Education is the first step in a wealth succession plan

Detailed summary

Families and advisers who understand this earliest will achieve the most durable transfers of wealth

Families and advisers who understand this earliest will achieve the most durable transfers of wealth

MOST family succession plans focus on trusts, governance structures, tax efficiency and wealth transfer. Yet, succession failures are rarely caused by inadequate legal planning. More often, they stem from a simpler problem: an unprepared heir.

For wealthy families, the central question is not how to transfer assets, but how to prepare the next generation to become capable owners, stewards and leaders. In practice, education is the first succession plan.

The most expensive mistake a wealthy family can make is rarely a bad investment. More often, it is a flawless structure built around an unprepared heir.

A third-generation heir once described his education this way: “I was taught everything about the business and nothing about myself.”

He had a Master of Business Administration from an Ivy League university, spoke four languages and had never been told no by anyone who needed something from his family.

Succession is less an event than an outcome, shaped long before the lawyers arrive, and largely by something families underestimate: education.

Succession planning begins not with lawyers and trusts, but with education. Families and advisers who understand this earliest will achieve the most durable transfers of wealth.

Many families consider the matter settled once an heir secures a degree from Harvard, Oxford or Stanford. But a degree certifies what a young person knows, not who they are.

Opening of the article, excerpted from The Business Times. To read the rest, open the article on the publisher's site.