Every family has a wealth culture, a mindset or system informing beliefs about money and how it should be used, preserved or passed between generations, whether they have articulated it or not. Families who enjoy healthy multi-generational family wealth cultures have taken proactive steps to cultivate and foster them.

How does a family create healthy thinking about wealth? It starts by identifying a common purpose, understanding the role of family members in building and using the family wealth, and good communication among family members, including appropriate transparency about the overall wealth plan. The most successful family wealth cultures aren’t based on a rigid set of rules; instead, they are flexible and adaptable to a family’s changing situation or economic shifts and accommodate evolving priorities and perspectives as the years go by.

A vision for the use of family wealth sets a common direction for multiple generations within a family, serving as a touchstone for future financial decisions. In most cases, the wealth creators set the goals and tone, with input from younger family members.

Building a family wealth culture

A healthy culture around wealth embraced by multiple generations doesn’t just happen. Instead, it is developed and fostered intentionally by all members of the family. But the wealth creators can lay the groundwork for their family’s vision:

1. Establish and articulate a common purpose

Your family is more likely to be successful in using the family wealth if everyone is working toward the same goal. Articulating a common purpose may seem a lofty ideal, but is really a statement of those core values that are a part of the family’s everyday life. One way to identify and voice family values is to engage in the exercise of creating a mission statement together.

For example, one client we work with has created the following mission statement, “[o]ur family prospers and thrives through the support of each other’s dreams.” It displays the family’s commitment to compassion, cooperation, collaboration and community. It acts as a guide for financial and planning decisions they make.

2. Preserve family history

Your family has a story – and every family member has a place in that story. Knowing how they fit into the story encourages younger generations to continue the legacy they have been given.

To preserve your family’s history, create a family timeline showing how each individual has contributed to furthering the family’s overarching mission. Or capture your family’s history in a written or video biography, adding to it with new stories through the years.

While it may seem that preserving your family’s history has little to do with material wealth, it places a focus on what sustains and enriches you as a family. This practice can help frame the family’s legacy and encourage future generations to keep it going.

3. Keep the lines of communication open

While the wealth creators have the ultimate say in what decisions are made regarding the wealth they have built, a healthy family wealth culture seeks input and involvement from all family members. Set the standard for open communication by being appropriately transparent about what decisions you’ve made and why you’ve made them. Encourage family members to ask questions about your wealth plan and your wishes for how your money is handled, both during your lifetime and after you’re gone.

The family wealth plan review

One of the many benefits of articulating your family’s wealth culture is that every family member can take into account the values identified by the family when creating their own wealth plan. As a result, the wealth plans across the generations will be consistent in their values and goals, ensuring that the wealth is used to accomplish the family’s common purpose.

In addition, as the wealth creator, you can schedule a regular wealth plan review to offer opportunities for family members to ask questions and get updates regarding your plan. You also can reflect upon your family’s mission and values and discuss any shifts in your overall goals during this time.

The annual family wealth plan review should also include a conversation about your legacy and wealth transfer planning, as well as your charitable giving strategy. If you own a family business, you could also talk about the future of your business while you have everyone gathered.

Consider including your Capex Financial and Tax advisors to join your conversation. This gives family members the chance to ask questions and get to know the people you work with and trust. For an in-depth discussion on this and Wealth management, click on this link —> https://capexcpa.com/contact

-The Capex CPA Team