Turns out there’s proof that money doesn’t solve all problems.
Family dynamics and complex financial circumstances are often complicated by increased wealth, the 2014 U.S. Trust Insights on Wealth and Worth survey found.
“We would argue that wealth doesn’t ruin heirs and family dynamics. Poor communication, broken trust relationships in families, and keeping heirs in the dark about their roles and responsibilities until they are a certain age (when they suddenly are expected to have learned such responsibility completely by osmosis) most certainly do,” Chris Heilmann, chief fiduciary executive at U.S. Trust, said during a media webcast Friday.
According to the survey, few wealthy parents believe their children will be mature enough to handle family money before the age of 25, and only 38% have fully disclosed their financial status to their children.
“We see professional guidance improves inheritance confidence. Parents with a professional financial adviser are more likely to believe their children will be well prepared to handle the inheritance they will receive,” Mr. Heilmann said. “The vast majority of parents currently working with a financial adviser believe their children would benefit from a discussion with an adviser as well.”
Heilmann said the greatest risks to family wealth include addictions or impulsive behavior, divorce, and disagreements over inheritance or distribution of family assets.
The survey showed that nearly six in 10 wealthy people have provided financial support to a member of their immediate or extended family other than their spouse, with one-third saying they provide ongoing financial support. However, only 3% have a financial plan that addresses this need.
“Our exploration into changing structures and roles points to the need of a more modern approach to family wealth management. Gender and generational perspectives directly affect views on parenting, communication, relationships and the roles of family members, all of which in turn affect one’s concept of self-worth and ultimately family wealth,” Keith Banks, president of U.S. Trust, said during the webcast.