID pandemic. The disease can strike anyone, and the hour of death is uncertain. Family dynamics can change in an instant. As a result, many people have reoriented their priorities by redefining work-life balance. For others, it’s putting family first to insulate them from danger.

Strategic succession planning minimizes loss of wealth and potential confusion over wealth transfer and family leadership.

Wealth distribution is often the result of a profoundly entrenched family philosophy. UHNW individuals often lean toward legacy planning based on dearly-held values. For example, some families focus on education, and they want their wealth directed toward higher education opportunities for the family. Other families may wish to support the arts, provide scientific research opportunities, or reduce mental illness stigma.

Wealth advisors who assist these individuals in planning for future goals also plan for something more critical for the family’s legacy: its succession of wealth.

Necessary planning for succession skills

Family wealth complicates the relationship between family members. Experienced wealth advisors have identified four critical areas for consideration when transferring wealth:

  1. Communication – A lack of communication will sideline wealth succession planning. Inevitably, family meetings regarding asset distribution and management can turn into reality TV shows with no positive outcome in sight. On the other hand, transparent communication lessens anxiety.
  2. Fit – The UHNW who is next in succession might not be the leader the family needs. Succession planning requires that the new leadership have the right temperament for the job. This person must have demonstrated integrity and maturity, the ability to work with various stakeholders and be willing to put accountability at the forefront of every decision.
  3. Flexibility – Situations evolve, requiring changes in succession plans.
  4. Redefining roles – As the family leader steps aside and new leadership steps up, planners must take care that there is ample revenue to support the older generation while building wealth for the newer generation.

Other considerations in legacy planning

Planning for succession involves more than the family. Unless a family has prepared for a leadership transition, many livelihoods are at risk. There are also assets and employees to consider if a business is involved.

Commercial banking and private wealth executives who have proven track records for building top revenue-generating business portfolios and deep centers of influence in their respective markets are uniquely suited to guide families through succession planning. Financial firms who recruit and hire these legacy planners may find themselves well-positioned to guide generations of wealthy families.

UHNW individuals and their families can transcend any crisis with the proper planning and guidance.