The Big Picture: A first-generation wealthy couple knew the conversations they needed to have with their children around money would be vastly different from the ones they grew up with. As part of their integrated family office solution, TwinFocus worked alongside these parents to implement a wealth education plan that started with buying a wallet and evolved into discussions around estate planning and the family foundation.
The Backdrop: One of the top concerns for ultra-high-net-worth families is how to raise financially responsible children—allowing them to enjoy the family’s success while encouraging them to pursue passions and careers to become productive members of society. They often ask:
Our Approach: Every family has its own values around, and comfort level with money, and these form the basis for our tailored recommendations. For families of young children, we often suggest starting with an age-appropriate allowance and working up to charitable donations. For others, we create irrevocable trusts for each child, allowing them to have a say in how trust assets are invested and the ability to withdraw assets at different milestones to start teaching them self-discipline.
Estate planning is always a core priority, but in light of the pandemic—especially the early days that gave many people a more palpable sense of their mortality—we have been keenly focused on putting family trusts, partnerships, and other co-investment vehicles in place, and preparing formal documentation to ensure children have a clear understanding of their parent’s wishes in the event it’s needed. This planning also helps establish governance to ease potential conflicts that may arise as the children grow into adulthood and the family expands.
Here’s how we helped one family open the wealth conversation and impart lifelong lessons.
The Situation: Our clients, a couple with a self-made fortune from selling a successful business, have two children. When they welcomed their first child, they realized their upbringing would look very different from their own.
Like all parents, they wanted to set a bright, successful, productive, and responsible path for their children but quickly realized they weren’t sure where or what age to begin. So, they turned to TwinFocus for help as an integral part of their family office program.
The Solution: Walking through examples of successful strategies we had deployed with other families, we worked with these clients to devise a plan tailored to their unique preferences and circumstances, along with an implementation strategy designed to evolve as their children mature.
With our guidance, the couple decided it was important to begin educating their children early and laying the groundwork for eventually managing a significant inheritance. This included a number of tangible and age-appropriate activities, starting with providing the children a small allowance for completing household chores and showing them how to split their earnings into three buckets: saving, spending, and giving to those in need. They encouraged them to set up small business endeavors, such as selling sneakers online. With those earnings, they had the kids purchase a physical wallet so they could learn to responsibly hold and use their money. Taken together, these steps instilled financial confidence and laid a strong foundation for more sophisticated conversations to come.
As the children grew older, the couple began introducing more complex elements of wealth stewardship, such as the principals of compounding, philanthropic efforts, capital market perspectives, alternative investing, and estate planning. They introduced the children to the family foundation and began considering their input and interests, both in terms of how to select charitable grants and how best to invest foundation assets.
And through all this, they made a conscious effort to have regular conversations about money in casual family settings—like over dinner or on car rides—to help their children feel at ease with financial topics and decisions and receptive to ongoing learning.
With their children now entering college, the couple continues to work closely with our team to roll out the next phase of education. We are beginning to prepare them for the types of complex and sensitive topics that enter the discussion with adult children, such as wills, trusts, and prenuptial agreements.
The Bottom Line: Providing financial education to children is extremely important and an ongoing journey. Through this couple’s work to provide education early and continuously, they are now confident their children will be prepared to responsibly navigate their inheritance and preserve their family’s legacy for generations to come, even as they create their own families.
Disclosure: Case studies may not be representative of the experiences of other TwinFocus clients.
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