While the list is not exhaustive, some of these other questions asked by very high net worth clients address the equally important, challenging, and sometimes overlooked question of how financial assistance can be provided in a way that will be accepted and accepted as that Present realized that it should be.
Although the term “gifting” is often positively connoted, financial gifting is not without the potential for unintended negative consequences. With the status of “self-made” or “first generation wealth” of most very wealthy families comes an understanding of the great joy that comes with creating it yourself. They shy away from taking the incentive to work and do not want to inadvertently withhold the life experiences that were crucial to their success from their children or other relatives. Mishandled, gift giving can also contribute to financial dependency, a sense of entitlement, a lack of appreciation of the true value of a dollar, or the naturalness of the blood, sweat, and tears that created family wealth.
Giving gifts can undoubtedly make it financially easier for the family members receiving the gifts, but “having it easy” often does not reflect the work ethic, principles, and values of these wealthy families. This is not to say that financial gifts should not be given or, if they do, should have negative consequences. Instead, I want to emphasize that the act of financial gift giving can be the easier part compared to the emotional, relational, and psychological aspects of gift giving, which are often the much more important, yet overlooked, elements of gift giving.
Warren Buffet famously said that the perfect amount to leave children is “enough money to make them feel like they can do anything, but not so much that they can’t do anything”. Although Buffet talks about how much he will leave his children with, how much to give to his children in their lifetime, this has similar considerations and is often a more pressing matter. Although Buffet speaks of a purely financial legacy, parents as every parent know that there are many other elements they can bestow on their children. It is necessary to consciously spend your time and energy determining the money that you will leave or give to your children. However, the greatest gifts to the family are often not those measured in dollars and cents, but those of the time. It is also necessary to spend time discussing, determining, and documenting the values and beliefs that you convey to your children and sharing the lessons and knowledge that underlie them.
Most organizations today have a mission statement. While there are necessary differences between running a family and running an organization, this practice is relevant and beneficial to both. Indeed, the creation of a family mission statement is recommended. Working with a counselor enables a family to clarify and document things like their values and beliefs, what they would like to achieve together, how they will work towards what is important to them, and how they will recognize when they do meet success in these areas. Passing on this knowledge is often thought of as a one-way street – from the older generation to the younger. However, it is crucial to include the younger generations in this conversation. For intergenerational success it is necessary to determine the beliefs, values, purpose and most important things for the future stewards of the family.