Estate planners are sadly all too familiar with high net worth families who lose their wealth by the second generation. How can this happen? Often, it is the result of errors made by well-intentioned estate planners who lack the skills to lock in protection for the future and help their clients stay the course.
Such planners may yield to unwise decisions made by clients who impulsively jump into one arena after another where they have no experience. These planners are unable to provide safe navigation to preserve generational wealth. Their primary concern may be to humor rather than heal their clients. Many large institutions with big names dabble in estate plans these days, but their primary business is not estate planning. Look for a planner with solid experience in the industry and a razor-sharp understanding of business and trust law.
Avoid the people-pleasers
A person in need of medical intervention will not be well-served by a physician who smiles and agrees to apply the patient’s desired bandaid. Though the procedure is painless and straightforward, it will not cover the wound or promote healing. Effective estate planners do not pander to popularity—they plan for their client’s success with a genuine desire to steer them to long-term safety. They possess the fortitude to help high net worth individuals use discipline in growth.
A wise estate planner follows the axiom, “When you’ve seen one estate plan, you have seen one estate plan.” In other words, each high net worth family needs a unique plan. Planners who apply stale formulas—or encourage clients to adopt the latest investment fads—are failing in their duty of care to those who look to them for expert guidance.
Fail to plan, plan to fail
As folk-wisdom states, people who fail to plan, plan to fail. A grave error too often made by those who control family assets is the mistaken belief that time is on their side. It is not. Media stories abound with descriptions of people who have lost fortunes when an accident or early death struck them—often before they had a strong estate plan in place.
Procrastinators can go from hero to zero by failing to protect their families and provide a rich stream of wealth to flow through succeeding generations. Estate succession is a remarkably useful vehicle to carry wealth forward, but pushing away the need to plan is a guaranteed method to rob future generations of wealth.
Quality of life through a well-crafted estate plan
There is a subset of the ultra-wealthy who may feel that commitment to an estate plan is something best deferred to later years. Their subliminal motivation may be a desire to avoid confronting the fact that life is finite. Some people in control of family fortunes may unknowingly act with an ever-present fear that estate planning brings the hazy notion of mortal limits into sharp focus. In reality, estate planning avoids the demise of legacies. No plan can guarantee added years of life; however, a good estate plan is worth more than gold. It can ensure peace of mind for those who use this powerful tool now to preserve and increase their assets for future generations.
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