Passing on Wealth: What Rich Families Often Get Wrong

A massive shift of wealth is coming. Over the next 25 years, a staggering $74 trillion is expected to change hands between generations. For the world's billionaires, this transfer is happening even faster. By 2040, they are predicted to pass down $5. 9 trillion to their heirs. This unprecedented movement of money brings with it big expectations and potential pitfalls. Many wealthy families struggle with how to handle this transition. Richard Orlando, founder of Legacy Capitals, works with these families to navigate the complexities of passing on wealth. He emphasizes the importance of preparing the next generation for their new responsibilities. Whether it's $2 million or $200 million, families who take the time to educate and plan tend to see better outcomes. One common mistake is avoiding money talks. Some parents fear discussing wealth might create entitlement in their children. However, this silence can leave kids unprepared for the responsibilities that come with inheriting wealth. Orlando suggests gradually increasing transparency. For instance, one of his clients decided to put $5 million into wealth management accounts for each child before they inherited much larger sums. This approach helps the next generation develop the skills they need to manage wealth responsibly.Another issue is the lack of a clear plan. Families often need guidelines for communication, investing, and philanthropy. For example, if a family owns a business, they should discuss who will take over. If there's a foundation, they should agree on its goals. Orlando advises finding common ground to prevent future conflicts. This might mean agreeing on a few key causes and incorporating them into a philanthropy mission statement. Finally, Orlando points out that micromanaging can hinder the growth of the next generation. Many billionaires want their children to grow the family business and continue the legacy. However, if the current leaders don't trust their heirs with decisions, the next generation won't be prepared to take over. Orlando suggests gradually handing over control through low-risk projects. This allows children to voice their opinions and gain experience.