The Cost of Keeping Wealth Private From the Next Generation

A look at how concerns about disrupting life prevented heirs from being prepared for the responsibilities of family wealth In the late 1990s, a family of significant wealth completed the sale of a closely-held business. Shortly thereafter, the family patriarch passed away, leaving the matriarch to oversee the family’s newly-liquid wealth and long-term estate plan. She approached the responsibility with discipline and seriousness: Wealth and tax advisors were engaged, estate structures were carefully designed, and assets were preserved and positioned to transfer to two adult children and seven grandchildren. From a planning perspective, everything was done correctly. What was missing was multi-generational communication and engagement around the purpose of wealth and how to preserve it. Out of concern that disclosure would diminish motivation or distort values, the matriarch held her “cards” close to the vest when it came to how much wealth the family managed and how it would be distributed. Her children and grandchildren were never told the scope of the wealth, how it had been created, or what it was intended to support. And when she passed, the family learned for the first time the magnitude of what they had inherited. In many ways, the concerns she had surrounding motivation and values became reality: Careers were paused, lifestyle spending increased, and capital was deployed without discipline or shared understanding. Within a few years, family wealth declined materially. Without transparency, education, or engagement, the heirs received assets without understanding their purpose, and the wealth was treated as a windfall rather than a responsibility.