Enhancing Your Financial Plan with Family Values

Most families worry about financial documents and legal trusts when planning the future of their wealth and its impact on the family. But without identifying and then incorporating values, the entire plan could end up being litigated in court, with heirs fighting over money.

It's hard work to identify a family's values, but the process begins with effective listening and communication on everyone's part. Otherwise it's like a game of high-stakes telephone, open to misinterpretation. For example, parents might bestow gifts to beneficiaries equal to the $13,000 annual exclusion amount, leading beneficiaries to believe it will be an annual event. They've come to depend on the extra income, but what happens when parents suspend the payments or go another direction with the money? Without communication, beneficiaries can end up feeling disappointed or angry. Far worse, they could believe their parents are wielding power with the money, which may not have been their intention at all.

Family meetings are a great way to bring individuals together for face-to-face discussions and could be conducted in conjunction with annual family reunions. After members have expressed individual goals, they can develop objectives for the family that everyone supports. From there, developing a financial strategy that encourages and develops those goals and objectives will be easier. Most families work backward, putting tax advantages and finances first and family values second.

The biggest challenge for the wealth creators will be refraining from imposing their own values on the group. Instead, they should lead the family meetings toward defining a common mission. The mission is the family's ultimate reason for being, and remains fairly static, but as the family grows, individual and group goals can change and evolve. Continual gatherings will ensure the plan stays on track and that everyone buys into any needed adjustments.

By incorporating values into wealth planning, families will accomplish more than their financial goals: they'll become a united force, strengthened in accomplishing a higher purpose. And they'll be less likely to spend down the family assets in court.